<PAGE>
As filed with the Securities and Exchange Commission on April 25, 1995
Registration No. 33-57939
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
AMENDMENT NO. 1 TO
FORM S-4
Registration Statement Under The Securities Act of 1933
_______________
MARSHALL & ILSLEY CORPORATION
(Exact name of Registrant as specified in charter)
Wisconsin 6022 39-0968604
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code No.) Identification No.)
770 North Water Street
Milwaukee, Wisconsin 53201
(Address, including ZIP Code, and telephone number, including area code,
of Registrant's principal executive offices)
_______________
M.A. HATFIELD, Secretary
Marshall & Ilsley Corporation,
770 North Water Street,
Milwaukee, Wisconsin 53202
(414) 765-7801
(Name, address, including ZIP Code, and telephone number, including
area code, of agent for service)
_______________
Copies to:
Randall J. Erickson Rymund P. Wurlitzer
Godfrey & Kahn, S.C. Sharon State Bank
780 North Water Street 114 Plain Street
Milwaukee, Wisconsin 53202 P.O. Box 504
(414) 273-3500 Sharon, Wisconsin 53585
(414) 736-4414
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of the Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
=============================================================================
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
=============================================================================
<PAGE>
MARSHALL & ILSLEY CORPORATION
Cross Reference Sheet
Registration Statement
- ----------------------
Item and Heading Location in Prospectus
---------------- ----------------------
1. Forepart of Registration Facing Page of Registration Statement;
Statement and Outside Front Cross-Reference Sheet; Outside Front
Cover Page of Prospectus Cover Page of Prospectus/Proxy Statement
2. Inside Front and Outside Back Inside Front Cover of Prospectus/Proxy
Cover Pages of Prospectus Statement; Available Information;
Incorporation of Certain Information by
Reference; Table of Contents
3. Risk Factors, Ratio of Summary
Earnings to Fixed Charges
and Other Information
4. Terms of the Transaction Incorporation of Certain Information by
Reference; Summary; The Consolidation;
Comparison of Shareholder Rights; Certain
Provisions of the Wisconsin Business
Corporation Law
5. Pro Forma Financial
Information Not Applicable
6. Material Contacts With the
Company Being Acquired Certain Related Transactions
7. Additional Information Required Not Applicable
for Reoffering by Persons and
Parties Deemed to be
Underwriters
8. Interests of Named Experts Not Applicable
and Counsel
9. Disclosure of Commission Not Applicable
Position on Indemnification
For Securities Act Liabilities
10. Information With Respect to Available Information; Incorporation of
S-3 Registrants Certain Information by Reference;
Summary; Certain Information Regarding
M&I
11. Incorporation of Certain Summary; Incorporation of Certain
Information by Reference Information by Reference
12. Information with Respect to Not Applicable
S-2 or S-3 Registrants
13. Incorporation of Certain Not Applicable
Information by Reference
14. Information with Respect to Not Applicable
Registrantsother than S-2
or S-3 Registrants
15. Information with Respect to Not Applicable
S-3 Companies
16. Information with Respect to Not Applicable
S-2 or S-3 Companies
17. Information with Respect Summary; Certain Information
to Companies other than S-3 Concerning Sharon Bank; Index
or S-2 Companies to Financial Statements
18. Information if Proxies, Incorporation of Certain Information by
Consents or Authorizations Reference; Summary; The Special Meeting;
to be Solicited The Consolidation - Dissenters' Rights
of Appraisal; The Consolidation -
Conditions to Consolidation; Certain
Information Concerning Sharon Bank -
Share Ownership; Certain Information
Concerning M&I; Certain Related
Transactions
19. Information if Proxies, Not Applicable
Consents or Authorizations
are not to be Solicited
or in an Exchange Offer
<PAGE>
Sharon State Bank
114 Plain Street
P.O. Box 504
Sharon, Wisconsin 53585
------------------------------
Notice of Special Meeting of Shareholders
To Be Held Tuesday, May 30, 1995
Notice is hereby given that a special meeting of shareholders of Sharon
State Bank ("Sharon Bank"), a Wisconsin state bank, will be held on
Tuesday, May 30, 1995 at 9:30 a.m. local time, at the main office of the
Citizens Bank of Delavan, 104 North Fifth Street, Delavan, Wisconsin 53115
(the "Special Meeting") for the following purposes:
1. To consider and act upon a proposal to approve the Agreement and
Plan of Reorganization dated as of August 31, 1994, as amended, between
Sharon Bank and Marshall & Ilsley Corporation ("M&I") and a related Agreement
and Plan of Consolidation (all of which are hereinafter collectively referred
to as the "Consolidation Agreement"), copies of which are attached as
Appendix A to the accompanying Prospectus/Proxy Statement, pursuant to which
Sharon Bank will be consolidated with and into a wholly-owned subsidiary of
M&I (the "Consolidation") and each outstanding share of Sharon Bank's common
stock, $100 par value, will be converted into the right to receive 220 shares
of M&I's common stock, $1.00 par value, and cash in lieu of fractional
shares;
2. To transact such other business as may properly come before the
Special Meeting or any adjournments thereof.
Shareholders are urged to read the accompanying Prospectus/Proxy
Statement completely and carefully. No person has been authorized to give
any information or make any representations not contained in the accompanying
Prospectus/Proxy Statement and if given or made, such information and
representations should not be relied upon.
The Board of Directors of Sharon Bank has fixed the close of business
on April 20, 1995, as the record date (the "Record Date") for
determining the shareholders of Sharon Bank entitled to notice of and to vote
at the Special Meeting, and only shareholders of record at such time will be
entitled to such notice and to vote.
THE BOARD OF DIRECTORS OF SHARON BANK BELIEVES THAT THE PROPOSED
CONSOLIDATION IS IN THE BEST INTERESTS OF SHARON BANK AND ITS SHAREHOLDERS
AND RECOMMENDS THAT SHAREHOLDERS OF SHARON BANK VOTE "FOR" THE CONSOLIDATION
AGREEMENT. ---
DISSENTERS' RIGHTS OF APPRAISAL ARE AVAILABLE TO SHARON BANK
SHAREHOLDERS WHO WISH TO DISSENT FROM THE CONSOLIDATION AND WHO PROPERLY
PERFECT SUCH RIGHTS.
By order of the Board of Directors
Rymund P. Wurlitzer, Chairman of Board
Sharon, Wisconsin
April 25, 1995
_________________________
Your vote is important. Please mark, sign and date the accompanying form of
proxy and return it promptly in the envelope enclosed for your use. The form
of proxy will not be used if you attend the meeting and wish to vote in
person.
The date of the accompanying Prospectus/Proxy Statement is April 25, 1995.
<PAGE>
SHARON STATE BANK
PROXY STATEMENT
--------------------
MARSHALL & ILSLEY CORPORATION
PROSPECTUS
220,000 SHARES
Common Stock ($1.00 par value)
This Prospectus/Proxy Statement is being furnished in connection with
the solicitation of proxies by the Board of Directors of the Sharon State
Bank, a Wisconsin state bank ("Sharon Bank"), from the holders of Sharon
Bank's common stock, $100 par value (the "Sharon Bank Stock"), for use at the
special meeting of Sharon Bank's shareholders to be held on Tuesday, May 30,
1995 at the time and place set forth in the notice accompanying this
Prospectus/Proxy Statement (the "Special Meeting"). This Prospectus/Proxy
Statement and the accompanying Proxy are being sent to Sharon Bank's
shareholders commencing on or about April 28, 1995.
This Prospectus/Proxy Statement constitutes a Prospectus of Marshall &
Ilsley Corporation, a Wisconsin corporation ("M&I"), covering shares of M&I
common stock, $1.00 par value ("M&I Stock"), which may be issued and
delivered pursuant to the Agreement and Plan of Reorganization dated as of
August 31, 1994, as amended, and a related Agreement and Plan of
Consolidation by and between Sharon Bank and Citizens Bank of Delavan
("Citizens Bank"), a Wisconsin state bank which, at the time the
Consolidation is completed, will be a wholly-owned subsidiary of M&I
(hereinafter collectively referred to as the "Consolidation Agreement"). The
Consolidation Agreement provides for the consolidation of Sharon Bank with
and into a wholly-owned subsidiary of M&I (the "Consolidation") in which each
share of Sharon Bank Stock will be converted into the right to receive 220
shares of M&I Stock.
At the Special Meeting, Sharon Bank's shareholders will be asked to
consider and act upon all of the transactions contemplated by the
Consolidation Agreement.
M&I Stock is quoted under the symbol "MRIS" on the National Association
of Securities Dealers Automated Quotations-National Market System
("NASDAQ/NMS"). On April 24, 1995, the closing sale price of M&I Stock
on the NASDAQ/NMS as reported in the Midwest edition of The Wall Street
Journal was $20.25 per share.
The principal executive offices of M&I are located at 770 North Water
Street, Milwaukee, Wisconsin 53202 and its general phone number is (414)
765-7801.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATE-
MENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
__________________
THE SHARES OF M&I STOCK OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
_______________
The date of this Prospectus/Proxy Statement is April 25, 1995.
<PAGE>
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . . . . . 1
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
M&I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Sharon Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Time, Place and Date of the Special Meeting . . . . . . . . . . . 3
Purpose of the Meeting. . . . . . . . . . . . . . . . . . . . . . 4
Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Recommendation of the Board . . . . . . . . . . . . . . . . . . . 4
The Consolidation and the Exchange Ratio. . . . . . . . . . . . . 4
Required Regulatory Approval. . . . . . . . . . . . . . . . . . . 4
Conditions to the Consolidation . . . . . . . . . . . . . . . . . 4
Termination of the Consolidation Agreement. . . . . . . . . . . . 5
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . 5
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . 5
Selected Per Share Data . . . . . . . . . . . . . . . . . . . . . 6
Comparative Stock Prices. . . . . . . . . . . . . . . . . . . . . 7
Selected Historical Financial Information . . . . . . . . . . . . 7
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . 10
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Proposals to be Considered. . . . . . . . . . . . . . . . . . . . 10
Record Date and Voting Rights . . . . . . . . . . . . . . . . . . 10
Voting; Revocation of Proxies . . . . . . . . . . . . . . . . . . 10
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . 10
THE CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Background of the Consolidation . . . . . . . . . . . . . . . . . 11
Reasons For Approval of the Consolidation . . . . . . . . . . . . 12
Consolidation Consideration . . . . . . . . . . . . . . . . . . . 12
Conversion of Shares; Exchange of Certificates;
No Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . 13
Representations and Warranties. . . . . . . . . . . . . . . . . . 14
Additional Covenants and Agreements . . . . . . . . . . . . . . . 15
No Solicitation of Transactions . . . . . . . . . . . . . . . . . 16
Conditions to the Consolidation . . . . . . . . . . . . . . . . . 16
Termination and Amendment . . . . . . . . . . . . . . . . . . . . 17
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . 18
Certain Federal Income Tax Consequences . . . . . . . . . . . . . 18
Resale of M&I Stock by Affiliates . . . . . . . . . . . . . . . . 18
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . 19
Regulatory Approvals Required . . . . . . . . . . . . . . . . . . 20
Management After the Consolidation. . . . . . . . . . . . . . . . 20
COMPARISON OF SHAREHOLDER RIGHTS. . . . . . . . . . . . . . . . . . . . 21
Required Vote for Authorization of Certain Transactions . . . . . 21
Amendment of By-laws. . . . . . . . . . . . . . . . . . . . . . . 21
Size, Classification of, and Vote Required
to Elect Board of Directors . . . . . . . . . . . . . . . . . . . 21
Removal of Directors for "Cause". . . . . . . . . . . . . . . . . 22
Newly Created Directorships and Vacancies
on the Board of Directors . . . . . . . . . . . . . . . . . . . . 22
Advance Notice of Proposals to be Brought at the Annual Meeting . 22
Advance Notice of Nominations of Directors. . . . . . . . . . . . 22
Certain Business Combinations . . . . . . . . . . . . . . . . . . 22
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . 23
CERTAIN PROVISIONS OF THE WISCONSIN BUSINESS CORPORATION LAW. . . . . . 23
CERTAIN INFORMATION CONCERNING SHARON BANK. . . . . . . . . . . . . . . 24
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Market Information and Dividends. . . . . . . . . . . . . . . . . 25
Share Ownership . . . . . . . . . . . . . . . . . . . . . . . . . 25
CERTAIN INFORMATION CONCERNING M&I. . . . . . . . . . . . . . . . . . . 26
CERTAIN RELATED TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . 26
RECENT LEGISLATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . 27
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 28
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
<PAGE>
Except as contained in this Prospectus/Proxy Statement, no person has
been authorized to give any information or make any representations with
respect to Sharon State Bank, M&I, Citizens Bank of Delavan, the
Consolidation, or the Consolidation Agreement; and, if given or made, such
other information or representations, should not be relied upon as having
been authorized by Sharon State Bank, M&I or Citizens Bank of Delavan. Under
no circumstances should the delivery of this Prospectus/Proxy Statement or
the issuance or delivery of any shares of M&I Stock pursuant to the
Consolidation Agreement create any implication that there has been no change
in the assets, properties, businesses or affairs of Sharon State Bank, M&I or
Citizens Bank of Delavan since the date of this Prospectus/Proxy Statement.
AVAILABLE INFORMATION
Marshall & Ilsley Corporation ("M&I") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and in accordance therewith files proxy statements, annual
reports and other information with the Securities and Exchange Commission
(the "Commission"). Such proxy statements, reports and other information
concerning M&I can be inspected at Room 1024 of the Commission's offices at
450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices
in New York, New York (7 World Trade Center, Suite 1300, New York, New York,
10048) and Chicago, Illinois (Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661). Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
M&I has filed a Registration Statement on Form S-4 (together with any
amendments thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with the Commission covering the
shares of M&I Common Stock to be issued in connection with the Consolidation.
As permitted by the rules and regulations of the Commission, this
Prospectus/Proxy Statement omits certain information, exhibits and
undertakings contained in the Registration Statement, including the exhibits
filed as a part thereof. Statements contained in this Prospectus/Proxy
Statement or in any documents incorporated by reference herein as to the
contents of any contract or other document are not necessarily complete and,
in each instance where such contract or document is an exhibit to the
Registration Statement or an incorporated document, reference is made to the
copy of such contract or document filed as an exhibit to the Registration
Statement or such incorporated document, each such statement being qualified
in all respects by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by M&I with the Commission pursuant to
the Exchange Act are hereby incorporated by reference in this
Prospectus/Proxy Statement:
(1) M&I's Annual Report on Form 10-K for the year ended December 31,
1994.
(2) The description of M&I's common stock which is contained in M&I's
registration statement filed pursuant to Section 12(g) of the
Exchange Act, and any amendment or report filed for the purpose
of updating such description.
<PAGE>
All documents filed by M&I pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus/Proxy
Statement and prior to the date of the Special Meeting shall be deemed to be
incorporated by reference into this Prospectus/Proxy Statement from the dates
of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated in this Prospectus/Proxy Statement
shall be deemed to be modified or superseded for purposes of this
Prospectus/Proxy Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus/Proxy
Statement.
THIS DOCUMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS, OTHER
THAN EXHIBITS THERETO, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING
ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS/PROXY STATEMENT IS DELIVERED
UPON WRITTEN OR ORAL REQUEST DIRECTED TO: MR. MICHAEL A. HATFIELD,
SECRETARY, MARSHALL & ILSLEY CORPORATION, 770 NORTH WATER STREET, MILWAUKEE,
WISCONSIN 53202 (TELEPHONE: (414) 765-7801).
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD
-----------------------------------------------------------------------
BE MADE BY MAY 19, 1995.
- ------------------------
All information contained in this Prospectus/Proxy Statement relating
to M&I has been supplied by M&I and all information relating to Sharon Bank
has been supplied by Sharon Bank.
<PAGE>
SUMMARY
The following summarizes certain information contained elsewhere herein
or incorporated by reference in this Prospectus/Proxy Statement. The summary
is necessarily incomplete and selective and is qualified in its entirety by
more detailed information contained herein or incorporated herein by
reference, which shareholders are urged to read carefully.
Introduction. . . . . . . . This Prospectus/Proxy Statement relates to the
proposed consolidation of Sharon Bank with and
into a wholly-owned subsidiary of M&I, pursuant
to the Agreement and Plan of Reorganization,
which is being submitted to a vote of Sharon
Bank shareholders. As a result of the
Consolidation, each share of Sharon Bank Stock
(other than Sharon Bank Stock as to which
Dissenters' Rights are exercised) will be
converted into the right to receive 220 shares
of M&I Stock.
M&I . . . . . . . . . . . . M&I is a multi-bank holding company registered
under the Bank Holding Company Act of 1956, as
amended (the "BHCA"). As of March 31, 1995,
M&I owned substantially all of the outstanding
capital stock of 35 banks and one savings
association with over 225 offices in Wisconsin
and 12 offices in Arizona. M&I and its
subsidiaries also engage in banking-related
businesses, including trust services,
investment management, commercial leasing,
mortgage banking, investment advice, brokerage
services, data processing and venture capital.
At December 31, 1994, M&I had consolidated
total assets of approximately $12.6 billion.
M&I's principal executive offices are located
at 770 North Water Street, Milwaukee, Wisconsin
53202, and its general telephone number is
(414) 765-7801. For additional information
concerning the business of M&I and its
financial condition, please refer to the M&I
documents incorporated herein by reference.
See "INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE."
Sharon Bank . . . . . . . . Sharon Bank provides retail and commercial
banking services for customers in Walworth
County, which is located in southeastern
Wisconsin. At December 31, 1994, Sharon Bank
had total assets of approximately $19.8
million, loans outstanding of approximately
$11.6 million, total deposits of approximately
$14.6 million, and shareholders' equity
totalling approximately $3.9 million. Sharon
Bank is located at 114 Plain Street, P.O. Box
504, Sharon, Wisconsin 53585, and its general
telephone number is (414) 736-4414. See
"CERTAIN INFORMATION CONCERNING SHARON BANK."
Time, Place and Date
of the Special Meeting . . A special meeting of the stockholders of Sharon
Bank will be held at 9:30 a.m. (local time)
on Tuesday, May 30, 1995 at the main office of
the Citizens Bank of Delavan, 104 North Fifth
Street, Delavan, Wisconsin 53115. See "THE
SPECIAL MEETING - General."
<PAGE>
Purpose of the Meeting. . . To consider and vote upon the Consolidation
Agreement.
Required Vote . . . . . . . The affirmative vote of the holders of two-
thirds (2/3) of the issued and outstanding
shares of Sharon Bank Stock is required under
the Wisconsin banking statutes to approve and
adopt the Consolidation Agreement. On January
31, 1995, there were 1,000 shares of Sharon
Bank Stock outstanding, 450 shares of which
were held by Sharon Bank's directors, executive
officers and their affiliates. See "THE
SPECIAL MEETING - Record Dates and Voting
Rights."
Recommendation of the Board. The Board of Directors of Sharon Bank has
determined that the transactions contemplated by
the Consolidation Agreement are in the best
interests of its shareholders and has
recommended that the shareholders approve and
adopt the Consolidation Agreement. The members
of the Board of Directors of Sharon Bank have
indicated that they intend to vote all of their
shares, which represent 45% of the outstanding
shares of Sharon Bank Stock in favor of the
Consolidation Agreement. See "THE CONSOLIDATION
-Reasons for Approval of the Consolidation."
The Consolidation and the
Exchange Ratio . . . . . . If the Consolidation is implemented, Sharon
Bank will be consolidated with and into a
wholly-owned subsidiary of M&I. At the
effective time of the Consolidation (the
"Effective Time," or if reference is made to
the date on which the Consolidation is
effected, the "Effective Date"), each share of
Sharon Bank Stock outstanding immediately prior
to the Effective Time (exclusive of shares held
by Sharon Bank's shareholders who have properly
exercised dissenters' rights under the
Wisconsin banking statutes) will be converted
into the right to receive 220 shares of M&I
Stock and cash in lieu of fractional shares.
See "THE CONSOLIDATION - General."
Required Regulatory Approval. Before the Consolidation may be consummated, the
transactions must be approved by the Wisconsin
Commissioner of Banking (the "WCB"), the Board
of Governors of the Federal Reserve System (the
"Federal Reserve Board"), and the Federal
Deposit Insurance Corporation ("FDIC"). See
"THE CONSOLIDATION - Regulatory Approvals
Required."
Conditions to the
Consolidation. . . . . . . Consummation of the Consolidation is subject to
approval of the Consolidation Agreement by
Sharon Bank's shareholders and a number of other
conditions including, without limitation: (i)
approval by the WCB, the Federal Reserve Board
and the FDIC, (ii) the absence of any material
adverse changes in the financial condition of
Sharon Bank, and (iii) the absence of certain
litigation. See "THE CONSOLIDATION - Conditions
to the Consolidation."
<PAGE>
Termination of the Consolidation
Agreement. . . . . . . . . The Consolidation Agreement may be terminated
by the mutual consent of the Boards of
Directors of M&I and Sharon Bank, by either
Sharon Bank or M&I if the Consolidation is not
consummated on or before July 1, 1995, by
either Sharon Bank or M&I if any conditions
precedent to their respective obligations under
the Consolidation Agreement have not been met
or satisfied, and by Sharon Bank if there has
been a material adverse change in the
consolidated financial condition of M&I from
that set forth in M&I's balance sheet included
in its Form 10-K for the year ended December
31, 1993. See "THE CONSOLIDATION - Termination
and Amendment."
Federal Income Tax
Consequences . . . . . . . The Consolidation is intended to qualify as a
tax-free reorganization pursuant to Section
368(a)(2)(D) of the Internal Revenue Code of
1986, as amended (the "Code"). If the
Consolidation does, in fact, so qualify,
shareholders of Sharon Bank who receive M&I
Stock will recognize no gain or loss on the
exchange of their Sharon Bank Stock for M&I
Stock except as to cash received, if any, in
lieu of fractional shares. See "THE
CONSOLIDATION - Certain Federal Income Tax
Consequences."
Dissenters' Rights
of Appraisal . . . . . . . Holders of Sharon Bank Stock who comply with the
procedural requirements of the Wisconsin Banking
Code (the "Banking Code") will have appraisal
rights in connection with the Consolidation
("Dissenters' Rights"). Pursuant to Section
221.25 of the Banking Code, holders of shares of
stock entitled to notice of a shareholders
meeting at which shareholders are to vote on a
consolidation are provided, subject to certain
procedural requirements, with statutory rights
of appraisal pursuant to which such shareholders
may be entitled to receive cash in the amount of
the "value" of their shares (as determined
pursuant to Section 221.25 of the Banking Code)
instead of the shares or cash in lieu of
fractional shares offered pursuant to the
Consolidation. See "THE CONSOLIDATION -
Dissenters' Rights of Appraisal;" and Appendix
B hereto.
<PAGE>
Selected Per Share Data . . The following table presents selected unaudited
historical per share data for M&I and Sharon
Bank, selected pro forma per share data for
M&I, and selected pro forma equivalent per
share data for Sharon Bank. The terms of the
Consolidation Agreement provide for holders of
Sharon Bank Stock to receive 220 shares of M&I
Stock for each share of Sharon Bank Stock. The
selected pro forma per share data assumes
220,000 shares of M&I Stock were exchanged for
1,000 shares of Sharon Bank Stock in a
transaction accounted for as a purchase.
Sharon Bank
Historical M&I Pro Forma
M&I Sharon Bank Pro Forma
Equivalent(3)
--- ----------- --------- -------------
Operating Income (1) (2)
Year ended December 31, 1994 $ .93 $ 388 $ .93 $ 204.60
Cash Dividends
Year ended December 31, 1994 $ .59 $ 125 $ .59 $ 129.80
Book Value
As of December 31, 1994 $11.01 $3,879 $11.03 $2,426.60
____________________
(1) Operating income represents income before extraordinary items.
(2) The pro forma earnings per share computations are based on pro forma
average shares outstanding for the periods presented.
(3) The Sharon Bank pro forma equivalent represents the M&I pro forma
amount multiplied by the Exchange Ratio of 220.
<PAGE>
Comparative Stock Prices. . The following table represents market price per
share data for M&I Stock on September 7, 1994,
the last trading day preceding the public
announcement of the proposed Consolidation and
on April 24, 1995. There is no established
trading market for Sharon Bank Stock. The
price shown below for Sharon Bank Stock is the
last known traded price per share of Sharon
Bank Stock, which was traded on October 29,
1993.
Historical
---------------------
Sharon Sharon Bank
M&I Bank Equivalent Market
Stock (1) Stock (2) Value Per share (3)
--------- --------- -------------------
Market value per share
September 7, 1994 $20.50 $3,500 $4,510
April 24, 1995 $20.25 $3,500 $4,455
(1) The market value of the M&I Stock is the closing sale price per share
quoted on the NASDAQ/NMS on the dates indicated as reported in the
Midwest Edition of The Wall Street Journal.
-----------------------
(2) This figure represents the last known traded price per share of Sharon
Bank Stock which was traded on October 29, 1993. See "CERTAIN
INFORMATION CONCERNING SHARON BANK - Market Information and Dividends."
(3) The equivalent market value per share amount represents the closing
sale price of a share of M&I Stock on the date presented multiplied by
the Exchange Ratio of 220.
Selected Historical
Financial Information. . . The following tables set forth certain
historical consolidated financial information
for M&I and Sharon Bank, respectively. This
information is based on the consolidated
financial statements of M&I and Sharon Bank,
respectively, including the respective notes
thereto, which are either incorporated by
reference in this Prospectus/Proxy Statement or
included elsewhere herein and should be read in
conjunction therewith.
<PAGE>
MARSHALL & ILSLEY CORPORATION
Selected Historical Financial Information
(In Thousands, Except Per Share Data)
For The Years Ended December 31,
-----------------------------------------------------
1994 1993 1992 1991 1990
Summarized
Consolidated
Income Statement
Data(1):
Net interest
income $491,227 $480,279 $472,551 $429,498 $402,461
Provision for
loan
losses 24,907 18,034 23,546 28,924 47,639
Other income 361,481 371,926 328,411 276,748 228,601
Other expense 584,770 569,587 545,624 490,584 440,231
Merger/
restructuring 75,228 --- --- --- ---
Operating
income (3) 94,398 171,394 156,401 130,013 100,362
Per Share
Data (1) (2):
Primary
operating
income (3) $ .95 $ 1.67 $ 1.55 $ 1.33 $ 1.03
Fully diluted
operating
income (3) .93 1.60 1.48 1.27 1.00
Dividends paid .59 0.54 0.48 0.43 0.39
Selected Average
Balance Sheet
Data (1):
Total
Assets $12,432,461 $12,039,468 $11,525,409 $11,015,325 $10,426,274
Long-term
borrowings 447,254 272,041 284,333 290,724 236,745
________________
(1) Financial information for periods ended prior to May 31, 1994 has been
restated to give effect to the merger of Valley Bancorporation with and
into M&I on a pooling of interests basis.
(2) M&I's per share data has been retroactively restated for a 3 for 1 stock
split in the form of a 200% stock dividend distributed to shareholders
in May, 1993.
(3) Operating income and related earnings per share are before extraordinary
items for the year ended December 31, 1994 and before cumulative effects
of changes in accounting principles for the year ended December 31,
1992.
<PAGE>
SHARON STATE BANK
Selected Historical Financial Information
(In Thousands, Except Per Share Data)
For The Years Ended December 31,
-----------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- ------
Summarized Income
Statement Data:
Net interest income . . . . $ 944 $ 920 $ 688 $ 697 $ 622
Operating income. . . . . . 388 463 299 331 242
Per Share Data:
Operating income. . . . . . $ 388 $ 463 $ 299 $ 331 $ 242
Dividends paid. . . . . . . 125 116 114 78 111
Selected Balance
Sheet Data (1):
Total Assets. . . . . . . . $19,814 $18,909 $16,931 $14,455 $13,617
Long-term borrowings. . . . 0 0 0 0 0
________________
(1) Amounts represent period end balances.
<PAGE>
THE SPECIAL MEETING
General
This Prospectus/Proxy Statement is being furnished to shareholders of
Sharon Bank in connection with the solicitation of proxies by the Board of
Directors of Sharon Bank for use at its Special Meeting, including any
adjournments or postponements thereof. Sharon Bank's Special Meeting will be
held on Tuesday, May 30, 1995 at 9:30 a.m., local time, at the main
office of the Citizens Bank of Delavan, 104 North Fifth Street, Delavan,
Wisconsin 53115.
Proposals to be Considered
Sharon Bank's Special Meeting will be held to consider and vote upon a
proposal to approve the Consolidation and to transact such other business as
may properly come before Sharon Bank's Special Meeting.
Record Date and Voting Rights
Holders of Sharon Bank Stock at the close of business on the Record
Date (April 20, 1995) will be entitled to notice of and to vote at the
Special Meeting. Each share of Sharon Bank Stock is entitled to one vote on
each proposal presented. As of the Record Date, 1,000 shares of Sharon Bank
Stock were outstanding, of which 450 shares or 45% were held by Sharon Bank
directors, executive officers and their affiliates. Directors and executive
officers of Sharon Bank have indicated that they intend to vote their shares
to approve the Consolidation.
Shares of Sharon Bank Stock representing, as of the Record Date, a
majority of the outstanding shares of Sharon Bank Stock must be represented
in person or by proxy at the Special Meeting for a quorum to be present. The
affirmative vote of the holders of two-thirds (2/3) of the issued and
outstanding shares of Sharon Bank Stock as of the Record Date is required to
approve the Consolidation. Abstentions and broker non-votes will be treated
as present for purposes of determining the presence of a quorum, but have the
same effect as a vote against the proposal to approve the Consolidation.
Voting; Revocation of Proxies
Shares of Sharon Bank Stock represented by a proxy properly signed and
received at or prior to the Special Meeting, unless subsequently revoked,
will be voted in accordance with the instructions thereon. Any proxy may be
revoked by the person giving it at any time prior to the voting of the proxy
by giving written notice to the cashier of Sharon Bank, by giving oral notice
to the presiding officer during the Special Meeting that the shareholder
intends to vote in person, or by submitting a subsequently dated proxy.
Attendance by a shareholder at the Special Meeting will not, in and of
itself, constitute revocation of a proxy. If a proxy is signed and returned
without indicating any voting instructions, such proxy will be voted FOR the
proposal to approve the Consolidation.
Sharon Bank's Board of Directors is not aware of any business to be
acted upon at the Special Meeting other than as described herein. If,
however, other matters are properly brought before the Special Meeting, the
persons appointed as proxies will have discretion to vote thereon in
accordance with their best judgment.
Solicitation of Proxies
The enclosed proxy is being solicited by the Board of Directors of
Sharon Bank for use in connection with the Special Meeting. Sharon Bank will
bear its own expenses in connection with the Special Meeting. In addition to
solicitation of proxies by mail, directors, officers and employees of Sharon
Bank may make solicitation of proxies for the Special Meeting either
personally or by telephone, telegram or other forms of communication. Such
directors, officers and employees will receive no special compensation for
any solicitation. Brokerage houses, nominees, fiduciaries and other
custodians will be requested to forward soliciting materials to beneficial
owners and will be reimbursed for their customary charges and expenses.
SHARON BANK SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR
PROXY. ---
<PAGE>
THE CONSOLIDATION
The following information with respect to the Agreement and Plan of
Reorganization, as amended, and the related Agreement and Plan of
Consolidation (collectively referred to as the "Consolidation Agreement"),
does not purport to be complete and is qualified in its entirety by reference
to the Consolidation Agreement, which is attached hereto as Appendix A and
incorporated herein by reference. All shareholders of Sharon Bank are urged
to read the Consolidation Agreement in its entirety. The Consolidation
Agreement is being presented to Sharon Bank's shareholders as a single,
unified proposal, encompassing all of the elements relating to the
acquisition of Sharon Bank by M&I as hereinafter described. APPROVAL OF THE
CONSOLIDATION AGREEMENT WILL CONSTITUTE APPROVAL OF EACH OF SUCH ELEMENTS,
INCLUDING THE CONSOLIDATION.
General
Consummation of the Consolidation is conditioned upon, among other
things, consummation of a related merger between M&I Interim Corp., a wholly-
owned subsidiary of M&I, and Citizens Bancorp of Delavan, Inc. ("Citizens
Bancorp"), pursuant to which Citizens Bancorp will be merged with and into
M&I Interim Corp. (the "Merger"). See "- Conditions to the Consolidation."
As a result of the Merger, Citizens Bank of Delavan ("Citizens Bank"), which,
prior to the Merger was a wholly-owned subsidiary of Citizens Bancorp, will
become a wholly-owned subsidiary of M&I. Once the Merger is effected, the
Consolidation of Sharon Bank with and into Citizens Bank can proceed as
provided in the Consolidation Agreement.
The Consolidation Agreement provides that, subject to the requisite
approval of the shareholders of Sharon Bank, the Federal Reserve Board and
any other necessary government authorities or third parties and to the
satisfaction or waiver of certain other conditions, Sharon Bank will be
consolidated with and into Citizens Bank. As a result, Citizens Bank will be
the surviving bank (the "Surviving Bank"), and Sharon Bank will cease to
exist (the "Consolidation").
At the Effective Time of the Consolidation (as defined below), in
accordance with the terms of the Consolidation Agreement, each outstanding
share of Sharon Bank Stock (other than "Dissenting Shares," defined below)
will be converted into the right to receive 220 shares of M&I Stock and cash
in lieu of fractional shares. Shares of M&I Stock and shares of the common
stock of Citizens Bank outstanding at the Effective Time will not be changed,
cancelled, modified or converted as a result of the Consolidation. Thus, as
a result of the Consolidation, Citizens Bank will succeed to the assets and
liabilities of Sharon Bank and Citizens Bank will remain a wholly-owned
subsidiary of M&I.
Effective Time
The Consolidation will become effective at the time and date the Merger
Certificate, issued by the Wisconsin Commissioner of Banking (the "WCB")
pursuant to Section 221.25 of the Banking Code, is recorded by the Register
of Deeds of Walworth County, Wisconsin, which will occur as promptly as
practicable after the satisfaction of or, if permissible, waiver of all
conditions to the Consolidation Agreement (the "Effective Time" and
"Effective Date," respectively). See "- Regulatory Approvals Required." The
Consolidation Agreement may be terminated by either party if, among other
reasons, the Consolidation has not been consummated on or before July 1,
1995. See "- Termination and Amendment."
<PAGE>
Background of the Consolidation
For many years, Sharon Bank and Citizens Bancorp, the holding company
for the Citizens Bank, have been managed by Mr. Rymund Wurlitzer and members
of his family. Mr. Wurlitzer and his family are substantial stockholders of
both Sharon Bank and Citizens Bancorp. See "CERTAIN INFORMATION CONCERNING
SHARON BANK - Share Ownership." Sharon Bank and Citizens Bancorp also have
many of the same directors and shareholders. They are not, however, under
the common control of a single corporation.
In April 1994, Mr. Wurlitzer, in consultation with the Sharon Bank
Board of Directors, determined that an orderly management succession for
Sharon Bank and Citizens Bancorp would best be served by joining both
institutions with a larger bank holding company. In furtherance of this
determination, Mr. Wurlitzer contacted Mr. J. B. Wigdale, Chairman of the
Board and Chief Executive Officer of M&I, in May 1994 concerning a possible
business combination between Sharon Bank, Citizens Bancorp and M&I. Mr.
Wurlitzer and officers and representatives of M&I negotiated a possible
business combination between the organizations during the summer of 1994,
which negotiations culminated in the Consolidation Agreement. On August 29,
1994, the Board of Directors of Sharon Bank approved the Consolidation
Agreement.
Reasons For Approval of the Consolidation
The Board of Directors of Sharon Bank has approved the Consolidation
Agreement and believes that the proposed Consolidation is in the best
interests of Sharon Bank's shareholders. Accordingly, the Board of Directors
recommends that the shareholders of Sharon Bank vote in favor of adoption of
the Consolidation Agreement for the following reasons:
1. The Consolidation will provide Sharon Bank with management
resources for current and future operations.
2. The Consolidation will afford Sharon Bank the advantages of
joining a multi-bank holding company while preserving its identity. Because
of M&I's size and financial strength, M&I has a greater range of financing
alternatives available to raise any additional capital necessary to meet the
financial requirements of Sharon Bank.
3. The Consolidation will permit Sharon Bank, through its
affiliation with M&I, to improve and expand its services and to realize
economies through centralized operations by more effectively utilizing its
present personnel and by permitting the employment of additional skilled
personnel on an economical basis. The affiliation with other banks owned by
M&I will permit group participation and credit extensions which will enable
Sharon Bank to effectively handle the credit needs of businesses which might
otherwise do their banking outside the service area of Sharon Bank.
4. The outstanding shares of M&I Stock are, and the shares of
such stock to be received in exchange for Sharon Bank Stock will be, actively
traded in the over-the-counter market, and hence enjoy greater liquidity than
shares of Sharon Bank Stock, which are not regularly traded in any organized
market. The active trading of M&I Stock also provides a means of valuing
shares received in the exchange which is not now available to the owners of
Sharon Bank Stock.
Consolidation Consideration
At the Effective Time, without any action on the part of any holder of
shares of Sharon Bank Stock, each share of Sharon Bank Stock issued and
outstanding immediately prior to the Effective Time will, pursuant to the
Consolidation Agreement, be converted into the right to receive 220 shares
(the "Exchange Ratio") of M&I Stock. The Exchange Ratio is subject to
adjustment in the event of an M&I stock split, stock dividend or other
similar transaction between the date of the Consolidation Agreement and the
Effective Time. Not included in this conversion is Sharon Bank Stock owned
by shareholders who have perfected dissenters' rights (the "Dissenting
<PAGE>
Shares" and "Dissenting Shareholders"), whose shares shall be cancelled upon
cash payment to each such shareholder in accordance with the provisions of
Section 221.25 of the Wisconsin Statutes. For a description of the M&I Stock
to be received in connection with the Consolidation, see "INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE" and for a description of certain
differences in the rights of shareholders of M&I and Sharon Bank, see
"COMPARISON OF SHAREHOLDER RIGHTS." No fractional shares of M&I Stock will
be issued in the Consolidation. Instead, each shareholder who would
otherwise be entitled to receive a fractional share of M&I Stock will be paid
cash equal to such fraction multiplied by the closing sales price of M&I
Stock as reported in the Midwest Edition of the Wall Street Journal on the
Effective Date. See "- Conversion of Shares; Exchange of Certificates; No
Fractional Shares."
Shares of common stock of Citizens Bank issued and outstanding as of
the Effective Time will remain outstanding, be owned by M&I, and not changed
or converted by the Consolidation.
Conversion of Shares; Exchange of Certificates; No Fractional Shares
At the Effective Time, by virtue of the Consolidation and without any
action on the part of M&I, Sharon Bank, or the holders of Sharon Bank Stock,
each share of Sharon Bank Stock issued and outstanding immediately prior to
the Effective Time will be converted into the right to receive 220 shares of
M&I Stock (excluding Sharon Bank Stock owned by Dissenting Shareholders).
All such shares of Sharon Bank Stock will no longer be outstanding and will
automatically be cancelled and retired and will cease to exist, and each
certificate previously representing any such shares of Sharon Bank Stock will
thereafter represent the right to receive a certificate representing shares
of M&I Stock into which such Sharon Bank Stock is convertible. Certificates
previously representing shares of Sharon Bank Stock will be exchanged for
certificates representing whole shares of M&I Stock upon the surrender of
such certificates as provided below, without interest. No fractional share
of M&I Stock will be issued, and, in lieu thereof, a cash payment will be
made as provided below.
As soon as practicable after the Effective Time, M&I will deposit, or
cause to be deposited, with a bank or trust company designated by M&I (the
"Exchange Agent") certificates representing the shares of M&I Stock issuable
pursuant to the terms of the Consolidation Agreement to former holders of
Sharon Bank Stock at the Effective Time. M&I will also deposit with the
Exchange Agent cash to be used for payment to holders of fractional shares.
As soon as reasonably practicable after the Effective Time, the Exchange
Agent will mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented outstanding shares
of Sharon Bank Stock (the "Certificates"), whose shares of Sharon Bank Stock
were converted into the right to receive shares of M&I Stock, (i) a notice in
transmittal form and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of M&I
Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent together with a properly executed letter of transmittal, the holder of
such Certificate will receive a certificate representing that number of whole
shares of M&I Stock which such holder has the right to receive in respect of
the Certificate surrendered (after taking into account all shares then held
by such holder) and cash in lieu of any fractional shares, and the
Certificate so surrendered will be cancelled. In the event of a transfer of
ownership of shares of Sharon Bank Stock which is not registered in the
transfer records of Sharon Bank, a certificate representing the proper number
of shares of M&I Stock may be issued to a transferee if the Certificate
representing such shares of Sharon Bank Stock is presented to the Surviving
Bank. A certificate evidencing shares of M&I Stock in a name other than that
in which the Certificate surrendered and exchanged is registered may be
issued if the Certificate so surrendered is properly endorsed, with
signatures guaranteed by a commercial bank or a firm having membership on a
national securities exchange, or otherwise in proper form for transfer, and
the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of its certificate
for shares of M&I Stock to any person other than the registered holder of the
Certificate surrendered. Until surrendered, each Certificate will, after the
Effective Time, represent only the right to receive upon such surrender a
certificate representing shares of M&I Stock and cash in lieu of any
fractional share of M&I Stock as described below.
<PAGE>
SHARON BANK SHAREHOLDERS SHOULD NOT FORWARD THEIR STOCK CERTIFICATES TO
THE EXCHANGE AGENT UNTIL THEY RECEIVE A TRANSMITTAL FORM AND INSTRUCTIONS.
No dividends or other distributions declared, made or with a record
date after the Effective Time with respect to M&I Stock will be paid to the
holder of any unsurrendered Certificate with respect to the shares of M&I
Stock represented thereby, and no cash payment in lieu of fractional shares
will be paid to any such holder, until the holder of such Certificate
surrenders such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there will be paid to the holder
of the certificates representing whole shares of M&I Stock issued in exchange
therefor, without interest, (i) promptly, the amount of any cash payable with
respect to a fractional share of M&I Stock to which such holder is entitled
and the amount of dividends or other distributions with a record date after
the Effective Time previously paid with respect to such whole shares of M&I
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect
to such whole shares of M&I Stock.
No certificates or scrip representing fractional shares of M&I Stock
will be issued upon the surrender for exchange of Certificates, no dividend
or distribution with respect to M&I Stock will be payable on or with respect
to any fractional share and such fractional share's interest will not entitle
the owner thereof to vote or to claim any rights of a shareholder of M&I.
Each holder of a fractional share interest will be paid an amount in cash
equal to the product obtained by multiplying such fractional share interest
to which such holder (after taking into account all fractional share
interests then held by such holder) would otherwise be entitled by the
closing price for a share of M&I Stock as reported in the Midwest Edition of
the Wall Street Journal on the Effective Date.
-------------------
Neither the Exchange Agent nor any person, firm or entity shall be
liable to any former holder of shares of Sharon Bank Stock with respect to
any M&I Stock, or dividends thereon, or with respect to any cash to which any
shareholder would be entitled as a consequence of the Consolidation, if such
M&I Stock, dividends or cash have been paid, or are payable, to any public
official pursuant to any abandoned property, escheat or similar laws.
At the Effective Time, the stock transfer books of Sharon Bank shall be
closed and there shall be no further registration of transfers of shares of
Sharon Bank Stock thereafter on the records of Sharon Bank. From and after
the Effective Time, the holders of certificates evidencing ownership of
shares of Sharon Bank Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares except as
otherwise provided in the Consolidation Agreement or by law. On or after the
Effective Time, any Certificates presented to the Exchange Agent or M&I for
any reason shall be converted into shares of M&I Stock in accordance with the
terms of the Consolidation Agreement as described above.
Representations and Warranties
The Consolidation Agreement contains certain customary representations
and warranties of each of M&I (and in certain cases also relating to M&I's
subsidiaries) and Sharon Bank relating to, among other things, (a)
organization; (b) capital structures; (c) authorization, execution, delivery,
performance and enforceability of the Consolidation Agreement and other
related matters; (d) the absence of material pending or threatened litigation
or governmental investigations or agreements except as otherwise disclosed in
the Consolidation Agreement; and (e) full disclosure with regard to all
written information furnished pursuant to the Consolidation Agreement.
With respect to Sharon Bank only, representations and warranties are
contained in the Consolidation Agreement relating to (a) delivery to M&I of
correct and complete copies of Sharon Bank's financial statements; (b)
reserves for possible loan and lease losses; (c) the absence of certain
material changes or events since January 1, 1994, including changes or events
relating to the incurrence of a material adverse effect in the business,
properties or financial condition of Sharon Bank, except as otherwise
disclosed in the Consolidation Agreement; (d) good title to all assets and
properties, free of liens, except as specified;(e) compliance with laws;
<PAGE>
(f) certain tax matters; (g) certain matters relating to employment contracts
and benefits; (h) material contracts; (i) retirement and other employee plans
and matters relating to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"); (j) certain matters relating to the conduct of Sharon
Bank since December 31, 1993; (k) Sharon Bank's approval of the Consolidation
Agreement and its recommendation to Sharon Bank shareholders to authorize and
approve the Consolidation Agreement; (l) certain insurance matters; (m) the
absence of any adverse contracts, agreements or restrictions; (n) Sharon
Bank's loan schedule; and (o) the absence of certain environmental matters,
except as disclosed in the Consolidation Agreement.
With respect to M&I only, representation and warranties are contained
in the Consolidation Agreement which relate to documents filed with the
Securities and Exchange Commission (the "Commission") and the accuracy of the
information contained therein.
Additional Covenants and Agreements
Pursuant to the Consolidation Agreement, Sharon Bank has agreed that
prior to the Effective Time, it will (a) carry on its business diligently and
consistent with past practice; (b) maintain and keep its properties in as
good repair and condition as at present, except for depreciation due to
ordinary wear and tear and damage due to casualty; (c) maintain insurance
comparable in amount and in scope of coverage to that now maintained by it;
(d) perform all of its obligations under contracts, leases and documents
relating to or affecting its assets, properties and business; (e) maintain
and preserve its business organization intact, retain its present employees
and maintain its relationships with customers; and (f) comply with and
perform all obligations and duties imposed upon it by federal and state laws
and all rules, regulations and orders imposed by federal or state
governmental authorities.
Sharon Bank has also agreed that prior to the Effective Time (unless
the prior written consent of M&I shall have been obtained), it will not: (a)
(i) incur or assume any material obligation or liability, including without
limitation any obligation for borrowed money whether or not evidenced by a
note, bond, debenture or similar instrument, (ii) assume, guaranty, endorse
or otherwise become liable or responsible (whether directly, contingent or
otherwise) for the obligations of any other person; or (iii) mortgage,
license, pledge or grant a security interest in any of its material assets or
allow to exist any material lien thereon; except (A) for liabilities and
obligations (including corporate debt issuances) incurred in the ordinary
course of business consistent with past practice and in amounts not material
to Sharon Bank; or undertaken in connection with the capital expenditures
otherwise permitted under this section; and (B) as may be required under
existing agreements to which Sharon Bank is a party; (b) change its lending,
investment, liability management and other material banking policies in any
material respect; organize any subsidiaries or enter into any new non-banking
line of business whether or not permissible under applicable federal or state
law, make any material changes in its operations or make any material
investment in any other person, firm or entity; (c) propose, adopt or permit
any amendment to its Articles of Incorporation or By-Laws or the terms of any
securities issued by it; (d) in an aggregate amount exceeding $100,000
authorize, incur or commit to any capital expenditures other than capital
expenditures consistent with the budget heretofore furnished to and approved
by M&I; (e) (i) split, combine or reclassify any Sharon Bank Stock or redeem,
purchase or otherwise acquire any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of
its capital stock, or any options, warrants, conversion or rights to acquire
any shares of its capital stock or any securities or obligations; (ii) merge
with or into any other corporation or bank, permit any other corporation or
bank to merge into it or consolidate with any other corporation or bank, or
effect any reorganization or recapitalization; (iii) purchase or otherwise
acquire any substantial portion of the assets, or more than 5% of any class
of capital stock, of any corporation, bank or other business; and (iv)
liquidate, sell, dispose of, or encumber any assets other than in the
ordinary course of business consistent with past practice which assets are
not material to Sharon Bank; (f) revalue in any material respect any of its
assets, including without limitation the writing down or writing off the
value of any asset; or change its methods of accounting, except as required
by changes in generally accepted accounting principles as concurred in by
Arthur Andersen LLP, or change any of its methods of reporting income and
deductions for Federal income tax purposes, except as required by changes in
applicable law; (g) make any tax election or settle or compromise any income
tax liability material to Sharon Bank;
<PAGE>
(h) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or contemplated by,
the financial statements (or the notes thereto) of Sharon Bank or incurred in
the ordinary course of business consistent with past practice; (i) (i) issue,
grant, sell or pledge any shares of its capital stock or any securities
convertible into capital stock, or permit any shares of its capital stock
held in its treasury to become outstanding, except upon exercise of rights or
options outstanding under employee benefit plans, programs or arrangements in
existence on the date hereof; (ii) confer, issue, sell, grant or award any
options, warrants, conversion or other rights not outstanding on the date
hereof to acquire any shares of its capital stock not outstanding on the date
hereof, including without limitation, the issue, sale, or grant of any option
or stock appreciation right; or (iii) amend any of the terms of any such
outstanding securities, options, warrants, rights or agreements; (j) take or
suffer to exist any of the actions described in Section 3.13 of the
Consolidation Agreement (relating to the conduct of Sharon Bank since
December 31, 1993); (k) (i) enter into or adopt any new employee benefit plan
or agreement, or (except as required under existing plans or agreements)
increase in any manner the compensation or benefits of any of its officers,
directors or other employees; (ii) pay or agree to pay any pension,
retirement or severance allowance or other employee benefit not required or
permitted by any existing plan, agreement or arrangement to any director,
officer or key employee; (iii) adopt or commit itself to any additional
pension, profit sharing, bonus, incentive, deferred compensation, insurance,
or other employee benefit plan, agreement or arrangement or to any employment
or consulting agreement with or for the benefit of any director, officer or
employee; (iv) amend any such plan, agreement or arrangement; or (v) enter
into any contract, agreement or commitment to do any of the foregoing; or (l)
declare or pay any dividends on its outstanding shares of capital stock,
except for regular dividends paid in the ordinary course of business and
consistent with past practices of Sharon Bank.
In addition to the foregoing, Sharon Bank has covenanted to (a) provide
M&I with certain financial statements as well as information required for
inclusion in the Registration Statement, (b) promptly (i) take all necessary
steps to hold a meeting of its shareholders for the purpose of voting on the
Consolidation Agreement; (ii) include in the Prospectus/Proxy the
recommendation of Sharon Bank's Board of Directors that Sharon Bank's
shareholders vote in favor of the Consolidation Agreement; and (iii) use its
best efforts to furnish the information required to be included by it in the
Prospectus/Proxy, cause such to be mailed to its shareholders in a timely
manner and obtain the necessary approvals by the requisite percentage of its
shareholders of the Consolidation Agreement; (c) afford to the officers,
attorneys, accountants and other authorized representatives of M&I full and
free access to the properties, books, contracts, commitments and records of
Sharon Bank; (d) consult with and provide notice to the officers of M&I with
respect to certain actions and proceedings; and (e) identify all known
"affiliates" and require each to execute an agreement (the "Affiliate
Agreement") restricting the transfer of the M&I stock received by each in the
Consolidation.
M&I has also agreed to perform certain tasks in connection with the
Consolidation Agreement. Specifically, M&I will (a) file the Registration
Statement with the Commission as soon as practicable after receiving from
Sharon Bank all the necessary information regarding Sharon Bank, and comply
with all appropriate state securities laws in connection with the
Consolidation Agreement; and (b) file with the Federal Reserve Board, the
Wisconsin Office of the Commissioner of Banking, the FDIC and other
appropriate state and federal banking regulatory agencies an application to
complete the Consolidation.
Furthermore, both M&I and Sharon Bank agree to (a) use their reasonable
best efforts to consummate the transactions contemplated by the Consolidation
Agreement and (b) certain restrictions relating to the issuance of public
statements regarding the transactions contemplated by the Consolidation
Agreement.
No Solicitation of Transactions
The Consolidation Agreement provides that neither Sharon Bank nor any
of its officers, directors, employees, agents or representatives will,
directly or indirectly, without the prior written consent of M&I, initiate
contact with, solicit or encourage any inquiries or proposals by or except
as, in the written opinion of Sharon Bank's counsel, may be required by the
fiduciary duties of the Board of Directors of Sharon Bank, enter into any
<PAGE>
discussions or agreements with, or disclose directly or indirectly any
information not customarily disclosed concerning its business and properties,
or afford any access to its properties, books and records to any corporation,
partnership, person or other entity or group in connection with any possible
proposal regarding a tender offer for or sale of Sharon Bank's capital stock
or a consolidation, merger or sale of all or a substantial portion of the
assets of Sharon Bank or any similar transaction.
Conditions to the Consolidation
The Consolidation Agreement contains certain conditions to the
obligations of M&I and Sharon Bank to consummate the Consolidation. In
addition to other customary closing conditions, the following conditions are
contained in the Consolidation Agreement: (a) M&I's and Sharon Bank's
representations and warranties contained in the Consolidation Agreement shall
be true and correct in all material respects; (b) all agreements and
covenants of each of M&I and Sharon Bank required to be performed by it under
the Consolidation Agreement shall have been performed by it in all material
respects; (c) the holders of no more than 5% of the shares of Sharon Bank
Stock shall, at the Effective Date, be entitled to assert statutory
dissenters' appraisal rights under Section 221.25 of the Wisconsin Statutes
(with respect to the Consolidation); (d) M&I and Sharon Bank shall have
received Affiliate Agreements executed by Sharon Bank shareholders who have
been identified by Sharon Bank to be "affiliates;" (e) the parties hereto
shall have received final approval of the transactions contemplated by the
Consolidation Agreement from all appropriate government agencies and
authorities without any condition which is not satisfactory to M&I, all
conditions required to be satisfied prior to the Effective Time imposed by
the terms of such approvals shall have been satisfied, and all waiting
periods relating to such approvals shall have expired; (f) the Registration
Statement shall be effective under the 1933 Act prior to the Effective Time
(and no stop order suspending the effectiveness thereof shall have been
issued during such period and no proceedings for that purpose shall have been
instituted or be pending at the Effective Time) and all appropriate
registrations, permits and consents required by any state securities law (or
exemptions therefrom) in connection with the Consolidation Agreement shall
have been obtained and be in effect at the Effective Time; (g) on the
Effective Date there shall not be any litigation, investigation, inquiry or
proceeding pending or threatened in or by any court or government agency or
authority which might result in an action to restrain, enjoin or prohibit
consummation of the transactions contemplated by the Consolidation Agreement,
or which might result in divestiture, rescission or damages in connection
with such transactions or involving any of the assets, properties, business
or operations of Sharon Bank which might result in any material adverse
change in the financial condition, results of operations, business or
prospects of Sharon Bank; and (h) all actions, proceedings, instruments and
documents required to carry out the transaction contemplated by the
Consolidation Agreement and all other related legal matters (including but
not limited to all matters relating to the federal income tax consequences of
the Consolidation) shall have been satisfactory to and approved by counsel to
each of the parties to the Consolidation Agreement.
In addition to the mutual conditions discussed above, M&I's obligation
to consummate the Consolidation is subject to the following additional
conditions: (a) the Consolidation shall have been approved by the requisite
percentage of the outstanding shares of Sharon Bank Stock; (b) M&I shall have
received from the President of Sharon Bank a certificate attesting to the
truth and accuracy of the information set forth in the Registration Statement
relating to Sharon Bank; (c) Sharon Bank shall have delivered to M&I the
Affiliate Agreements of those persons deemed to be "affiliates" of Sharon
Bank by M&I counsel; (d) Sharon Bank shall have provided M&I with statements
of Sharon Bank's Net Earnings as of certain specified dates and such shall
not be less than $375,000 for any of the specified periods; (e) the total
shareholders' equity of Sharon Bank as of the end of the month last preceding
the Effective Time shall not be less than $3,500,000; (f) the absence of
certain material adverse changes in the financial condition of Sharon Bank;
(g) the absence of acceleration of any debt, as a result of the
Consolidation, owed by Sharon Bank, excluding that which M&I has been
previously notified of; (h) Sharon Bank shall make such adjustments to
accounting and income tax provisions as M&I shall deem appropriate; and (i)
the Merger provided for in the Agreement and Plan of Reorganization, as
amended, between M&I and Citizens Bancorp, dated as of August 31, 1994, of
Citizens Bancorp with and into M&I Interim Corp. shall have been consummated
as provided therein and the merger of the Surviving Corporation (as defined
therein) with and into M&I shall have been consummated as anticipated
therein.
<PAGE>
Termination and Amendment
The Consolidation Agreement may be terminated at any time prior to
Effective Time, whether before or after approval of the matters presented in
connection with the Consolidation by the shareholders of Sharon Bank: (a) by
mutual consent of the Boards of Directors of Sharon Bank and M&I; (b) by
either Sharon Bank or M&I if the Consolidation is not consummated on or
before July 1, 1995; (c) by M&I only if any of the conditions to the
obligation of M&I to consummate the Consolidation have not been met or
waived; (d) by Sharon Bank only if any of the conditions to the obligation of
Sharon Bank to consummate the Consolidation have not been met or waived; or
(e) by Sharon Bank only if there shall be a material adverse change in the
consolidated financial condition of M&I from that set forth in M&I's balance
sheet included in its Form 10-K for the year ended December 31, 1993.
Subject to applicable law, the Consolidation Agreement may be amended
at any time before or after the adoption of the Consolidation by the
shareholders of Sharon Bank by written agreement of Sharon Bank and M&I,
except that after such approval of the shareholders of Sharon Bank, no such
amendment, modification or supplement shall reduce or change the form of the
consideration into which each share of Sharon Bank Stock will be converted
pursuant to the terms of the Consolidation Agreement or change any of the
terms and conditions of the Consolidation Agreement in a manner which
materially and adversely affects the rights of Sharon Bank's shareholders
without the approval of such shareholders.
Accounting Treatment
The Consolidation will be accounted for by M&I under the purchase
method of accounting in accordance with Accounting Principles Board Opinion
No. 16, "Business Combinations," as amended. Under this method of
accounting, the purchase price will be allocated to assets acquired and
liabilities assumed based on their estimated fair values, and the applicable
income tax effects, at the Effective Time. Income of the combined company
will not include income (or loss) of Sharon Bank prior to the Effective Time.
Certain Federal Income Tax Consequences
The following is a summary of certain material federal income tax
consequences of the Consolidation. The summary is provided for general
informational purposes only and does not include consequences of foreign,
state, local or other tax laws. Because each Sharon Bank shareholder's tax
circumstances may differ, each Sharon Bank shareholder should consult such
shareholder's personal tax advisor as to the tax consequences of the
Consolidation under federal, state, local or other applicable laws.
The Consolidation is intended to qualify as a tax-free reorganization
pursuant to Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code"). If the Consolidation does, in fact, so qualify, the
following will occur: (a) no gain or loss will be recognized by M&I, Citizens
Bank or Sharon Bank as a result of the Consolidation, (b) for those Sharon
Bank shareholders who receive solely M&I Stock in exchange for their Sharon
Bank Stock, no gain or loss will be recognized on such exchange except as to
any cash received in lieu of fractional shares, (c) the tax basis of the
shares of M&I Stock received by shareholders of Sharon Bank will be the same
as the tax basis of their converted Sharon Bank Stock, reduced by any amount
allocable to any fractional share interest for which cash is received, (d)
for those Sharon Bank shareholders who receive solely cash in exchange for
their Sharon Bank Stock through exercise of dissenter's rights, the receipt
of cash in exchange for such stock will be treated as a distribution in
redemption of the stock by Sharon Bank subject to the provisions and
limitations of Section 302 of the Code, (e) the holding period of the shares
of M&I Stock received by Sharon Bank shareholders in the Consolidation will
include the holding period of the shares of Sharon Bank Stock surrendered in
exchange therefor, provided the Sharon Bank Stock is held as a capital asset
on the date of the exchange, and (f) the payment of cash in lieu of
fractional share interests of M&I Stock will be treated as if the fractional
shares were distributed as part of the exchange and then were redeemed by M&I
subject to the provisions and limitations of Section 302 of the Code.
<PAGE>
Resale of M&I Stock by Affiliates
The shares of M&I Stock to be issued to former shareholders of Sharon
Bank upon consummation of the Consolidation have been registered under the
Securities Act. Such shares may be traded freely and without restriction by
those shareholders not deemed to be "affiliates," as such term in defined
under the Securities Act, of Sharon Bank. "Affiliates" are generally defined
as persons who control, are controlled by, or are under common control with
Sharon Bank. Accordingly, "affiliates" will generally include directors and
executive officers of Sharon Bank. Shares of M&I Stock received by those
shareholders of Sharon Bank deemed to be "affiliates" may not be sold without
registration, except as permitted by Rule 145 under the Securities Act, or as
otherwise permitted under the Securities Act. This Prospectus/Proxy
Statement does not cover resales of any M&I Stock received by "affiliates" of
Sharon Bank. Sharon Bank has agreed to use reasonable efforts to cause each
person identified as an affiliate of Sharon Bank to enter into an agreement
which provides that such affiliate will not dispose of any M&I Common Stock
received in the Consolidation except in compliance with the Securities Act or
except in a transaction which, in the opinion of legal counsel reasonably
satisfactory to M&I, is exempt from registration under the Securities Act.
Dissenters' Rights of Appraisal
Under the provisions of Section 221.25 of the Banking Code, a copy of
which is attached to this Prospectus/Proxy Statement as Appendix B, any
holder of record of Sharon Bank Stock has the right to dissent from the
Consolidation and demand payment of the "value" of his or her shares in cash
as determined pursuant to Section 221.25 of the Banking Code ("Dissenters'
Rights"). Any shareholder who wishes to assert Dissenters' Rights must
deliver a written notice of his or her intent to exercise such rights to
Sharon State Bank, 114 Plain Street, P.O. Box 504, Sharon, Wisconsin 53585,
Attention: Rymund P. Wurlitzer, within 20 days after the date the notice is
mailed or delivered to the shareholder notifying him or her of the Wisconsin
Commissioner of Banking's (the "WCB") approval of the Consolidation. Notice
of the WCB's approval of the Consolidation will be sent only to those holders
of Sharon Bank Stock that did not vote for the Consolidation. Thus, in order
to preserve your Dissenters' Rights, you must either vote against the
Consolidation at the Special Meeting or give notice in writing at or prior to
the Special Meeting that you dissent from the Consolidation. A PROXY OR VOTE
AGAINST THE CONSOLIDATION AGREEMENT WILL NOT, BY ITSELF, BE REGARDED AS A
WRITTEN NOTICE OF INTENT TO DEMAND PAYMENT FOR PURPOSES OF ASSERTING
DISSENTERS' RIGHTS.
If the Consolidation Agreement is approved by the requisite vote of
holders of Sharon Bank Stock and the Consolidation is approved by the WCB,
Sharon Bank is required to send a notice to all shareholders of Sharon Bank
Stock who did not vote for the Consolidation, notifying them of their right
to receive the appraised value for their shares of Sharon Bank Stock.
Shareholders of Sharon Bank desiring to exercise their rights of appraisal
must notify Sharon Bank, at the address indicated above, within 20 days after
the date the notice of the WCB's approval of the Consolidation is mailed or
delivered to the Sharon Bank shareholder, that the shareholder dissents from
the Consolidation. If the Sharon Bank shareholder complies with these
procedural requirements, the shareholder shall be entitled to receive in cash
the "value" of Sharon Bank Stock held by the shareholder. The "value" of
Sharon Bank Stock shall be ascertained by an appraisal committee of three
persons, one to be selected by the dissenting shareholders, one by the
directors and the third by the two so chosen (the "Appraisal Committee").
The expense of the appraisal conducted by the Appraisal Committee will be
borne by Sharon Bank.
If the dissenting shareholder is dissatisfied with the Appraisal
Committee's determination of "value," such dissenting shareholder may appeal
to the WCB, who shall cause a reappraisal to be made by an appraiser or
appraisers to be named by the WCB (the "Reappraisal"). A dissenting
shareholder must make this appeal to the WCB within five days after receiving
notice of the Appraisal Committee's appraisal. If the shareholder appeals to
the WCB, the Reappraisal shall be final and binding. The expense of the
Reappraisal shall be borne by the shareholder if the "value" of Sharon Bank
Stock as determined by the Reappraisal does not exceed the "value" determined
<PAGE>
by the Appraisal Committee, and shall be borne by Sharon Bank if the "value"
determined by the Reappraisal exceeds the "value" determined by the Appraisal
Committee. The "value" so ascertained from the Reappraisal shall be deemed
to be a debt of Sharon Bank, which shall pay said amount to the dissenting
shareholder. The dissenting shareholder shall surrender his or her share or
shares and, after such notice as Sharon Bank's Board of Directors may
provide, said share or shares shall be sold at public auction within 30 days
after the final appraisement provided for by the foregoing.
In the event any holder of Sharon Bank Stock fails to perfect his or
her rights to dissent by failing to comply strictly with the applicable
statutory requirements of Section 221.25 of the Banking Code, he or she will
be bound by the terms of the Consolidation and will not be entitled to
payment for his or her shares under Section 221.25 of the Banking Code. ANY
HOLDER OF SHARON BANK STOCK WHO WISHES TO OBJECT TO THE TRANSACTION AND
DEMAND PAYMENT IN CASH FOR HIS OR HER SHARES SHOULD CONSIDER CONSULTING HIS
OR HER OWN LEGAL ADVISOR.
Because an executed proxy relating to Sharon Bank Stock on which no
voting direction is made will be voted at the Special Meeting in favor of the
Consolation, a dissenting shareholder who wishes to have his or her shares of
Sharon Bank Stock represented by proxy at the Special Meeting but preserve
his or her dissenters' rights must mark his or her proxy either to vote
against the Consolidation or to abstain from voting thereon, in addition to
the foregoing requirements.
The foregoing, while a summary of all material provisions of Section
221.25 of the Banking Code, is qualified in its entirety by reference to the
text of such statutory provision, which text is set forth in its entirety in
Appendix B hereto.
One of the conditions to the Consolidation is that the holders of no
more than 5% of the shares of Sharon Bank Stock will, at the Effective Date,
be entitled to assert statutory dissenters' rights under Section 221.25 of
the Banking Code. See "- Conditions to Consolidation."
Regulatory Approvals Required
The Consolidation is subject to the approval of the Federal Reserve
Board under Section 3 of the BHCA, the WCB pursuant to Section 221.25 of the
Banking Code, and the FDIC pursuant to Section 18(c) of the Federal Deposit
Insurance Act. M&I filed the necessary applications with these regulatory
authorities in January 1995.
With respect to approval of the Consolidation by the Federal Reserve
Board, Section 3 of the BHCA requires that the Federal Reserve Board take
into consideration, among other factors, the financial and managerial
resources and future prospects of the institutions and the convenience and
needs of the communities to be served. The BHCA prohibits the Federal
Reserve Board from approving the Consolidation (i) if it would result in a
monopoly or be in furtherance of any combination or conspiracy to monopolize
or to attempt to monopolize the business of banking in any part of the United
States or (ii) if its effect in any section of the country may be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner be a restraint of trade, unless the Federal Reserve
Board finds that the anti-competitive effects of the Consolidation are
clearly outweighed by the public interest and the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. The Community Reinvestment Act of 1978 also requires that the
Federal Reserve Board, in deciding whether to approve the Consolidation,
assess the record of performance of the bank subsidiaries of M&I in meeting
the credit needs of the entire community, including low- and moderate-income
neighborhoods, served by such bank subsidiaries. The Federal Reserve Board
has also indicated that it will not approve a significant acquisition unless
the resulting institution has adequate regulatory capital, taking into
account, among other things, the nature of the business and operations and
plans for expansion.
<PAGE>
Pursuant to the BHCA, the Consolidation may not be consummated until
the 15th day following the date of Federal Reserve Board approval, during
which time the United States Department of Justice may challenge the
Consolidation on antitrust grounds. The commencement of an antitrust action
would stay the effectiveness of the Federal Reserve Board's approval unless a
court specifically orders otherwise.
Management After the Consolidation
The board of directors and principal officers of the Surviving Bank as
of the Effective Time will consist of the persons who are the directors and
principal officers of Citizens Bank immediately prior to the Effective Time.
Such persons will serve as directors and principal officers of the Surviving
Bank until the next annual meeting of the Surviving Bank or until such time
as their successors have been duly qualified and elected or appointed in
accordance with the By-laws of the Surviving Bank. See "CERTAIN RELATED
TRANSACTIONS."
COMPARISON OF SHAREHOLDER RIGHTS
The following is a summary of material differences between the rights
of holders of M&I Stock and the rights of holders of Sharon Bank Stock prior
to the Consolidation. As both M&I and Sharon Bank are organized under the
laws of Wisconsin, rights of shareholders are substantially similar.
Differences in the rights provided to shareholders of M&I and Sharon Bank
exist because the former is organized under the Wisconsin Business
Corporation Law (the "WBCL") while the latter is organized under the
Wisconsin Banking Code (the "Banking Code"). This summary does not purport
to be a complete discussion of and is qualified in its entirety by reference
to the governing law and the articles of incorporation, by-laws and
contractual commitments of each entity.
Required Vote for Authorization of Certain Transactions
M&I. Pursuant to Section 180.1706(1) of the WBCL, except as otherwise
provided in a corporation's articles of incorporation or by-laws, any
amendment to the articles of incorporation, merger or certain other
extraordinary events involving a corporation organized before January 1,
1973, which did not expressly elect before January 1, 1991 to be governed by
a majority or greater voting requirement, must be approved by the affirmative
vote of two-thirds of the shares entitled to vote at a meeting called for
that purpose. The M&I Articles were amended prior to January 1, 1991 to
reduce the vote required for a merger, consolidation or certain other
extraordinary events to a majority vote of the M&I capital stock entitled to
vote, provided that three-quarters of the M&I Board of Directors shall have
approved the transaction. The M&I Articles were not amended prior to January
1, 1991 to reduce the vote required to amend the M&I Articles. Consequently,
any amendment to the M&I Articles requires the affirmative vote of two-thirds
of the outstanding shares of M&I capital stock entitled to vote at a meeting
called for that purpose.
<PAGE>
Sharon Bank. Pursuant to Section 221.12 of the Banking Code, any
amendment to the articles of incorporation of a state chartered bank must be
approved by the affirmative vote of two-thirds of the capital stock entitled
to vote at a meeting called for that purpose. Furthermore, Section 221.25 of
the Banking Code provides that any two or more state chartered banks, may,
with the approval of the WCB and the vote of the shareholders of each such
bank owning at least two-thirds of the capital stock entitled to a vote at a
meeting called for that purpose, consolidate into one bank.
Amendment of By-laws
M&I. M&I's Articles of Incorporation and By-laws provide that M&I's
By-laws may be amended only by the affirmative vote of not less than two-
thirds of the outstanding shares of capital stock of M&I entitled to vote at
a meeting of shareholders duly called for such purpose, or by a vote of not
less than three-quarters of the entire Board of Directors then in office.
Sharon Bank. Sharon Bank's By-laws provide that its By-laws may be
amended in any manner permitted by law at the time the By-laws are to be
amended. Pursuant to Section 221.04 of the Banking Code, an affirmative vote
of two-thirds of the capital stock of Sharon Bank is currently required to
amend Sharon Bank's By-laws.
Size, Classification of, and Vote Required to Elect Board of Directors
M&I. The M&I Articles and By-laws provide that the M&I Board of
Directors will consist of not less than three directors (exclusive of
directors, if any, elected by the holders of one or more classes of series of
M&I Preferred Stock pursuant to the M&I Articles applicable thereto), the
exact number of which to be determined from time to time by resolution
adopted by an affirmative vote of a majority of the entire Board of Directors
then in office. M&I's Board of Directors is classified into three classes,
with directors serving staggered three-year terms. The M&I By-laws provide
that directors are to be elected by a plurality of the votes cast by the
capital stock entitled to vote in the election.
Sharon Bank. Sharon Bank's By-laws provide that the Bank's Board of
Directors will consist of not less than five nor more than eight directors,
the exact number of which to be determined by the Bank's stockholders at
their annual meeting. The Bank's Articles of Incorporation and By-laws do
not provide for the classification of its Board of Directors. However, each
director shall hold office for one year and until the director's successor
has been elected and a majority of the newly elected board has been
qualified. The Bank's By-laws provide that a majority of the capital stock
represented at a meeting shall be necessary for the election of each
director.
Removal of Directors for "Cause"
M&I. Exclusive of directors, if any, elected by holders of one or more
classes of M&I Preferred Stock, shareholders of M&I may remove a director
only for "cause" and then only by a vote of two-thirds of the outstanding
shares of capital stock of M&I entitled to vote at a meeting of shareholders
called for that purpose. "Cause" is defined solely as malfeasance arising
from the performance of a director's duties which has a materially adverse
effect on the business of M&I.
Sharon Bank. Pursuant to Section 221.04 of the Banking Code, a
director of Sharon Bank may be removed from office by the affirmative vote of
a majority of the capital stock represented and entitled to vote at a special
meeting called for that purpose, with or without "cause."
Newly Created Directorships and Vacancies on the Board of Directors
M&I. Pursuant to Section 180.0810 of the WBCL, unless otherwise
provided in a corporation's Articles of Incorporation, shareholders may fill
vacancies on a corporation's Board of Directors. The M&I Articles and
By-laws provide that newly created directorships and any vacancies on M&I's
Board of Directors shall be filled by the majority vote of the Board of
Directors.
Sharon Bank. Sharon Bank's By-laws and Section 221.08(5) of the
Banking Code authorize the Board of Directors to fill vacancies on the Bank's
Board of Directors until the next succeeding election of directors.
Advance Notice of Proposals to be Brought at the Annual Meeting
M&I. Pursuant to Section 2.5 of the M&I By-laws, any shareholder who
intends to bring business before an annual meeting of shareholders (other
than nominations for directors) must provide M&I with notice of such
intention, the nature of such proposal, the reasons for conducting such
business at the annual meeting and certain information regarding the
shareholder bringing the proposal not less than 60 days prior to the meeting.
Sharon Bank. Sharon Bank's Articles of Incorporation and By-laws do
not contain any provisions relating to advance notice of proposals to be
brought before an annual meeting.
<PAGE>
Advance Notice of Nominations of Directors
M&I. Pursuant to Article VI of the M&I Articles and Section 2.6 of the
By-laws, any shareholder who intends to nominate directors for election at a
meeting called for that purpose must provide M&I with notice of such
intention, a written consent of the nominee to serve as a director, certain
information regarding the proposed nominee and certain information regarding
the nominating shareholder not less than 30 days prior to the meeting.
Sharon Bank. Neither Sharon Bank's Articles of Incorporation nor its
By-laws contain any provisions relating to advance notice of nominations of
directors.
Certain Business Combinations
M&I. Article XI of M&I's Articles provides that an affirmative vote of
80% of M&I's outstanding capital stock entitled to vote in the election of
directors, or two-thirds of the shares entitled to so vote excluding shares
of M&I capital stock held by an "interested stockholder" (as hereinafter
defined), is required to approve a merger, consolidation or other business
combination involving M&I, or any subsidiary, and any interested stockholder
or an affiliate or associate of an interested stockholder (excluding M&I or
any subsidiary thereof or employee benefit plan for the benefit of employees
of M&I or its subsidiaries). An interested stockholder refers to (a) the
beneficial owner of more than 10% of M&I's outstanding capital stock entitled
to vote, (b) an affiliate or associate of M&I that at any time within the two
year period preceding the combination was a beneficial owner of 10% or more
of the outstanding M&I capital stock entitled to vote or (c) an assignee of
or successor to any M&I capital stock entitled to vote previously
beneficially owned within the two year period preceding the combination by
another interested stockholder, if such assignment or succession shall have
occurred in the course of a transaction not involving a public offering
within the meaning of the Securities Act. These provisions of the M&I
Articles do not apply if (a) the consideration offered in connection with
such transaction satisfies certain "fair price" requirements or (b) a
majority of the "disinterested directors" (defined as a director who is not
affiliated with the interested stockholder and who either was (i) a member of
the Board of Directors prior to the date that the interested stockholder
became such or (ii) elected or recommended for election by a majority of the
disinterested directors in office at the time such director was nominated for
election) approves the transaction.
Sharon Bank. Neither Sharon Bank's Articles of Incorporation nor its
By-laws contain any supermajority voting provisions relating to the approval
by holders of its capital stock of mergers, consolidations or other business
combinations.
Dissenters' Rights of Appraisal
M&I. Pursuant to Section 180.1302 of the WBCL, dissenters' rights of
appraisal are provided when a corporation consummates (i) a plan of merger,
if shareholder approval is required by statute or by the corporation's
articles of incorporation, or if the corporation is a subsidiary that is
merged with its parent; (ii) a plan of share exchange, if the corporation's
shares will be acquired and shareholder approval is required; or (iii) a sale
or exchange of all, or substantially all, of the corporation's property other
than in the usual and regular course of business including a sale in
dissolution, but not including a sale pursuant to a court order or a sale for
cash pursuant to a plan by which all or substantially all of the net proceeds
of the sale will be distributed to the shareholders within one year after the
date of sale. However, no such rights are provided if (i) the shares of the
corporation are listed on a national securities exchange or quoted on NASDAQ,
or (ii) the corporation is undergoing a reorganization, unless the
reorganization plan provides otherwise. The foregoing exceptions
notwithstanding, the WBCL provides dissenters' rights of appraisal in
connection with certain business combinations involving a corporation and an
"interested stockholder." See "- Certain Business Combinations."
Sharon Bank. Pursuant to Section 221.25 of the Banking Code,
dissenters' rights of appraisal are provided when any two or more banks
consolidate into one bank.
<PAGE>
CERTAIN PROVISIONS OF THE WISCONSIN BUSINESS CORPORATION LAW
The following is a description of certain provisions applicable to
Wisconsin corporations, such as M&I. These provisions are not, however,
applicable to Wisconsin banks, such as Sharon Bank.
The WBCL provides that shareholders of Wisconsin domestic corporations
are personally liable, up to the par value of their shares ($1.00 per share
in the case of the M&I Stock), for all debts owed by the corporation to
employees for services performed but not exceeding six months' service in any
one case. While the WBCL specifies that such liability is limited to the par
value of the shares, par value has been interpreted by a Wisconsin court to
mean the consideration paid to the corporation for its shares.
The WBCL prohibits a "business combination" (defined to include a
merger, share exchange or a disposition of 5% or more of the aggregate market
value of all assets or stock of the corporation) between a "resident domestic
corporation" and an "interested stockholder" (defined as the beneficial owner
of at least 10% of the voting power of the outstanding stock) for three years
following the stock acquisition date (i.e., the date the person became an
interested stockholder), unless the board of directors approves the business
combination or the purchase of stock by the interested stockholder before the
stock acquisition date. Business combinations after the three-year period
following the stock acquisition date are permitted only if (i) the board of
directors approved the acquisition of the stock prior to the stock
acquisition date; (ii) the business combination is approved by a majority of
the outstanding voting stock not beneficially owned by the interested
stockholder; or (iii) the consideration to be received by shareholders meets
certain requirements of the statute with respect to form and amount. M&I is
a "resident domestic corporation" within the meaning of the WBCL.
Under the WBCL, the voting power of shares of an "issuing public
corporation" held by any person or persons acting as a group in excess of 20%
of the voting power in the election of directors is limited (in voting on any
matter) to 10% of the full voting power of those excess shares. An issuing
public corporation is defined as a domestic corporation, with (i) total
assets exceeding $1,000,000; (ii) a class of equity securities held of record
by 500 or more persons; and (iii) at least 100 shareholders of record who
have unlimited voting rights and who reside in Wisconsin. M&I is an
"issuing public corporation" within the meaning of the WBCL. This
restriction does not apply to shares acquired (a) under an agreement entered
into before the corporation was an "issuing public corporation," (b) directly
from the issuing public corporation, (c) in a merger or share exchange to
which the issuing public corporation is a party, (d) in certain specified
non-market transactions (i.e., gifts, distributions upon death and pledges)
or (e) in a transaction incident to which the corporation's shareholders have
approved restoration of the full voting power of the otherwise restricted
shares.
The WBCL provides that, in addition to the vote otherwise required by
law or the articles of incorporation of an "issuing public corporation"
(defined above), the approval by a majority vote of the holders of the
corporation's shares entitled to vote is required before such corporation can
take certain actions while a "takeover offer" (as defined in the WBCL) is
being made or after a takeover offer has been publicly announced and before
it is concluded. Under the WBCL, such shareholder approval is required for
the corporation to (i) acquire more than 5% of the corporation's outstanding
voting shares at a price above the market price from any individual or
organization that owns more than 3% of the outstanding voting shares and has
held such shares for less than two years, unless a similar offer is made to
acquire all voting shares or (ii) sell or option assets of the corporation
which amount to at least 10% of the market value of the corporation, unless
the corporation has at least three independent directors and a majority of
the independent directors vote not to have this provision apply to the
corporation.
The WBCL also provides for certain super-majority voting and fair price
provisions in connection with certain business combinations substantially
similar to provisions contained in M&I's Articles. See "COMPARISON OF
SHAREHOLDER RIGHTS - Certain Business Combinations."
<PAGE>
Under the WBCL, in discharging his or her duties to the corporation and
in determining what he or she believes to be the best interests of the
corporation, a director or officer may, in addition to considering the
effects of any action on the corporation's shareholders, consider the effects
of the action on employees, suppliers, customers, the communities in which
the corporation operates and any other factors that the director or officer
considers pertinent.
CERTAIN INFORMATION CONCERNING SHARON BANK
Business
Sharon Bank is a Wisconsin state bank chartered in 1903 and
headquartered in the southeastern Wisconsin community of Sharon, in Walworth
County. Sharon Bank offers a wide range of traditional bank services which
include commercial and consumer lending, depository account services and
other services to individuals and businesses. Sharon Bank's service area is
in the immediate geographical area of its main office.
See "INDEX TO FINANCIAL STATEMENTS" for historical financial statements
of, and other financial information regarding, Sharon Bank.
Market Information and Dividends
The number of holders of record of Sharon Bank Stock at January 31,
1995 was 11.
The Sharon Bank Stock is not listed on any exchange nor quoted in the
over-the-counter market, and no established "bid" or "ask" price is
available. In the opinion of Sharon Bank, due to the lack of an active
market for the shares of Sharon Bank Stock, transactions in Sharon Bank Stock
of which Sharon Bank is aware are not frequent enough to constitute
representative prices. The last sale of Sharon Bank Stock of which Sharon
Bank is aware was at $3,500 per share on October 29, 1993.
Dividends of $125 and $116 per share of Sharon Bank Stock were paid in
fiscal 1994 and 1993, respectively. Sharon Bank is restricted by the
Wisconsin Commissioner of Banking from making dividend distributions above
prescribed amounts. At December 31, 1994, approximately $1,779,000 of Sharon
Bank's retained earnings were available for distribution as dividends without
prior regulatory approval. In addition, pursuant to the Consolidation
Agreement, Sharon Bank has agreed not to declare or pay any dividends prior
to the Effective Time on its outstanding shares of capital stock, except for
dividends paid in the ordinary course of business and consistent with its
past practices. See "THE CONSOLIDATION - Additional Covenants and
Agreements."
Share Ownership
The following table sets forth information regarding the beneficial
ownership of shares of Sharon Bank Stock as of January 31, 1995 by (i) Sharon
Bank's directors and executive officers; (ii) Sharon Bank's directors and
executive officers as a group; and (iii) persons who are known to Sharon Bank
to beneficially own more than 5% of Sharon Bank Stock.
Name (1) Number of Shares Percent
-------- ---------------- -------
Harold Einsiedel 10 1.0%
Vance Spear 20 2.0
Margaret Wurlitzer * 35 3.5
Prescott Wurlitzer ** 115 11.5
Rymund Wurlitzer * 270 27.0
All directors and executive
officers as a group
(5 individuals) 450 45.0
<PAGE>
Name (1) Number of Shares Percent
-------- ---------------- -------
Amy Wurlitzer Hopkins ** 116 11.6
6935 Wellauer Drive
Wauwatosa, Wisconsin 53213
Heidi Wurlitzer Haas ** 125 12.5
799 Garrison Court
Delafield, WI 53018
Kristina Wurlitzer Harvey ** 137 13.7
4133 West Freistadt Road
Mequon, Wisconsin 53092
Wendy Wurlitzer ** 129 12.9
12300 Chadsworth Court
Glen Allen, Virginia 23060
________________
* Mr. Rymund Wurlitzer and Ms. Margaret Wurlitzer are husband and wife.
** Prescott and Wendy Wurlitzer, and Amy Hopkins, Heidi Haas and Kristina
Harvey are children of Mr. Rymund and Ms. Margaret Wurlitzer.
(1) Includes any shares held by, or jointly with, a spouse and/or dependent
children. The shares are reported in such cases on the presumption
that the individual may share voting and/or investment power because of
the family relationship.
CERTAIN INFORMATION CONCERNING M&I
Information regarding the names, ages, positions and business backgrounds
of the executive officers and directors of M&I, as well as additional
information, including executive compensation, security ownership of certain
beneficial owners and management and certain relationships and related
transactions, is incorporated herein by reference to M&I's Annual Report on
Form 10-K for the year ended December 31, 1993.
CERTAIN RELATED TRANSACTIONS
Following consummation of the Merger of Citizens Bancorp with and into
M&I Interim Corp., which will result in M&I owning 100% of Citizens Bank,
previously a wholly-owned subsidiary of Citizens Bancorp, and the related
Consolidation of Sharon Bank with and into Citizens Bank, certain persons who
were previously under the employ of Citizens Bank will continue to hold their
respective positions pursuant to an employment agreement dated August 31,
1994 between such persons and M&I. Specifically, Rymund Wurlitzer will
continue in the position of Chairman of the Board with Citizens Bank until he
reaches the age of 75. Mr. Wurlitzer's compensation will be $100,000 per
year. He will be eligible to receive benefits consistent with other M&I
personnel in similar positions. If Mr. Wurlitzer's employment duties and
responsibilities change materially, he will be permitted to resign, although
M&I would continue to pay his salary until age 75. In addition, Ms. Margaret
Wurlitzer, Mr. Wurlitzer's wife, will continue to hold her present position
as a part-time teller with Citizens Bank for as long as Mr. Wurlitzer is
employed there.
<PAGE>
RECENT LEGISLATION
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
became effective on September 29, 1994 (the "Interstate Banking Act"). The
Interstate Banking Act amends the Bank Holding Company Act to permit, as of
September 29, 1995 and with certain limitations, adequately capitalized and
managed bank holding companies to acquire control, or all the assets, of
banks located in a state other than the home state of the bank holding
company. The Interstate Banking Act also amends the Federal Deposit
Insurance Act to permit, as of June 1, 1997 and with certain limitations,
merger transactions between adequately capitalized and managed insured banks
with different home states. The provisions of the Interstate Banking Act
generally increase the ease with which banks and bank holding companies may
acquire banks across state lines, and may increase the pace of consolidation
in the banking industry and the competition for independent banks.
EXPERTS
The consolidated financial statements of M&I, incorporated in this
Prospectus/Proxy Statement by reference, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference in this Prospectus/Proxy
Statement in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
The statement of financial condition at December 31, 1994 and
statements of income, changes in shareholders' equity and cash flows for
the year ended December 31, 1994 of Sharon Bank, included in this
Prospectus/Proxy Statement, have been audited by Arthur Andersen LLP,
independent public accountants, as set forth in their report with respect
thereto. Sharon Bank's statement of financial condition at December 31, 1993
and statements of income, changes in shareholders' equity and cash flows for
the years ended December 31, 1993 and 1992, also included herein, have not
been audited.
LEGAL OPINION
A legal opinion to the effect that the issuance of the shares of M&I
Stock offered hereby has been duly authorized by M&I and that the shares,
when issued in accordance with the Consolidation Agreement, will be duly
issued and outstanding, fully paid and nonassessable (except as provided by
Section 180.0622 of the WBCL), has been rendered by Godfrey & Kahn, S.C.,
Milwaukee, Wisconsin.
SHAREHOLDER PROPOSALS
If the Consolidation is consummated, shareholders of Sharon Bank will
become shareholders of M&I. M&I's 1996 Annual Meeting is scheduled for April
23, 1996. In accordance with M&I's By-Laws, nominations, other than by or at
the direction of the M&I Board of Directors, of candidates for election as
directors at the 1996 Annual Meeting must be submitted to M&I not later than
March 23, 1996. In addition, any M&I shareholder who wishes to submit a
proposal for presentation to the 1996 Annual Meeting of Shareholders of M&I
must have submitted the proposal in writing to M&I, 770 North Water Street,
Milwaukee, Wisconsin 53202, Attention: M.A. Hatfield, Secretary, by November
11, 1995 for inclusion, if appropriate, in M&I's proxy statement and the form
of proxy relating to the 1996 Annual Meeting. To avoid disputes as to the
date of receipt, it is suggested that any shareholder proposal be submitted
by certified mail, return receipt requested.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Sharon Bank
Independent Public Accountant's Report . . . . . . . . . . . . . . . . .F-1
Statements of Financial Condition at December 31, 1994 (audited)
and December 31, 1993 (unaudited)*. . . . . . . . . . . . . . . . . .F-2
Statements of Income for the years ended December 31, 1994
(audited), December 31, 1993 (unaudited)*,
and December 31, 1992 (unaudited)* . . . . . . . . . . . . . . . . .F-3
Statements of Changes in Shareholders' Equity for the years
ended December 31, 1994 (audited), December 31,
1993 (unaudited)* and December 31, 1992 (unaudited)*. . . . . . . . .F-4
Statements of Cash Flows for the years ended December 31, 1994
(audited), December 31, 1993 (unaudited)*,
and December 31, 1992 (unaudited)*. . . . . . . . . . . . . . . . . .F-5
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . .F-6
Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . F-12
________________
* Unaudited financial information for the periods indicated was obtained
from Sharon Bank's Reports of Condition and Income (collectively, the
"Call Reports"), which are filed by Sharon Bank with the FDIC. The
Call Reports are prepared in accordance with regulatory instructions
issued by the Federal Financial Institutions Examination Counsel.
Because of the special supervisory, regulatory and economic
policy needs served by these Call Reports, those regulatory
instructions do not in all cases follow generally accepted accounting
principles or opinions and statements of the Accounting Principles
Board or the Financial Accounting Standards Board.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Sharon State Bank:
We have audited the accompanying statement of financial position of Sharon
State Bank (a Wisconsin corporation) as of December 31, 1994, and the related
statements of income, changes in shareholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sharon State Bank as of
December 31, 1994, and the results of operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, effective January 1,
1994, the Company changed its method of accounting for investment securities.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
February 3, 1995.
<PAGE>
SHARON STATE BANK
-----------------
STATEMENTS OF FINANCIAL POSITION
--------------------------------
AS OF DECEMBER 31, 1994 AND 1993
--------------------------------
(Dollars in thousands)
ASSETS 1994 1993
------ -------- --------
Unaudited
CASH AND DUE FROM BANKS (Note 3) $778 $420
FEDERAL FUNDS SOLD 656 1,234
------- -------
Total cash and cash equivalents 1,434 1,654
INVESTMENT SECURITIES HELD TO MATURITY,
(market value of $6,533 in 1994 and $7,069 in 1993) 6,666 6,553
(Note 3)
LOANS (Note 4) 11,563 10,593
Less- Reserve for loan losses (151) (171)
-------- --------
Net loans 11,412 10,422
BANK PREMISES AND EQUIPMENT, net 8 10
ACCRUED INTEREST AND OTHER ASSETS 294 270
------- -------
Total assets $19,814 $18,909
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993
------------------------------------ -------- --------
Unaudited
DEPOSITS:
Noninterest-bearing deposits $3,026 $1,986
Interest-bearing deposits 11,622 12,257
------- -------
Total deposits 14,648 14,243
FEDERAL FUNDS PURCHASED 274 -
SECURITIES SOLD UNDER REPURCHASE
AGREEMENTS 934 863
DIVIDEND PAYABLE 39 -
ACCRUED EXPENSES AND OTHER LIABILITIES 40 148
-------- --------
Total liabilities 15,935 15,254
------- -------
COMMITMENTS AND CONTINGENT LIABILITIES (Note 6)
SHAREHOLDERS' EQUITY (Note 7):
Common stock ($100, par value,
1,000 shares authorized;
1,000 shares issued and outstanding)
and paid-in capital 2,100 2,000
Retained earnings 1,779 1,655
_______ _______
Total shareholders' equity 3,879 3,655
_______ _______
Total liabilities and shareholders' equity $19,814 $18,909
======= =======
The accompanying notes to financial statements are an integral part of
these statements.
<PAGE>
SHARON STATE BANK
-----------------
STATEMENTS OF INCOME
--------------------
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
----------------------------------------------------
(Dollars in thousands)
1994 1993 1992
-------- -------- --------
Unaudited Unaudited
INTEREST INCOME:
Interest and fees on loans $1,021 $925 $913
Interest on investment securities-
Taxable 371 395 342
Nontaxable 155 129 107
Interest on Federal funds sold 14 18 21
-------- -------- --------
Total interest income 1,561 1,467 1,383
-------- -------- --------
INTEREST EXPENSE:
Interest on deposits 575 507 642
Interest on short-term debt 42 40 53
-------- -------- --------
Total interest expense 617 547 695
-------- -------- --------
Net interest income 944 920 688
PROVISION FOR LOAN LOSSES (Note 4) 206 103 173
-------- -------- --------
Net interest income after
provision for loan losses 738 817 515
-------- -------- --------
NONINTEREST INCOME:
Service charges on deposit accounts 40 32 23
Other service charges, commissions and fees 5 14 9
Net securities gains (losses) (11) 32 80
Other 2 1 1
-------- -------- --------
Total noninterest income 36 79 113
-------- -------- --------
NONINTEREST EXPENSE:
Salaries and employee benefits 115 99 117
Equipment and premises expense 17 15 19
Professional services 7 3 5
Processing charges 7 3 6
Payments to regulatory agencies 34 33 26
Other 32 45 14
-------- -------- --------
Total noninterest expense 212 198 187
-------- -------- --------
INCOME BEFORE INCOME TAXES 562 698 441
INCOME TAXES (Note 5) (174) (235) (142)
-------- -------- --------
Net income $388 $463 $299
======== ======== ========
The accompanying notes are an integral part of these statements.
<PAGE>
SHARON STATE BANK
-----------------
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
---------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
----------------------------------------------------
(Years Ended December 31, 1993 and 1992, are Unaudited)
(Dollars in thousands)
Common Stock Total
and Paid-In Retained Shareholders'
Capital Earnings Equity
---------------- -------- --------------
BALANCE, December 31, 1991 $1,400 $1,723 $3,123
Net income - 299 299
Dividends declared - (114) (114)
Transfer from retained
earnings to surplus 600 (600) -
------- -------- -------
BALANCE, December 31, 1992 2,000 1,308 3,308
------- -------- -------
Net income - 463 463
Dividends declared - (116) (116)
------- -------- -------
BALANCE, December 31, 1993 2,000 1,655 3,655
------- -------- -------
Net income - 388 388
Dividends declared - (164) (164)
Transfer from retained
earnings to surplus 100 (100) -
------- -------- -------
BALANCE, December 31, 1994 $2,100 $1,779 $3,879
======= ======== =======
The accompanying notes are an integral part of these statements.
<PAGE>
SHARON STATE BANK
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Dollars in thousands)
1994 1993 1992
---- --------- ---------
Unaudited Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $388 $463 $299
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities-
Depreciation and amortization 2 2 -
Provision for loan losses 206 103 173
Net (gain) loss on sales of
investment securities 11 (32) (80)
Decrease (increase) in other
liabilities and dividend (82) 48 (8)
payable
(Increase) decrease in other assets (50) 69 (23)
------ ------ ------
Total adjustments 87 190 62
------ ------ ------
Net cash provided by operating activities 475 653 361
------ ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment securities 880 794 927
Proceeds from maturities of
investment securities 726 334 487
Purchases of investment securities (1,730) (1,430) (3,236)
Net increase in loans (1,196) (1,197) (452)
------ ------ ------
Net cash used in investing activities (1,320) (1,499) (2,274)
------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in
noninterest-bearing deposits 216 586 (3)
Net increase in interest-bearing deposits 189 793 2,052
Net increase in federal funds purchased
and repurchase agreements 345 204 130
Dividends paid (125) (116) (114)
------ ------ ------
Net cash provided by financing activities 625 1,467 2,065
------ ------ ------
Net (decrease) increase in cash and
cash equivalents (220) 621 152
CASH AND CASH EQUIVALENTS, at beginning of year 1,654 1,033 881
------ ------ ------
CASH AND CASH EQUIVALENTS, at end of year $1,434 $1,654 $1,033
====== ====== ======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for-
Interest $617 $601 $663
Income taxes 290 102 175
The accompanying notes are an integral part of these statements.
<PAGE>
SHARON STATE BANK
-----------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1994, 1993 AND 1992
--------------------------------
(Information as of and for the years ended December 31, 1993 and 1992,
is Unaudited)
(Dollars in thousands)
(1) Summary of Significant Accounting Policies-
------------------------------------------
Sharon State Bank (the "Company") is a Wisconsin corporation. A
description of the significant accounting policies is as follows:
Investment securities-
---------------------
Securities, when purchased, are designated as investment securities held
to maturity or investment securities available for sale and remain in
that category until they are sold or mature. The specific identification
method is used in determining the cost of securities sold. The Bank does
not engage in the trading of securities. In addition, the bank has no
investment securities designated as available for sale.
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," (FAS 115). FAS 115 requires, among other things, that
securities classified as available for sale be carried at market value;
however, market value adjustments and the related income tax effects, are
excluded from earnings and reported separately as a component of
shareholders' equity. This new standard was adopted by the Company on
January 1, 1994.
Adoption of this standard had no impact on the Company as none of its
investment securities are designated as available for sale.
Loans-
-----
Interest on loans is recognized as income based on the loan principal
outstanding during the period. Loans are generally placed on nonaccrual
status or charged off when they are past due 90 days or more. Loan fees
and origination costs are not deferred. The Company has not adopted
Financial Accounting Standards Board Statement No. 91, "Accounting for
Nonrefundable Fees and Costs Associated with Originating Loans." The
impact of adoption would not be material to the financial statements.
Reserve for loan losses-
-----------------------
The level of the reserve for loan losses is based upon management's
evaluation of the effects on the loan portfolio of current economic
conditions, various factors affecting the collectibility of loans and
changes in the character of the loan portfolio. The reserve for loan
losses is based on estimates. These estimates are reviewed periodically
and, as adjustments become necessary, they are reported in earnings in
the period in which they become known. Actual loan losses are recorded
as charges to the reserve for the principal amount of the loan. Any
subsequent recoveries are added to the reserve.
For income tax purposes, the Bank provides additions to the reserve in
accordance with the maximum amounts allowed under Federal income tax law.
<PAGE>
Bank premises and equipment-
---------------------------
Bank premises and equipment are stated at cost, less an allowance for
depreciation. Provisions for depreciation are charged to operating
expenses over the estimated useful lives of the assets.
Income taxes-
------------
Certain items are accounted for in different periods for financial
reporting purposes than for income tax purposes. Provisions are made for
deferred taxes in recognition of these temporary differences.
Cash equivalents-
----------------
For purposes of the statement of cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and federal funds sold.
(2) Business Combination-
--------------------
On August 31, 1994, the Company entered into an Agreement and Plan of
Reorganization (the "Agreement") whereby the Company will merge with and
into Marshall and Ilsley Corporation (M&I), a Wisconsin bank holding
company located in Milwaukee with consolidated assets of approximately
$12.6 billion. Under the terms of the Agreement each share of the
Company's common stock will be exchanged for 220 shares of the M&I's
common stock in a tax-free reorganization which is to be accounted for as
a purchase. The Agreement is subject to approval by the shareholders and
certain regulatory authorities. Consummation of the merger with and into
the M&I is expected to occur in the second quarter of 1995.
(3) Cash and Investment Securities-
------------------------------
A summary of the amortized cost and estimated market values, as computed
by Bank One, Milwaukee, of investment securities at December 31, is as
follows:
1994 1993
----------------- -------------------
Amortized Market Amortized Market
Cost Value Cost Value
-------- ------- ------- -------
Investment securities held to maturity:
U.S. Treasury Securities $2,074 $2,042 $2,079 $2,297
U.S. Agency Securities 1,149 1,111 656 693
State and Municipal Securities 1,275 1,276 1,986 2,115
Other Securities 2,168 2,104 1,832 1,964
------ ------ ------ ------
Total $6,666 $6,533 $6,553 $7,069
===== ===== ===== =====
<PAGE>
The unrealized gains and loss on investment securities at December 31,
were:
1994 1993
----------------------- ----------------------
Unrealized Unrealized Unrealized Unrealized
Gains Losses Gains Losses
---------- --------- --------- ---------
Investment securities
held to maturity:
U.S. Treasury Securities $7 $39 $218 $ -
U.S. Agency Securities 2 40 37 -
State and Municipal
Securities 26 25 135 6
Other Securities 34 98 132 -
---- ---- ---- ----
Total $69 $202 $522 $6
==== ==== ==== ====
The amortized costs and market values of investment securities at
December 31, by contractual maturity are shown below:
1994 1993
----------------- --------------------
Amortized Market Amortized Market
Cost Value Cost Value
-------- ------- ------- -------
Investment securities held to maturity:
Within one year $285 $307 $439 $441
From one through five years 1,702 1,712 2,009 2,181
Over five years 4,679 4,514 4,105 4,447
----- ----- ----- -----
Total $6,666 $6,533 $6,553 $7,069
===== ===== ===== =====
During 1994, realized gains amounted to $9 and realized losses amounted
to $20. These securities were sold as a result of deterioration in the
issuers' credit worthiness since acquisition. During 1993 and 1992,
respectively, realized gains amounted to $32 and $80 and there were no
realized losses.
Securities with a par value of approximately $5,587 and $6,751 at
December 31, 1994 and 1993, respectively, were pledged primarily to
secure public deposits and short-term borrowings and for other purposes
required by law.
At December 31, 1994, there were no cash restrictions due to Federal
Reserve requirements to maintain certain reserve balances.
(4) Loans-
-----
The composition of loans at December 31, is as follows:
1994 1993
------ ------
Real estate:
Construction $160 $220
Residential mortgage 6,125 5,084
Commercial mortgage 769 937
Commercial, financial and agricultural 2,843 2,894
Industrial development revenue bonds 354 362
Lease financing - 208
Personal 1,312 888
------ ------
Total loans $11,563 $10,593
====== ======
<PAGE>
A majority of the Company's borrowers are located in Wisconsin and
Illinois due to the Company's close proximity to the Illinois border. As
a community lender, the Company extends all forms of credit to
individuals and businesses in the communities and their surroundings.
Those communities are often dependent on a small number of employers or
on the agricultural economy.
Personal loans include residential, installment and education loans. The
Company evaluates the credit risk of each customer on an individual basis
and, where deemed appropriate, collateral is obtained. Collateral may
include accounts receivable, inventory, real estate, equipment, personal
guarantees and general security agreements. Access to collateral is
dependent upon the types of collateral obtained. The Company monitors
its collateral and the collateral value on an on-going basis.
At December 31, 1994, the Company had approximately $20 of nonperforming
loans which were earning below a market interest rate or were nonincome
producing. There were no nonperforming loans at December 31, 1993. The
effect of interest foregone on these loans is not significant.
There were no loans to directors, executive officers, shareholders or
their companies during 1994. During 1993, a $16 loan to an executive
officer was paid off.
An analysis of the reserve for loan losses for the year ended December
31, is as follows:
1994 1993 1992
---- ---- ----
Balance, beginning of year $171 $161 $152
Loans charged off (278) (105) (172)
Recoveries of charged off loans 52 12 8
Provisions charged to operating expense 206 103 173
---- ---- ----
Balance, end of year $151 $171 $161
=== === ===
In May 1993, the FASB issued Statement No. 114, "Accounting by Creditors
for Impairment of a Loan," (FAS 114). FAS 114 requires that a loan's
value be measured when it has been determined that the loan is impaired
and loss is probable. Write-downs which result from the measurement
process are to be expensed. FASB Statement No. 118, "Accounting by
Creditors for Impairment of a Loan--Income Recognition and Disclosures"
(FAS 118) amends FAS 114 in that it allows a creditor to use existing
methods for recognizing interest income on an impaired loan. These new
standards must be adopted by the Company in the first quarter of 1995.
Based upon the current status of the Company's loan portfolio, it is not
anticipated that these pronouncements will have a material impact on the
financial statements.
(5) Income Taxes-
------------
Income taxes reflected in the statements of income include the following
components:
1994 1993 1992
---- ---- ----
Current $156 $210 $81
Deferred provision 18 25 61
--- --- ---
Total $174 $235 $142
=== === ===
<PAGE>
The tax effects of temporary differences that give rise to significant
elements of the deferred tax assets at December 31, are as follows:
1994 1993
---- ----
Deferred tax assets:
Reserve for loan losses $ 1 $24
Bond premium amortization 15 10
--- ---
Total deferred tax assets $16 $34
=== ===
Total income tax expense is less than the amount computed by applying the
statutory Federal income tax rate to income before income taxes. The
reasons for this difference are as follows:
1994 1993 1992
--------------- --------------- ----------------
Percent Percent Percent
of of of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
------ ------ ------ ------ ------ ------
Income tax computed at
statutory rate $191 34.0% $237 34.0% $150 34.0%
State taxes, net of Federal
benefit 32 5.7 38 5.4 24 5.5
Tax-exempt municipal
interest (54) (9.6) (44) (6.3) (36) (8.2)
Other, net 5 .9 4 .6 4 .9
----- ----- ----- ----- ----- -----
Total income tax
expense $174 31.0% $235 33.7% $142 32.2%
==== ===== ==== ===== ==== =====
(6) Commitments and Contingent Liabilities-
--------------------------------------
In the normal course of business, there are various outstanding
commitments and contingent liabilities, such as guarantees, commitments
to extend credit, etc., which are not reflected in the accompanying
financial statements. Outstanding commitments to extend credit totaled
approximately $349 and $20 at December 31, 1994 and 1993, respectively.
Outstanding letters of credit totaled approximately $20 and $39 at
December 31, 1994 and 1993, respectively. The Company evaluates each
customer's credit worthiness on an individual basis. Collateral
obtained, if any, upon extension of credit, is based upon management's
credit evaluation of the customer. Collateral requirements and the
ability to access collateral is generally similar to that required on
loans outstanding. Losses are not anticipated as a result of these
transactions.
(7) Shareholders' Equity-
--------------------
Banks are subject to statutory and regulatory restrictions on the amount
they may pay in dividends. However, at December 31, 1994, there are no
restrictions on the retained earnings of the bank.
The bank's risk-based capital ratio is 23.6% and 23.3% at December 31,
1994 and 1993, respectively, which is in compliance with the minimum
regulatory requirements for risk-based capital.
<PAGE>
(8) Related Party Disclosure-
------------------------
The President of the Company, who is also the Chairman of the Board of
Directors and a principal shareholder, does not draw a salary from the
Company.
(9) Retirement Plan-
---------------
The Company has a defined contribution retirement plan that covers
substantially all full-time employees. The contributions made in 1994,
1993 and 1992 were $6, $5 and $5, respectively.
<PAGE>
SHARON STATE BANK
-----------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
(Dollars in thousands)
The information provided herein is based on the results of the Sharon State
Bank (the "Bank") for the years ended December 31, 1994, 1993 and 1992.
Financial Summary of the Bank. 1994 net income of $388 decreased by $75 from
1993 net income of $463, which increased by $164 from 1992 net income of
$299.
Return on average equity was 10.3%, 13.3% and 9.3% in 1994, 1993 and 1992,
respectively. The return on average assets was 2.0%, 2.6% and 1.9% in 1994,
1993 and 1992, respectively.
The following sections provide a more detailed review of the Bank's financial
performance. A portion of the Bank's income is derived from investments in
securities of states and political subdivisions. The interest income from
these investments is exempt from Federal income tax; therefore, the yield on
these investments is lower than the yield on investments with similar risks
and maturity characteristics whose interest is subject to Federal income tax.
For purposes of Management's Discussion and Analysis of Financial Condition
and Results of Operations, this nontaxable interest is treated at its taxable
equivalent, calculated using historical statutory Federal income tax rates
and reduced by interest expense disallowed as an income tax deduction.
Net Interest Income. Net interest income is the difference between gross
interest earned on earning assets, primarily loans and investment securities
and interest paid on deposits and funds borrowed to finance investments and
loans. Growth in net interest income is influenced by the growth of earning
assets and changes in the yield on earning assets. The net yield is also
influenced by changes in the level of interest rates, changes in the mix of
assets and liabilities and changes in asset and liability maturity and
interest rate sensitivity.
Net interest income increased $24 or 2.6% in 1994, while average earning
assets volume increased $1,252. Net interest income increased $232 or 33.7%
in 1993, compared to 1992, while average earning assets volume increased
$2,095. Ratios of net interest income to average earning assets (net
interest margin) were 5.1%, 5.3% and 4.5% in 1994, 1993 and 1992,
respectively.
Interest income on loans increased $96 or 10.4% in 1994 and $12 or 1.3% in
1993. The average rate of return on loans was 9.4%, 9.4% and 9.9% in 1994,
1993 and 1992, respectively. Average loan volume increased $1,042 or 10.6%
in 1994, and $686 or 7.5% in 1993.
Interest income on U.S. Treasury and Federal Agency securities decreased $39
or 12.0% in 1994, and $82 or 33.7% in 1993, while tax exempt interest income
on obligations of state and municipal governments and subdivisions thereof
increased $22 or 20.2% in 1994, and increased $26 or 20.6% in 1993. The
average tax equivalent rate of return on investment securities was 9.0% in
1994, 9.1% in 1993 and 9.3% in 1992. The average volume of investment
securities increased $224 or 3.5% in 1994 and increased $1,118 or 21.2% in
1993.
The composite yield on average interest earning assets on a fully taxable
equivalent basis was 8.8% in 1994 and 1993 and 9.4% in 1992.
<PAGE>
Interest expense on deposits and borrowed money increased $70 or 12.8% in
1994, and decreased $148 or 21.3% in 1993. The composite average interest
rate paid on interest bearing liabilities was 4.8%, 4.6% and 6.7% in 1994,
1993 and 1992, respectively.
Loan Losses. The provision for loan losses charged to operations was $206 in
1994, $103 in 1993, and $173 in 1992. The allowance for loan losses was $151
in 1994, $171 in 1993 and $161 in 1992, which represents 1.3%, 1.6% and 1.7%
of outstanding loans at the end of those years, respectively.
Other Income. Total noninterest income decreased $43 in 1994, and $34 in
1993, mainly due to investment gains realized of $32 and $80 in 1993 and
1992.
Other Expense. Total noninterest expense increased $14 or 7.0% in 1994, and
- -------------
decreased $11 in 1993. Salaries and employee benefits, the largest single
category of noninterest expense, increased $16 or 16.2% in 1994, compared to
an $18 or 15.3% decrease in 1993.
Income Taxes. The effective income tax rate of the Bank was 31.0%, 33.7% and
- ------------
32.2% for 1994, 1993 and 1992, respectively.
Average Balance Sheet Analysis. Total average assets increased $1,442 or
- ------------------------------
8.0% in 1994, and $2,167 or 13.8% in 1993, while average earning assets
increased by $1,252 or 7.3% in 1994, and $2,095 or 13.9% in 1993. Average
investment securities increased $224 or 3.5% in 1994, and increased $1,118 or
21.2% in 1993, while average tax exempt securities increased $16 or 1.0% and
$304 or 23.2% in 1993. As a percentage of total average assets, taxable
investments were 25.7% in 1994, 26.6% in 1993 and 25.1% in 1992, while tax
exempt securities were 8.4% in 1994, 9.0% in 1993 and 8.3% in 1992. Average
net loans and leases increased $1,042 or 10.6% in 1994 and $686 or 7.5% in
1993.
The primary source of funding earning asset growth in both 1994 and 1993, was
the increase each year in total deposits. Average deposits increased $892 or
6.6% in 1994, and $1,714 or 14.5% in 1993.
The following table presents average balance sheet categories and their
percentage of total average assets for the last two years:
Average Balance Sheet Composition of the Bank
Year Ended
-----------------------------------------
December 31, December 31,
1994 1993
------------------- -------------------
Assets $ % $ %
- ------ -------- ------ ------- -------
Loans and leases (net) $10,917 56.4% $9,875 55.1%
Investment securities:
Taxable securities 4,979 25.7 4,771 26.6
Tax-exempt securities 1,631 8.4 1,615 9.0
Short-term investments 945 4.9 959 5.4
------- ------ ------ ------
Total interest earning assets 18,472 95.4 17,220 96.1
------ ------ ------ ------
Cash and due from banks 599 3.1 385 2.1
Other assets 291 1.5 315 1.8
------ ------ ------ ------
Total assets $19,362 100.0% $17,920 100.0%
====== ====== ====== ======
<PAGE>
Year Ended
-----------------------------------------
December 31, December 31,
1994 1993
------------------- -------------------
Liabilities and
Shareholders' Equity $ % $ %
- --------------------- -------- ------ ------- -------
Savings and other time deposits:
Savings and NOW deposits $5,696 29.4% $6,026 33.6%
Other time deposits 6,244 32.2 5,835 32.6
------ ------ ------ ------
Total savings and other
time deposits 11,940 61.6 11,861 66.2
Other borrowings 1,035 5.4 761 4.2
------ ------ ------ ------
Total interest
bearing liabilities 12,975 67.0 12,622 70.4
Demand deposits 2,506 12.9 1,693 9.5
Other liabilities 114 .6 124 .7
Shareholders' equity 3,767 19.5 3,481 19.4
------ ------ ------ ------
Total liabilities
and shareholders' equity $19,362 100.0% $17,920 100.0%
====== ====== ====== ======
Capital Resources. Total shareholders' equity increased $224 or 6.1% to
$3,879 at December 31, 1994, and increased $347 or 10.5% to $3,655 at
December 31, 1993. The change in shareholders' equity in each of these years
was generated primarily from earnings.
Liquidity. Liquidity is the ability of the Bank to meet its financial
commitments when contractually due or needed by depositors. The Bank'
primary external source of liquidity is its deposit base. Internally
generated liquidity is principally provided by funds and investment
securities sold and, to a lesser extent, through loans. The Bank's
investment in funds sold was $656 at December 31, 1994, and $1,234 at
December 31, 1993. The Bank's investment in securities which mature within
one year at December 31, 1994 and 1993, were $285 and $439, respectively.
PMK-Sharon MD&A F-
S-MDA-F.PMK
02/23/95 ica
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION, AS AMENDED
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as
of the 31st day of August, 1994, by and between Marshall & Ilsley
Corporation, a Wisconsin corporation (the "Corporation") and Sharon State
Bank, a Wisconsin state chartered bank (the "Bank").
W I T N E S S E T H
WHEREAS, this Agreement provides for the consolidation of the Bank
with and into the Citizens Bank of Delavan, a Wisconsin state chartered bank
("Citizens Bank"), in accordance with applicable law and pursuant to the
terms of this Agreement and the Agreement and Plan of Consolidation between
the Bank and Citizens Bank which is attached hereto as Exhibit A (the
"Consolidation Agreement"). The consolidation of the Bank and Citizens Bank
(hereafter, the "Consolidation") shall occur following consummation of the
merger of Citizens Bancorp of Delavan, Inc. into M&I Interim Corp. (after the
merger, referred to as the "Surviving Corporation") and the merger of the
Surviving Corporation into the Corporation, as set forth in that certain
Agreement and Plan of Reorganization between the Corporation and Citizens
Bancorp of Delavan, Inc., dated the same date as this Agreement. Thereafter,
the Corporation will control Citizens Bank within the meaning of Section
368(c) of the Internal Revenue Code of 1986, as amended (the "IRC"). This
Agreement provides for the conversion, at the Effective Time of such
Consolidation, of the Bank's outstanding shares of common stock, $100.00 par
value, ("Bank Stock") into the right to receive shares of the Corporation's
$1.00 par value common stock (the "M&I Stock"), all upon the terms and
conditions hereinafter set forth. The Consolidation is intended to qualify
as a tax-free reorganization pursuant to Section 368(a)(2)(D) of the IRC.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
CONSOLIDATION OF BANK WITH AND INTO CITIZENS BANK
Section 1.01. Consolidation. In accordance with the provisions of
this Agreement, the Consolidation Agreement and applicable law, at the
Effective Time (as hereinafter defined) the Bank shall be merged with and
into Citizens Bank (which is herein referred to as the "Surviving Bank"
whenever reference is made to it on or after the Effective Time) and the
separate existence of Bank shall cease. The Consolidation shall be
consummated effective at the date and time specified in Section 6.03 of this
Agreement (the "Effective Date" and "Effective Time," respectively).
<PAGE>
Section 1.02. Surviving Bank. After the Effective Time the name of
the Surviving Bank shall be "M&I Bank of Delavan" and the Articles of
Incorporation and By-Laws of Citizens Bank as in effect immediately prior to
the Effective Time shall be the Articles of Incorporation and By-Laws,
respectively, of the Surviving Bank, unless and until changed in accordance
with applicable law. The Surviving Bank shall continue its existence under
the laws of the State of Wisconsin as a wholly-owned direct or indirect sub-
sidiary of the Corporation.
Section 1.03. Business. The business of the Surviving Bank shall
be that of a state bank and shall be conducted at such locations as the
Surviving Bank may establish.
Section 1.04. Board of Directors; Officers. The Board of Directors
and principal officers of the Surviving Bank as of the Effective Time shall
consist of the persons who are the directors and principal officers of
Citizens Bank immediately prior to the Effective Time. Such persons shall
serve as directors and principal officers of the Surviving Bank until the
next annual meeting of the Surviving Bank or until such time as their suc-
cessors have been duly qualified and elected or appointed in accordance with
the By-Laws of the Surviving Bank.
Section 1.05. Effect of Consolidation. All assets of Bank, as they
exist at the Effective Time, shall pass to and vest in the Surviving Bank
without any conveyance or other transfer and the Surviving Bank shall be
responsible for all liabilities of Bank. At any time after the Effective
Time the officers of the Surviving Bank may, in the name of Bank, execute and
deliver all such deeds, assignments and other instruments and take or cause
to be taken all actions as the Surviving Bank may deem necessary or desirable
in order to vest, perfect or confirm in the Surviving Bank title to and
possession of all of Bank's property, rights, privileges, immunities, powers,
purposes and otherwise to carry out the purposes of this Agreement.
Section 1.06. Closing. The closing of the transactions
contemplated by this Agreement shall be effected as promptly as practicable
within the thirty-day period commencing with the latest of the following
dates (the "Closing"):
(a) The 30th calendar day after the date of approval by the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board");
(b) Such date as may be prescribed by the Wisconsin Office
of the Commissioner of Banking (the "Commissioner of Banking"), the Federal
Deposit Insurance Corporation (the "FDIC") or any other agency or authority
from which approval must be received prior to the consummation of the
transactions contemplated herein; or
<PAGE>
(c) If the transactions contemplated herein are being
contested in any legal proceeding, and the Corporation has elected to contest
the same, then the date that such legal proceeding has been brought to a
conclusion favorable, in the judgment of the Corporation, to the consummation
of the transaction contemplated hereby.
The Closing shall take place at the offices of counsel to the Corporation,
780 North Water Street, Milwaukee, Wisconsin, or at such other place as shall
be mutually agreeable to the Corporation and Bank.
ARTICLE II
STATUS AND CONVERSION OF SECURITIES
Section 2.01. Capital Stock of Citizens Bank. Each share of common
stock of Citizens Bank issued and outstanding as of the Effective Time shall
remain outstanding and shall be owned directly or indirectly by the
Corporation and such shares shall not be changed or converted by the
Consolidation.
Section 2.02. Conversion of Bank Stock. Subject to the conditions
and limitations set forth in this Agreement, at the Effective Time, by virtue
of the Consolidation and without any action on the part of any holder of
shares of Bank Stock:
(a) All Bank Stock owned by the Bank shall be cancelled and
no M&I Stock or cash shall be delivered in exchange therefor;
(b) Each outstanding share of Bank Stock as to which
shareholders have validly perfected dissenter's rights in accordance with
applicable Wisconsin law shall not be converted into and shall not become M&I
Stock hereunder (hereinafter, the "Dissenting Shares"), and Bank shall give
the Corporation prompt notice of any written notice from any shareholder of
Bank objecting to the Consolidation (the "Dissenting Shareholders"). Prior
to the Effective Time, Bank shall not, except with prior written consent of
the Corporation, voluntarily make any payment with respect to or settle or
offer to settle any such objection. Each Dissenting Shareholder who becomes
entitled, pursuant to the provisions of applicable law, to payment for Bank
Stock shall receive payment therefor from the Surviving Bank from (i) the
Surviving Bank's assets or (ii) funds provided by the Corporation dependent
on which method would preserve the character of the overall transaction as a
reorganization under Section 368(a)(2)(D) of the IRC (but only after the
amount thereof shall have been agreed upon or finally determined pursuant to
the provisions of the laws of the State of Wisconsin) and such shares of Bank
Stock shall be cancelled. If any Dissenting Shareholder shall fail to
perfect or shall effectively withdraw or lose the right to appraisal of
payment for shares of Bank Stock under applicable law, such shares shall be
thereupon converted into M&I Stock in accordance with the provisions of
Sections 2.02 and 2.03 hereof; and
<PAGE>
(c) Each share of Bank Stock (except shares described in
subparagraph (a) hereof and Dissenting Shares) issued and outstanding as of
the Effective Time shall by virtue of the Consolidation and without any
action on the part of the holder thereof be converted into the right to
receive that number of shares of M&I Stock which is equal to the result
obtained by dividing 220,000 by the number of issued and outstanding shares
of Bank Stock at the Effective time, and rounding such result (if not a whole
number) to the nearest hundredth of a percentage.
Section 2.03. No Fractional Shares. No fractional shares of M&I
Stock shall be issued upon the surrender for exchange of certificates; no
dividend or distribution with respect to M&I Stock shall be payable on or
with respect to any fractional share; and no fractional share interest shall
entitle the owner thereof to any rights of a shareholder of the Corporation.
In lieu of any such fractional share, the Corporation shall pay to each
former shareholder who otherwise would be entitled to receive a fractional
share of M&I Stock an amount in cash determined by multiplying the closing
sales price of M&I Stock as reported in the Midwest Edition of the Wall
Street Journal on the Effective Date by the fraction of a share of M&I Stock
to which such holder would otherwise be entitled.
Section 2.04. Payment of Consolidation Consideration.
(a) As soon as practicable after the Effective Time, the
Corporation shall make available to Citizens Bank, which in turn shall make
available to M&I Marshall & Ilsley Bank or other financial institution which
shall be designated by the Corporation as Exchange Agent (the "Exchange
Agent") certificates representing the shares of M&I Stock into which Bank
Stock shall be converted pursuant to Section 2.02. The Corporation also
shall make available to Citizens Bank at the Effective Time, which in turn
shall make available to the Exchange Agent, the cash necessary to make all
required payment for fractional shares pursuant to Section 2.03, above.
(b) As soon as practicable after the Effective Time, the
Exchange Agent will send a notice and transmittal form to each holder of a
certificate which formerly represented Bank Stock prior to the Consolidation,
advising such holder of the terms of the exchange effected by the
Consolidation and the procedure for surrendering to the Exchange Agent such
certificate for exchange into one or more certificates evidencing shares of
M&I Stock and/or cash (as to fractional or Dissenting Shares). Until so
surrendered, each outstanding certificate will be deemed for all purposes to
evidence the right to receive cash (as to fractional or Dissenting Shares)
and/or the ownership of the number of full shares of M&I Stock as provided
herein; provided, however, that until such certificates are so surrendered,
no dividend payable to holders of record of shares of M&I Stock as of any
date subsequent to the Effective Time shall be paid to the holder or holders
of such certificates in respect to M&I Stock represented thereby. After the
Effective Time, there shall be no further registry of transfers on the
<PAGE>
records of Bank of Bank Stock and, if a certificate representing such Bank
Stock is presented to the Surviving Bank for transfer, it shall be cancelled
and exchanged for a check in the appropriate amount and/or a certificate
representing the appropriate number of shares of M&I Stock as herein
provided. Upon surrender of certificates for Bank Stock which have been
converted into shares of M&I Stock, there shall be paid (without interest) to
the record holder of the certificates for M&I Stock issued and exchanged
therefor: (i) on or as soon as practicable after such date of surrender, the
amount of dividends which as of any date subsequent to the Effective Time
became payable and were not paid to such holder with respect to such shares
of M&I Stock; and (ii) on the appropriate payment date occurring subsequent
to the date of surrender, the amount of such dividends, if the record date in
respect thereof occurred after the Effective Time but prior to the date of
surrender. Notwithstanding any provision of this Agreement, neither the
Exchange Agent nor any person, firm or entity shall be liable or obligated to
any former holder of any share of Bank Stock (or to anyone claiming through
any such former holder) with respect to any M&I Stock, or dividends thereon,
or with respect to any cash to which any such holder would be entitled as a
consequence of the Consolidation, if such M&I Stock, dividends or cash have
been paid, or are payable, to any public official pursuant to any abandoned
property, escheat or similar laws.
Section 2.05. Certificates in Other Names. A certificate
evidencing shares of M&I Stock in a name other than that in which the
certificate surrendered and exchanged is registered may be issued if the
certificate so surrendered shall be properly endorsed, with signatures
guaranteed by a commercial bank or a firm having membership on a national
securities exchange, or otherwise in proper form for transfer, and the person
requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of its certificate for shares
of M&I Stock to any person other than the registered holder of the
certificate surrendered or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
Section 2.06. Anti-Dilution Adjustment. If, subsequent to the date
hereof and prior to the Effective Time, the Corporation shall pay a dividend
or make a distribution on M&I Stock in shares of M&I Stock or any security
convertible into M&I Stock or shall combine or subdivide its stock, then in
each such case, from and after the record date for determining the share-
holders entitled to receive such dividend or distribution or the securities
resulting from such combination or subdivision, an appropriate adjustment
shall be made to the conversion ratio set forth in Section 2.02 hereof, for
purposes of determining the number of shares of M&I Stock into which Bank
Stock shall be converted. For the purpose hereof, the payment of a dividend
in or distribution on M&I Stock in securities convertible into M&I Stock
shall be deemed to have effected an increase in the number of outstanding
shares of M&I Stock equal to the number of shares of M&I Stock
<PAGE>
into which such securities shall be initially convertible without the payment
by the holder thereof of any consideration other than the surrender for
cancellation of such convertible securities. Notwithstanding the foregoing,
this Section shall not apply to any stock options issued under option plans
of the Corporation whether or not authorized as of the date of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANK
Bank hereby represents and warrants to the Corporation as follows:
Section 3.01. Organization. Bank is a state bank duly organized,
validly existing and in good standing under the laws of the State of
Wisconsin. Bank has the corporate power and authority and has received all
necessary material federal, state or local authorizations to own or lease its
properties and assets and to carry on its business as now conducted and
presently proposed to be conducted. The copies of the Articles of
Incorporation and By-Laws of Bank, certified by its Cashier, respectively, as
of the date of this Agreement and which have been delivered to the
Corporation, are correct and complete copies of the Articles of Incorporation
and By-Laws of Bank in effect as of the date of this Agreement. As of the
date of this Agreement, the minute books of Bank contain complete and
accurate records of all meetings and other corporate actions of its share-
holders and Boards of Directors (including committees of the Boards of
Directors). Bank is duly qualified to conduct its business and is in good
standing in each jurisdiction in which the nature of the business transacted
requires such qualification, except those jurisdictions in which the failure
to so qualify does not involve the violation of a criminal statute, affect
the validity or enforceability of a contract in any material respect or
otherwise have a material adverse effect on Bank.
Section 3.02 Capitalization. The authorized capital stock of
Bank consists of 1,000 shares of common stock, $100.00 par value, of
which 1,000 shares are issued and outstanding as of the date of this
Agreement and all of which shares are validly issued and outstanding, fully
paid, non-assessable (except as otherwise provided by applicable law), and
have not been issued in violation of the preemptive rights of any stock-
holder. There are no outstanding or existing options, preemptive rights,
warrants, subscriptions, conversion rights, calls or commitments of any kind
obligating Bank to issue, directly or indirectly, additional shares of any
class of capital stock. Bank has no outstanding commitments or obligations
to repurchase, reacquire or redeem any of its outstanding capital stock.
<PAGE>
Section 3.03. Authority and Validity of Agreement. Bank has full
corporate power and authority to enter into this Agreement, the Consolidation
Agreement and to consummate the transactions contemplated herein and therein.
The execution, delivery and performance of this Agreement and the
Consolidation Agreement by Bank have been duly authorized by all requisite
corporate action, including without limitation approval by Bank's Board of
Directors, subject only to approval by the holders of the requisite
percentage of the outstanding shares of Bank Stock. Subject to such approval
by its shareholders and the government approvals described below, this
Agreement and, upon execution and delivery, the Consolidation Agreement, each
will constitute a valid and binding obligation of Bank, enforceable in
accordance with its terms, except as such terms may be affected by
bankruptcy, insolvency, moratorium and similar laws affecting the rights of
creditors generally and by the availability of equitable remedies. Provided
the required approvals are obtained from the Federal Reserve Board, the
Commissioner of Banking and the FDIC, and the offering, sale and delivery of
the M&I Stock to be issued hereunder (and under the Consolidation Agreement)
are duly registered pursuant to the Securities Act of 1933 (the "1933 Act"),
as amended, and Rule 145 of the General Rules and Regulations thereunder
("Rule 145"), and subject to the rights of any Dissenting Shareholders,
neither the execution, delivery and performance of either this Agreement or
the Consolidation Agreement nor the consummation of the transactions
contemplated herein and therein, will conflict with, result in the material
breach of, constitute a default under or accelerate the performance provided
by, the terms of any law, or any rule or regulation of any government agency
or authority or any judgment, order or decree of any court or other
government agency to which Bank may be subject, any contract, agreement or
instrument to which Bank is a party or by which Bank is bound or committed or
the Articles of Incorporation or By-Laws of Bank, or constitute an event
which with the lapse of time or action by a third party could result in the
creation or imposition of any lien, charge or encumbrance upon any of the
assets or properties of Bank or upon any of the capital stock of Bank.
Section 3.04. Financial Statements.
(a) Bank has heretofore delivered to the Corporation correct
and complete copies of:
(i) Bank's unaudited financial statements
(including, in each case, any related notes thereto), certified by the
Cashier of the Bank, including Call Reports and unaudited Statements of
Condition for Bank as of December 31, 1992, December 31, 1993, and the period
from January 1, 1994 to June 30, 1994, and its unaudited Statements of
Income, Changes in Financial Position and Statements of Shareholders' Equity
for the same period; and
(ii) Copies of all management and other letters
delivered to Bank by Bank's independent auditors, of the internal controls of
Bank during the period January 1, 1991 to date, and will, upon reasonable
request, make available for inspection at such time and place as the
Corporation may request, reports and working papers produced or developed by
Bank's independent auditors in connection with their examination of such
financial statements, as well as all such reports and working papers for
prior periods for which any tax or other liability of Bank has not been
finally determined or barred by applicable statute of limitations.
<PAGE>
(b) The financial statements, Call Reports and
management and other letters described in subsections (a) and (b) above
fairly present as of their respective dates the financial positions of Bank
as of the dates thereof and the results of operations for the periods
indicated, and each such statement has been, and shall have been, prepared in
accordance and compliance with all standards and instructions of the FDIC
(the "Regulatory Accounting Standards"), and in conformity with generally
accepted accounting principles applied on a consistent basis, except as
otherwise stated, and except that any unaudited interim statements are
subject to normal year-end audit adjustments which shall not be materially
adverse.
(c) The financial statements and Call Reports
described
in Subsection (a) above, do not, as of the dates thereof, include any
material assets or omit to state any material liability, absolute or
contingent, or other facts, the inclusion or omission of which renders such
financial statements, in light of the circumstances under which they were
made, materially misleading.
Section 3.05. Reserves for Possible Loan Losses. The reserves
for possible loan and lease losses shown on Bank's Call Report filed as of
June 30, 1994, are to the best knowledge of Bank adequate in all respects to
provide for all losses, and net of recoveries relating to loans previously
charged off, on loans outstanding as of the date of such statement, and the
loan portfolios of Bank at such dates in excess of such reserves are all
fully collectible in accordance with their terms.
Section 3.06. Absence of Certain Changes or Events. Except as
has been disclosed in Exhibit C hereto (the "Disclosure Schedule"), since
January 1, 1994, there has not been any material adverse change in the
business, properties or financial condition of Bank nor any development
involving a prospective change in Bank's business, which has affected or may
affect materially and adversely the businesses, properties or financial
condition or the results of operations of Bank, and Bank has conducted its
business only in the ordinary course consistent with past practice.
Section 3.07. Title. Bank has good and marketable title to all
assets and properties, whether real or personal, tangible or intangible,
which it purports to own, including without limitation, all assets and
properties reflected in the most recent financial statements or Call Reports
referred to in Section 3.04(a) hereof, or acquired subsequent thereto (except
to the extent such assets and properties have been disposed of for fair value
in the ordinary course of business since the date of such financial
statements), subject to no liens, mortgages, security interests, encumbrances
or charges of any kind except: (i) as noted in said financial statements or
the notes thereto; (ii) statutory liens not yet delinquent;
<PAGE>
(iii) security interests granted incident to borrowings by Bank from the
Federal Reserve Banks or to secure deposits of funds by federal, state or
other governmental agencies; (iv) minor defects and irregularities in title
and encumbrances which do not materially impair the use thereof for the
purposes for which they are held; (v) liens in connection with repurchase
agreements and any other liens incurred in the ordinary course of business;
and (vi) such liens, mortgages, security interests, encumbrances and charges
as are not, in the aggregate, material to the assets and properties of Bank.
The Disclosure Schedule sets forth a list of all material leases pursuant to
which Bank leases real or personal property. All such leases are valid,
binding and enforceable in accordance with their terms, and are in full force
and effect, and there are no existing defaults by Bank thereunder or (to the
best knowledge of Bank) any other party thereto; and no event has occurred
which (whether with or without notice, lapse of time or both) would
constitute a default thereunder. True and correct copies of such leases have
been delivered to the Corporation. None of the buildings, structures or
appurtenances described in the Disclosure Schedule or the operation or
maintenance thereof as now operated or maintained, contravenes any zoning
ordinance or other administrative regulation (whether or not permitted
because of prior non-conforming use) or violates any restrictive covenant or
any provision of law, the effect of which would materially interfere with or
prevent the continued use of such properties for the purposes for which they
are now being used or would materially and adversely affect the value
thereof.
Section 3.08. Litigation. Except as set forth in the Disclosure
Schedule hereto, no claims have been asserted and no relief has been sought
against Bank in any pending litigation or government proceedings (including
without limitation any notice of possible violation or non-compliance with
any environmental law, rule or regulation) or otherwise which might result in
a judgment, decree or order having a material adverse effect on the financial
condition, results of operations, assets, business or prospects of Bank. To
the best of Bank's knowledge there is no reasonable basis for any material
proceedings, claims, actions or government investigation (including without
limitation any notice of possible violation or non-compliance with any
environmental law, rule or regulation). Bank is not a party to any order,
judgment or decree which will, or might reasonably be expected to have, a
material adverse effect on its business, operations, assets, financial
condition or prospects.
Section 3.09. Compliance with Laws. Bank has all permits,
licenses, certificates of authority, orders and approvals of, and has made
all filings, applications and registrations with federal, state or local
government or regulatory bodies that are required in order to permit it to
carry on its business as presently conducted and the absence of which would
have a material adverse effect on such business. All such permits, licenses,
certificates of authority, orders and approvals are in full force and effect,
to the knowledge of Bank, no suspension or cancellation of any of them is
threatened; and all such filings, applications and registrations are current
<PAGE>
in all material respects. Bank is not in default under any order, license,
regulation or demand of any federal, state, local or other government agency
or with respect to any order, writ, injunction or decree of any court, in
each case which violation, infringement or default would have a material
adverse effect on the financial condition, results of operations, business or
prospects of Bank.
Section 3.10. Taxes. Bank has filed with the appropriate
government agencies all federal, state and local income, franchise, excise,
real and personal property and other tax returns and reports which are
required to be filed by it and Bank is not delinquent in the payment of any
taxes shown on such returns or reports or on any assessments for any such
taxes received by it. The tax and audit positions taken by Bank in
connection with the tax returns described in this section were reasonable and
asserted in good faith. To Bank's knowledge, there are no examinations by
the Internal Revenue Service or the Wisconsin Department of Revenue for any
years pending with respect to Bank. The Disclosure Schedule sets forth the
date or dates through which the Internal Revenue Service and the Wisconsin
Department of Revenue, respectively, have examined the income tax returns of
Bank. There are included in the most recent financial statements (or the
notes thereto) referred to in Section 3.04(a) hereof, adequate reserves for
the payment of all accrued but unpaid federal, state and local taxes of Bank
including interest and penalties, whether or not disputed, for the period
ended as of the date of such statements and for all fiscal periods prior
thereto. Bank has not executed or filed with the Internal Revenue Service
any agreement extending the period for assessment and collection of any
federal or state tax, nor is Bank a party to any action or proceeding by any
government authority for assessment or collection of taxes, nor has any claim
for assessment or collection of taxes been asserted against Bank.
Section 3.11. Employment Contracts and Benefits; Material
Contracts. Except as disclosed in the Disclosure Schedule, there are no: (i)
employment, severance, consulting or other compensation agreements between
Bank and any officer, director or employee of Bank; and Bank is not a party
to or bound by any written or oral employment contract (including without
limitation, any collective bargaining contract or union agreement) which is
not terminable without penalty by Bank on sixty days' or less notice; (ii)
bonus, profit-sharing, severance, termination, stock option, pension,
retirement, deferred or contingent compensation or other employee benefit
agreements, trusts, plans or other arrangements for the benefit of any
director, officer or employee of Bank; (iii) material leases or licenses with
respect to any property, real or personal, whether as landlord, tenant,
licensor or licensee; (iv) contracts or commitments for capital expenditures
in excess of $50,000 for any one project; (v) material contracts or commit-
ments made in the ordinary course of business for the purchase of materials
or supplies or for the performance of services over a period of more than
sixty days from the date of this Agreement; or (vi) contracts or options to
purchase or sell any real or personal property otherwise than in the ordinary
<PAGE>
course of business. Bank has in all material respects performed all
obligations required to be performed by it to date and is not in default
under any outstanding indenture, mortgage, contract, lease or other agreement
to which it is a party or by which it is bound or under any provision of its
Articles of Incorporation or By-Laws, which might result in, or have
consequences which might result in, a material adverse effect on the
financial condition, results of operations, assets, business or prospects of
Bank.
Section 3.12. Employee Benefit Plans.
(a) Existence of Plans. The Disclosure Schedule lists
all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred com-
pensation, retiree medical or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements, and all material
employment, termination, severance or other employment contracts or employ-
ment agreements, with respect to which Bank has any obligation (collectively,
the "Plans"). Bank has furnished or made available to the Corporation a
complete and accurate copy of each Plan (or a description of the Plans, if
the Plans are not in writing) and a complete and accurate copy of each
material document prepared in connection with each such Plan, including,
without limitation and where applicable, a copy of: (i) each trust or other
funding arrangement; (ii) each summary plan description and summary of
material modifications; (iii) the most recently filed Internal Revenue
Service ("IRS") Form 5500 and related schedules; (iv) the most recently
issued IRS determination letter for each such Plan; and (v) the most recently
prepared actuarial report and financial statement in connection with each
such Plan.
(b) Absence of Certain Types of Plans. Bank does not
maintain or contribute to, or within the five years preceding the Effective
Time has not maintained or contributed to, an employee pension benefit plan
subject to Title IV of ERISA. Except as listed on the Disclosure Schedule,
none of the Plans obligates Bank to pay material separation, severance,
termination or similar-type benefits solely as a result of any transaction
contemplated by this Agreement or as a result of a "change in control,"
within the meaning of such term under Section 280G of the Code. Except as
listed in the Disclosure Schedule or as required by COBRA, none of the Plans
provides for or promises retiree medical, disability or life insurance
benefits to any current or former employee, officer or director of Bank.
(c) Compliance with Applicable Law. Except as listed on
the Disclosure Schedule, each Plan has been operated in all respects in
accordance with the requirements of all applicable Law and all persons who
participate in the operation of such Plans and all Plan "fiduciaries" (within
the meaning of Section 3(21) of ERISA) have acted in accordance with the
provisions of all applicable Law, except where such violations of applicable
Law would not, individually or in the aggregate, have a material adverse
<PAGE>
effect on Bank. Bank has performed all obligations required to be performed
by it under, is not in any respect in default under or in violation of, and
has no knowledge of any default or violation by any party to, any Plan,
except where such failures, defaults or violations would not, individually or
in the aggregate, have a material adverse effect on Bank. No legal action,
suit or claim is pending or threatened with respect to any Plan (other than
claims for benefits in the ordinary course) and, except as disclosed in the
Disclosure Schedule, to the knowledge of Bank no fact or event exists that
could give rise to any such action, suit or claim. Except as listed on the
Disclosure Schedule, Bank has not incurred any material liability to the
Pension Benefit Guaranty Corporation or any material "withdrawal liability"
within the meaning of Title IV of ERISA.
(d) Qualification of Certain Plans. Each Plan that is
intended to be qualified under Section 401(a) of the Code or Section 401(k)
of the Code has received a favorable determination letter from the IRS (as
defined herein) that it is so qualified, and each trust established in
connection with any Plan that is intended to be exempt from federal income
taxation under Section 501(a) of the Code is so exempt, and no fact or event
has occurred since the date of such determination letter from the IRS to
adversely affect the qualified status of any such Plan or the exempt status
of any such trust. Except as disclosed on the Disclosure Schedule, no trust
maintained or contributed to by Bank is intended to be qualified as a
voluntary employees' beneficiary association or is intended to be exempt from
federal income taxation under Section 501(c)(9) of the Code.
(e) Absence of Certain Liabilities and Events. Except
for matters listed on the Disclosure Schedule, there has been no prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan. Bank has not incurred any liability for
any excise tax arising under Section 4972 or 4980B of the Code and to the
knowledge of Bank no fact or event exists that could give rise to any such
liability.
(f) Plan Contributions. All contributions, premiums or
payments required to be made with respect to any Plan have been made on or
before their due dates.
Section 3.13. Conduct. Except as set forth in the Disclosure
Schedule hereto, since December 31, 1993 Bank has not: (i) declared or set
aside or paid any dividend or other distribution in respect of its capital
stock, or directly or indirectly, purchased, redeemed or otherwise acquired
any shares of such stock; (ii) incurred any obligations or liabilities
(absolute or contingent), or mortgaged, pledged or subjected to liens or
encumbrances (other than statutory liens not yet delinquent) any of its
assets or properties, except certificates of deposit, repurchase agreements,
letters of credit, cashier's checks, borrowings from the Federal Reserve
Banks, and obligations and liabilities incurred in the ordinary course of
business, discharged or satisfied any lien or encumbrance or paid any
<PAGE>
obligation or liability (absolute or contingent), other than current
liabilities included in the financial statements, current liabilities
incurred since the date thereof in the ordinary course of business and
liabilities incurred in carrying out the transaction contemplated by this
Agreement; (iii) sold, exchanged or otherwise disposed of or acquired assets
other than in the ordinary course of business; (iv) made any general wage or
salary increase to its employees as a class, or to any executive officer or
director, entered into or amended any employment contract, severance or
similar agreement or arrangement with any officer or salaried employee or
established any new or modified or amended any existing employee welfare,
bonus, stock option, profit-sharing, retirement or other employee benefit
plan or arrangement; (v) suffered any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting their business,
properties or assets or waived any rights of value which in the aggregate are
material; (vi) except in the ordinary course of business, entered or agreed
to enter into any agreement or arrangement granting any preferential rights
to purchase any of its assets, properties or rights or requiring the consent
of any party to the transfer and assignment of any such assets, properties or
rights; or (vii) entered into any transactions outside the ordinary course of
business except as expressly contemplated by this Agreement.
Section 3.14. Continuity of Interest. To the best of Bank's
knowledge, there is no plan or intention on the part of Bank's shareholders
to sell, exchange or otherwise dispose of a number of shares of the M&I Stock
to be received by them in the Consolidation which would reduce the holdings
of such M&I Stock to a number of shares having, in the aggregate, a value at
the time of the Consolidation of less than 50% of all capital stock of Bank
outstanding prior to the Consolidation. For purposes of this representation,
shares of Bank Stock exchanged for cash or other property, surrendered by
dissenters, or exchanged for cash in lieu of fractional shares of M&I Stock
will be treated as outstanding Bank Stock on the date of the Consolidation.
Moreover, shares of Bank Stock and shares of M&I Stock held by Bank
shareholders and otherwise sold, redeemed, or disposed of prior or subsequent
to the Consolidation will be considered in making this representation.
Section 3.15. Approval by Bank Board; Recommendation to Bank
Shareholders. The Board of Directors of Bank has determined that this
Agreement, the Consolidation and the other transactions contemplated hereby
are fair to the shareholders of Bank and recommended that the shareholders of
Bank authorize and approve this Agreement, the Consolidation Agreement and
the transactions contemplated herein (the "Board Resolutions"); the Board
Resolutions are in full force and effect, have not been withdrawn, modified,
amended or rescinded in any respect prior to the date hereof and will not be
withdrawn, modified, amended or rescinded in any respect prior to the
Effective Time; and the affirmative votes of only two-thirds (2/3) of the
outstanding shares of Bank Stock are required to authorize and approve this
Agreement, the Consolidation Agreement and the transactions contemplated
herein and therein.
<PAGE>
Section 3.16. Insurance. To the best of Bank's knowledge, Bank
has in effect insurance coverage with reputable insurers, which in respect to
amounts, types and risks insured, is adequate for companies of comparable
size engaged in business similar to that in which Bank is engaged. A
schedule of all insurance policies in effect as to Bank is set forth in the
Disclosure Schedule. All material policies of fire, product or other
liability, worker's compensation and other similar forms of insurance owned
or held by Bank are in full force and effect, all premiums with respect
thereto covering all periods up to and including the date as of which this
representation is being made have been paid and no notice of cancellation or
termination has been received with respect to any such policy. Such policies
are valid, outstanding and enforceable policies, and will not in any way be
affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement.
Section 3.17. Absence of Adverse Agreements. Bank is not a
party to any agreement or instrument or any judgment, order or decree or any
rule or regulation of any court or other government agency or authority which
materially and adversely affects or in the future may, to the best knowledge
of Bank, materially and adversely affect the financial condition, results of
operations, assets, business or prospects of Bank.
Section 3.18. Disclosure. No representation or warranty made by
Bank contained in this Agreement and no statement contained in any
certificate, list, exhibit or other instrument specified in this Agreement,
whether heretofore furnished to the Corporation or hereafter required to be
furnished to the Corporation, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary
to make the statements contained therein not misleading.
Section 3.19. Internal Controls and Records. Bank maintains
books of account which accurately and validly reflect, in all material
respects, all loans, mortgages, collateral and other business transactions
and maintains accounting controls sufficient to ensure that all such
transactions are (i) in all material respects, executed in accordance with
its management's general or specific authorization, and (ii) recorded in
conformity with generally accepted accounting principles. There is no
amendment to any lending agreement, collateral document or security which is
not fully reflected in Bank's books and records.
Section 3.20. Loan Schedule. The Disclosure Schedule contains a
Loan Schedule identifying certain loan agreements, notes and borrowing
arrangements between Bank and its borrowers. Except as specifically noted on
the Loan Schedule: (i) as of the date of this Agreement, Bank is not a party
to any written or oral loan agreement, note or borrowing arrangement under
the terms of which the obligor is 30 days or more delinquent in payment of
<PAGE>
principal or interest or, to the best of Bank's knowledge, in default of any
other provision as of the dates shown thereon other than loans the unpaid
balance of which does not exceed $10,000 per loan; (ii) as of the date of
this Agreement Bank is not a party to any written or oral loan agreement,
note or borrowing arrangement which has been classified as "substandard,"
"doubtful," "loss," "other loans especially mentioned" or any comparable
classifications by Bank, FDIC or Commissioner of Banking; (iii) as of the
date of this Agreement Bank is not a party to any written or oral loan
agreement, note, or borrowing arrangement, including any loan guaranty, with
any director, executive officer or ten percent shareholder of Bank, or any
person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing; or (iv) as of the date of this Agreement,
to the best of Bank's knowledge, Bank is not a party to any written or oral
loan agreement, note or borrowing arrangement in violation of any law,
regulation or rule of any governmental authority and which violation could
affect Bank in a materially adverse manner.
Section 3.21. Brokers. Neither Bank nor any of its officers and
directors have engaged any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the
Consolidation or the transactions contemplated herein. Bank agrees to
indemnify the Corporation against any claim by any third person for any
commission, brokerage or finder's fee, or other payment with respect to this
Agreement, the Consolidation Agreement or the transactions contemplated
herein and therein based on any alleged agreement or understanding between
such party and such third person, whether express or implied from the actions
of such party.
Section 3.22. Environmental Matters.
(a) To the best of Bank's knowledge and except as
disclosed in the Disclosure Schedule: (i) Hazardous Materials (as defined
below) have not been stored, released or disposed of on or from Bank's
Property (as defined below) or, to the actual knowledge of Bank, any property
adjoining Bank's Property; (ii) Environmental Permits (as defined below) have
been obtained and are in effect for the operations conducted at Bank's
Property; (iii) Bank is in compliance in all material respects with the
requirements of all of their Environmental Permits; and (iv) there are no
circumstances with respect to any Bank Property that could reasonably be
anticipated to form the basis of an Environmental Claim against the Bank or
Bank's Property that, individually or in the aggregate, could have a material
adverse effect on Bank or to cause Bank's Property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
applicable Environmental Law.
(b) As used herein, the following terms shall be defined
as follows:
<PAGE>
(i) "Bank's Property" means any real property and
improvements currently owned, leased, used, operated or occupied by Bank,
including properties acquired by foreclosure or held or operated in a
fiduciary or managerial capacity;
(ii) "Hazardous Materials" means (A) any petroleum
or petroleum products, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation, transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls and radon gas; (B) any chemicals, materials or
substances defined as or included in the definition of "hazardous sub-
stances," or words of similar import, under any applicable Environmental Law;
and (C) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority;
(iii) "Environmental Law" means any federal, state,
local or foreign statute, law, rule, regulation, ordinance, code, policy or
rule of common law in effect and in each case as amended as of the Effective
Time, and any judicial or administrative interpretation thereof as of the
Effective Time, including any judicial or administrative order, consent
decree or judgment, relating to the environment, health, safety or Hazardous
Materials;
(iv) "Environmental Claims" means any and all
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation, investigations
or proceedings relating in any way to any Environmental Law or Environmental
Permit; and
(v) "Environmental Permits" means all permits,
approvals, identification numbers, licenses and other authorizations required
under any applicable Environmental Law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants as follows:
Section 4.01. Organization. The Corporation is a corporation
validly existing and in active status under the laws of the State of
Wisconsin with all necessary power to carry on its business as it is now
being conducted. The Corporation is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended.
Section 4.02. Capitalization. The outstanding capital stock of
the Corporation is, and the shares of M&I Stock to be issued pursuant to this
Agreement and the Consolidation Agreement, when so issued, will be, duly
authorized, validly issued, fully paid and non-assessable (except as provided
by applicable law) and have not, and will not have, been issued in violation
of the preemptive rights of any person.
<PAGE>
Section 4.03. Filings and Reports. The Corporation has
previously delivered to Bank true and complete copies of: (i) its Annual
Report on Form 10-K for the fiscal years ended December 31, 1991, 1992 and
1993, respectively, as filed with the Commission; (ii) Proxy Statements
relating to all meetings of the Corporation's shareholders (whether annual or
special) during 1992, 1993 and 1994; and (iii) all other reports, statements
and registration statements (including current reports on Form 8-K and
quarterly reports on Form 10-Q) filed by it with the Commission since January
1, 1993 (collectively, the Corporation's "SEC Reports"). As of their
respective filing dates, the Corporation's SEC Reports did not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The audited and unaudited consolidated financial statements of
the Corporation included in the Corporation's SEC Reports have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as stated in such financial statements) and fairly
present the financial position of the Corporation and its consolidated
Subsidiaries as of the dates thereof and the results of their operations and
changes in financial position of the Corporation and its consolidated
Subsidiaries for the periods then ended, subject, in the case of the
unaudited financial statements, to normal year-end audit adjustments which
shall not be materially adverse.
Section 4.04. Litigation. No claims have been asserted and no
relief has been sought against the Corporation or any of its Subsidiaries in
any pending litigation or governmental proceedings or otherwise, which might
result in a judgment, decree or order having a material adverse effect on the
financial condition, results of operations, business or prospects of the
Corporation and its consolidated Subsidiaries, taken as a whole, or on the
transactions proposed by this Agreement.
Section 4.05. Authority and Validity of Agreement. The
Corporation has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated herein. The
execution, delivery and performance of this Agreement by the Corporation have
been duly authorized by all requisite corporate action. Subject to the
government approvals described below, this Agreement will constitute a valid
and binding obligation of the Corporation, enforceable in accordance with its
terms, except as such terms may be affected by bankruptcy, insolvency, mora-
torium and similar laws affecting the rights of creditors generally and by
the availability of equitable remedies. Provided the required approvals are
obtained from the Federal Reserve Board, the Commissioner of Banking and the
FDIC, and the offering, sale and delivery of the M&I Stock to be issued
hereunder (and under the Consolidation Agreement) are duly registered
pursuant to the 1933 Act and Rule 145 thereunder, neither the execution,
delivery and performance of this Agreement or the Consolidation Agreement nor
the consummation of the Consolidation contemplated herein and therein, will
conflict with, result in the breach of, constitute a default under or
<PAGE>
accelerate the performance provided by, the terms of any law, or any rule or
regulation of any government agency or authority or any judgment, order or
decree of any court or other government agency to which the Corporation may
be subject, any contract, agreement or instrument to which the Corporation is
a party or by which the Corporation is bound or committed or the Articles of
Incorporation or By-Laws of the Corporation or constitute an event which with
the lapse of time or action by a third party could result in a default under
any of the foregoing or result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets or properties of the Corporation
or upon any shares of M&I Stock.
Section 4.06. Disclosure. No representation or warranty made by
the Corporation contained in this Agreement and no statement contained in any
certificate, list, exhibit or other instrument specified in this Agreement,
whether heretofore furnished to Bank or hereafter required to be furnished to
Bank, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained therein not misleading.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
Section 5.01. Conduct of Business Prior to Closing. From and
after the date of this Agreement until the Effective Time, Bank shall: (i)
carry on its business diligently and in substantially the same manner as it
did prior to the Effective Time; (ii) maintain and keep its properties in as
good repair and condition as at present, except for depreciation due to
ordinary wear and tear and damage due to casualty; (iii) maintain in full
force and effect insurance comparable in amount and in scope of coverage to
that it now maintains; (iv) perform all of its obligations under contracts,
leases and documents relating to or affecting its assets, properties and
business; (v) maintain and preserve its business organization intact, retain
its present employees and maintain its relationship with customers; and (vi)
comply with and perform all obligations and duties imposed upon it by federal
and state laws and all rules, regulations and orders imposed by federal or
state governmental authorities. Without limiting the generality of the
foregoing, except as specifically contemplated in this Agreement, from the
date hereof until the Effective Time, Bank shall not enter into any agreement
or otherwise commit to do, without the written consent of the Corporation,
any of the following:
(a) (i) incur or assume any material obligation or
liability, including without limitation any obligation for borrowed money
whether or not evidenced by a note, bond, debenture or similar instrument,
(ii) assume, guaranty, endorse or otherwise become liable or responsible
(whether directly, contingent or otherwise) for the obligations of any other
person; or (iii) mortgage, license, pledge or grant a security interest in
any of its material assets or allow to exist any material lien thereon;
<PAGE>
except (A) for liabilities and obligations (including corporate debt
issuances) incurred in the ordinary course of business consistent with past
practice and in amounts not material to Bank; or undertaken in connection
with the capital expenditures otherwise permitted under this section; and (B)
as may be required under existing agreements to which Bank is a party;
(b) change its lending, investment, liability management
and other material banking policies in any material respect; organize any
Subsidiaries or enter into any new non-banking line of business whether or
not permissible under applicable federal or state law, make any material
changes in its operations or make any material investment in any other
person, firm or entity;
(c) propose, adopt or permit any amendment to its
Articles of Incorporation or By-Laws or the terms of any securities issued by
it;
(d) in an aggregate amount exceeding One Hundred
Thousand Dollars ($100,000.00) authorize, incur or commit to any capital
expenditures other than capital expenditures consistent with the budget
heretofore furnished to and approved by the Corporation;
(e) (i) split, combine or reclassify any Bank Stock or
redeem, purchase or otherwise acquire any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of
its capital stock, or any options, warrants, conversion or rights to acquire
any shares of its capital stock or any securities or obligations; (ii) merge
with or into any other corporation or bank, permit any other corporation or
bank to merge into it or consolidate with any other corporation or bank, or
effect any reorganization or recapitalization; (iii) purchase or otherwise
acquire any substantial portion of the assets, or more than 5% of any class
of capital stock, of any corporation, bank or other business; and (iv)
liquidate, sell, dispose of, or encumber any assets other than in the
ordinary course of business consistent with past practice which assets are
not material to Bank;
(f) revalue in any material respect any of its assets,
including without limitation the writing down or writing off the value of any
asset; or change its methods of accounting, except as required by changes in
generally accepted accounting principles as concurred in by Arthur Andersen &
Co., or change any of its methods of reporting income and deductions for
Federal income tax purposes, except as required by changes in applicable law;
(g) make any tax election or settle or compromise any
income tax liability material to Bank;
(h) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in, or
contemplated by, the financial statements (or the notes thereto) of Bank or
incurred in the ordinary course of business consistent with past practice;
<PAGE>
(i) (i) issue, grant, sell or pledge any shares of its
capital stock or any securities convertible into capital stock, or permit any
shares of its capital stock held in its treasury to become outstanding,
except upon exercise of rights or options outstanding under employee benefit
plans, programs or arrangements in existence on the date hereof; (ii) confer,
issue, sell, grant or award any options, warrants, conversion or other rights
not outstanding on the date hereof to acquire any shares of its capital stock
not outstanding on the date hereof, including without limitation, the issue,
sale, or grant of any option or stock appreciation right; or (iii) amend any
of the terms of any such outstanding securities, options, warrants, rights or
agreements;
(j) take or suffer to exist any of the actions described
in Section 3.13 hereof;
(k) (i) enter into or adopt any new employee benefit
plan or agreement, or (except as required under existing plans or agreements)
increase in any manner the compensation or benefits of any of its officers,
directors or other employees; (ii) pay or agree to pay any pension,
retirement or severance allowance or other employee benefit not required or
permitted by any existing plan, agreement or arrangement to any director,
officer or key employee; (iii) adopt or commit itself to any additional
pension, profit sharing, bonus, incentive, deferred compensation, insurance,
or other employee benefit plan, agreement or arrangement or to any employment
or consulting agreement with or for the benefit of any director, officer or
employee; (iv) amend any such plan, agreement or arrangement; or (v) enter
into any contract, agreement or commitment to do any of the foregoing; or
(l) declare or pay any dividends on its outstanding
shares of capital stock, except for regular dividends paid in the ordinary
course of business and consistent with past practices of Bank.
Section 5.02. Information Requirements. Bank shall, between the
date hereof and the Effective Date, deliver to the Corporation complete
copies of:
(a) as soon as practicable, but in no event later than
thirty (30) days after the end of each fiscal year, Bank's Call Reports and
Bank's unaudited Balance Sheet as of the last day of such year and its
Statements of Income, Changes in Shareholders' Equity and Changes in
Financial Position for the fiscal year then ended, together with comparable
data relating to the preceding fiscal year, all certified as true and correct
by Bank's principal accounting or financial officer, subject to normal year-
end fiscal audit adjustments;
<PAGE>
(b) as soon as practicable, but in any event not later
than thirty (30) days after the end of each fiscal quarter commencing with
the quarter ending June 30, 1994, its unaudited Balance Sheet and Bank Call
Reports as of the close of such fiscal quarter and the related unaudited
Statements of Income, Changes in Shareholders' Equity and Changes in
Financial Position for each such fiscal quarter, certified as accurate by
Bank's principal accounting officer; and
(c) all management and other letters delivered to Bank
by its independent auditors, and Bank will make available all reports and
work papers produced or developed by Bank's auditors in connection with their
examination of the financial statements of Bank, as well as all working
papers and reports for any prior period for which any tax or other liability
of Bank has not been finally determined or barred by the statute of
limitations.
The financial statements and Call Reports described in subsections (a) and
(b), above, shall fairly present, as of their respective dates, the financial
position of Bank and the results of operations for the periods indicated; and
each such statement has been, and shall have been, prepared in conformity
with the Regulatory Accounting Standards and generally accepted accounting
principles applied on a consistent basis. The financial statements described
in Subsections (a) and (b), above, shall not, as of the dates thereof,
include any material assets or omit to state any material liability, absolute
or contingent, or other facts, the inclusion or omission of which renders
such financial statements, in light of the circumstances under which they
were made, materially misleading, and there shall not have been since
December 31, 1993, any material adverse change in the financial condition,
results of operations, assets, business or prospects of Bank, other than
changes in the ordinary course of business, none of which individually or in
the aggregate has been materially adverse.
Section 5.03. Shareholders' Meeting. Bank, acting through its
Board of Directors, shall promptly in accordance with applicable law:
(a) take all actions necessary to duly call, give notice
of, convene and hold an annual or special meeting of its shareholders (the
"Shareholders' Meeting") as soon as practicable for the purpose of
considering and taking action upon this Agreement, the Consolidation and
related matters;
(b) subject to its fiduciary duties under applicable law
as determined by Bank's Board of Directors, include in the Prospectus/Proxy
(as defined in Section 5.04) the recommendation of Bank's Board of Directors
that shareholders of Bank vote in favor of the approval and adoption of this
Agreement, the Consolidation and the transactions contemplated hereby; and
(c) use its best efforts (i) to obtain and furnish the
information required to be included by it in the Prospectus/Proxy and cause
the Prospectus/Proxy Statement to be mailed to its shareholders at the
earliest practicable time and (ii) to obtain the necessary approvals by the
requisite percentage of its shareholders of this Agreement, the Consolidation
and the other transactions contemplated hereby.
<PAGE>
Section 5.04. Registration Statement Information. Bank will
furnish the Corporation with all information concerning Bank required for
inclusion: (i) in a registration statement (including the related prospectus)
on Form S-4 (or other appropriate form), any amendments thereto or any
supplements to any prospectus contained therein (the "Registration
Statement"), filed by the Corporation with the Securities and Exchange
Commission (the "Commission") in order to register under the 1933 Act or in
any blue sky application or exemption request filed with any state securities
commission regarding, the offer, sale and delivery of the shares of the M&I
Stock to be issued pursuant to the Consolidation; or (ii) in any application
or statement made by the Corporation to any government agency or authority in
connection with the transaction contemplated by this Agreement and the
Consolidation Agreement. Bank hereby represents and warrants to the
Corporation that at the time the Registration Statement and Blue Sky Permits
become effective, the Registration Statement and the Prospectus/Proxy
Statement included therein and all Blue Sky Applications, insofar as they
relate to Bank and are based upon written information furnished by Bank to
the Corporation for use therein: (i) will comply in all material respects
with the provisions of the 1933 Act, including the requirement to provide
audited financial information with respect to Bank to the Corporation; and
(ii) will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that, at the time of the shareholders
meeting referred to in Section 5.03, above and at the Effective Time, the
Prospectus/Proxy Statement, as amended or supplemented by any amendment filed
by the Corporation, insofar as it relates to Bank and is based upon written
information furnished by Bank to the Corporation for use in such
Prospectus/Proxy Statement, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section 5.05. Filing of Registration Statement; Blue Sky
Filings. The Corporation will, after receiving from Bank all information
necessary for the Registration Statement regarding Bank, file the
Registration Statement with the Commission as soon as practicable and use its
best efforts to cause the Registration Statement to become effective as soon
thereafter as practicable. The Corporation shall make all appropriate
applications and filings with and obtain all appropriate consents, permits,
registrations (or exemptions therefrom) required by any state securities law
in connection with this Agreement, and the same shall be in effect prior to
the mailing of the Prospectus/Proxy Statement to Bank shareholders, at the
date of the special meeting of shareholders of Bank and at the Effective
Time. The Corporation represents and warrants to Bank that at the time the
Registration Statement and Blue Sky permits become effective, the
<PAGE>
Registration Statement and the Prospectus/Proxy Statement included therein
and all Blue Sky Applications: (i) will comply in all material respects with
the provisions of the 1933 Act; and (ii) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
and that, at the time of the shareholders meeting referred to in Section
5.03, above and at the Effective Time, the Prospectus/Proxy Statement, as
amended or supplemented by any amendment or supplement filed by the
Corporation will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties in this
Section 5.05 shall apply to statements in or omissions from the Registration
Statement or Prospectus/Proxy Statement made in reliance upon and in confor-
mity with written information furnished by Bank for use in the Registration
Statement or Prospectus/Proxy Statement as provided in Section 5.04, above.
Section 5.06. Government Filings. The Corporation shall
promptly prepare and file with the Federal Reserve Board, the Commissioner of
Banking, the FDIC, and other appropriate state and federal banking regulatory
agencies, applications on appropriate forms to complete the Consolidation and
the other transactions contemplated herein and will use its best efforts to
have all such applications approved as promptly as possible.
Section 5.07. Access, Investigation and Review. From and after
the date of this Agreement, Bank shall afford to the officers, attorneys and
accountants and other authorized representatives of the Corporation full and
free access to the properties, books, contracts, commitments and records of
Bank, at all reasonable times during business hours, and such representatives
of the Corporation shall be furnished with true and complete copies of the
same and with all other information concerning the affairs of Bank as such
representatives may reasonably request. Any such information treated as
confidential by Bank (and so marked at the time of release to the repre-
sentatives of the Corporation) shall be kept confidential by the representa-
tives of the Corporation (and shall be used by them only in connection with
this Agreement and the transactions contemplated hereby) except to the extent
that: (i) it was already known to such representatives when received; (ii) it
hereafter becomes lawfully obtainable from other sources; or (iii) it is
required to be disclosed by the Corporation in any document required to be
filed with the Federal Reserve Board, the Commissioner of Banking, the FDIC,
the Securities and Exchange Commission or any other government agency or
authority.
Section 5.08. No Solicitation. Neither Bank nor any of its
officers, directors, employees, agents or representatives (including, without
limitation, investment bankers, attorneys and accountants) shall directly or
indirectly, without the prior written consent of the Corporation, initiate
<PAGE>
contact with, solicit or encourage any inquiries or proposals by or except
as, in the written opinion of Bank's counsel, may be required by the
fiduciary duties of the Board of Directors of Bank, enter into any
discussions or negotiations or agreements with, or disclose directly or
indirectly any information not customarily disclosed concerning its business
and properties, or afford any access to its properties, books and records to,
any corporation, partnership, person or other entity or group in connection
with any possible proposal regarding a tender offer for or sale of Bank's
capital stock or a consolidation, merger, or sale of all or a substantial
portion of the assets of Bank or any similar transaction.
Section 5.09. Consultation and Notice of Actions and
Proceedings. During the period from the date of this Agreement to the
Effective Time, Bank will cause one or more of its officers to confer on a
regular and frequent basis with officers of the Corporation to report the
general status of ongoing operations and to consult with the Corporation as
to the making of any decisions or the taking of any actions in matters
outside the ordinary course of business. Bank shall promptly notify the
Corporation of any claims, actions, proceedings or investigations commenced
or, to the best of its knowledge threatened, involving Bank or any of its
properties or assets or, to the best of its knowledge, any employee, director
or officer of Bank which if pending on the date hereof would have been
required to be disclosed in writing pursuant to Section 3.08 hereof or which
relates to the consummation of the Consolidation. Bank shall give prompt
notice to the Corporation of: (i) any notice of, or other communication
relating to, a default or event of default which, with notice or lapse of
time or both, would become a default, received by Bank subsequent to the date
of this Agreement and prior to the Effective Time, under any agreement,
indenture or instrument material to the financial condition, properties,
business or results of operations of Bank to which Bank is a party or is
subject; (ii) any notice or other communication from any third party alleging
that the consent of such third party is or may be required in connection with
the transactions contemplated by this Agreement; (iii) any notice or other
communication from any regulatory authority in connection with the
transactions contemplated hereby; or (iv) any material adverse change in the
financial condition, properties, businesses or results of operations of Bank.
Section 5.10. Agreement by Affiliated Shareholders of Bank.
(a) Bank shall deliver to the Corporation a letter
identifying all persons whom it believes to be, at the time of the
shareholders meeting referred to in Section 6.01, an "affiliate" for purposes
of Rule 145 under the Securities Act; and
(b) Each shareholder of Bank who shall, in the opinion
of counsel to the Corporation, be deemed to be an "affiliate" of Bank, within
the meaning of such term as used in Rule 145 ("Rule 145") of the General
Rules and Regulations (the "Rules") of the Commission under the 1933 Act,
<PAGE>
shall enter into an agreement ("Affiliate Agreement"), prior to the Effective
Date, substantially in the form attached hereto as Exhibit B to the effect
that no disposition of M&I Stock received in the Consolidation will be made
by such persons except within the limits and in accordance with the
applicable provisions of said Rule 145, as amended from time to time, or
except in a transaction which, in the opinion of legal counsel reasonably
satisfactory to the Corporation, is exempt from registration under the
Securities Act.
Section 5.11. Reasonable Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation:
(i) cooperation in the preparation and filing of the Prospectus/Proxy
Statement and any amendments thereto; (ii) the satisfaction of all
requirements of any financing agreements; (iii) the taking of all action
reasonably necessary, proper or advisable to secure existing debt obligations
of Bank or amend the notes, indentures or agreements relating thereto to the
extent required by such notes, indentures or agreements or redeem or
repurchase such debt obligations; and (iv) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and directors of each party hereto shall take all such necessary action.
Section 5.12. Public Announcements. The Corporation and Bank,
as the case may be, will consult with one another before issuing any press
release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange, as determined by the
Corporation or Bank, as the case may be.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.01. Conditions to Obligations of the Corporation. The
obligations of the Corporation under this Agreement are subject, in the
discretion of the Corporation, to the satisfaction at or prior to the
Effective Date of each of the following conditions:
(a) The representations and warranties made by Bank in
Article III or otherwise in this Agreement shall have been true when made
and, except for changes as contemplated herein, shall be true at the
Effective Time with the same force and effect as if such representations and
warranties were made at and as of the Effective Time and Bank shall have
<PAGE>
performed or complied in all material respects with all obligations,
covenants and conditions required by Articles V and VI and as otherwise
required in this Agreement to be performed or complied with by Bank prior to
or at the Closing or Effective Time. Bank shall have furnished the
Corporation with a certificate, signed by the President of Bank and dated the
Effective Date, to the foregoing effect.
(b) The holders of the requisite percentage of the
outstanding shares of Citizens Stock and Bank Stock shall have duly
authorized, adopted and approved this Agreement, the Consolidation Agreement
and the consummation of the transactions contemplated herein and in the
Consolidation Agreement. Bank shall have delivered to M&I a certificate
signed by the President of Bank as to the details of the foregoing.
(c) The Corporation shall have received a certificate,
dated the Closing Date, of the President of Bank to the effect that he has
read the Registration Statement, and, with respect to the information set
forth in the Registration Statement relating to Bank, such Registration
Statement, as of its effective date, as of the date of such certificate, and
as of the Effective Time, contained no untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(d) Bank shall have obtained and delivered to the
Corporation the Affiliate Agreements of those persons who, in the opinion of
counsel to the Corporation, may be deemed to be "affiliates" (as such term is
defined in the published rules and regulations under the 1933 Act) of Bank.
(e) As of the close of the most recent calendar quarter
(or if the Consolidation shall occur within 20 days following the close of a
calendar quarter, then as of the close of the next preceding calendar
quarter) the "Bank's Net Earnings" (as hereinafter defined) for (i) the four
most recent calendar quarters of Bank on a cumulative basis and (ii) the most
recent fiscal year of Bank for which Bank's earnings have been reported as of
such date, shall each be not less than $375,000. As used in this Section,
the "Bank's Net Earnings" means the net income of Bank for the relevant
period(s) determined in accordance with the Regulatory Accounting Standards
and generally accepted accounting principles applied on a basis consistent
with Bank's financial statements for the years ended December 31, 1992 and
1993, as referenced in Section 3.04 hereof, subject to any subsequent
adjustments required to be reported after the Effective Time, whether or not
such adjustments have, as yet, been reported, with the following expenses, if
any, net of related tax savings and costs, which were reflected in net income
for the relevant period(s) added back into net income for the applicable
period: (i) investment banking expenses, outside legal fees, outside
accounting fees, and printing costs associated with the Consolidation; and
(ii) any other expenses upon which the Corporation and Bank shall mutually
agree.
<PAGE>
(f) As of the end of the month last preceding the
Effective Time, the total net worth of Bank, prepared in accordance with
Regulatory Accounting Standards and generally accepted accounting principles,
applied on a basis consistent with its Statements of Changes in Shareholders'
Equity as of December 31, 1993, certified by the Cashier of the Bank, shall
not be less than $3,500,000.
(g) Between December 31, 1993 and the Effective Time
there shall have been no material adverse change in the financial condition
of Bank from that set forth in (i) the financial statements and Call Reports
described in Section 3.04 hereof or (ii) the reserve for possible loan and
lease losses described in Section 3.05 hereof, and nothing shall have come to
the Corporation's attention to lead it to believe that there is or could be a
material increase in the loans set forth in the Loan Schedule described in
Section 3.20 hereof. For purposes of this Section 6.01, without limiting
additional factors which may be considered material, a material adverse
change or material increase in the Loan Schedule shall mean any item,
occurrence or event or any series of the same resulting in damage, loss
(including unrecognized losses), liability, cost or expense which exceeds, in
the aggregate, $250,000, as shall be determined by the Corporation in its
sole discretion, but in the exercise of good faith.
(h) No payment on any indebtedness of Bank will, as a
result of the Consolidation be accelerated except those of which Bank has
notified the Corporation in writing not less than sixty (60) days prior to
the Closing and which acceleration(s) of indebtedness has been accepted by
the Corporation in writing prior to the Effective Time.
(i) As of the close of the month ending not more than
thirty (30) days prior to the Effective Time, Bank shall have made such
adjustments, charge offs, additions to reserves and other accounting and
income tax provisions as the Corporation shall in its sole discretion deem
appropriate.
(j) The merger provided for in that certain Agreement
and Plan of Reorganization between the Corporation and Citizens Bancorp of
Delavan, Inc., dated as of the date hereof, of Citizens Bancorp of Delavan,
Inc. with and into M&I Interim Corp. shall have been consummated as provided
therein and the merger of the Surviving Corporation (as defined therein) with
and into the Corporation shall have been consummated as anticipated therein.
Section 6.02. Conditions to Obligations of Bank. The
obligations of Bank under this Agreement and the Consolidation Agreement are
subject, in the discretion of Bank, to the satisfaction, at or prior to the
Effective Date, of each of the following conditions:
<PAGE>
(a) The representations and warranties made by the
Corporation in this Agreement shall have been true when made, and except as
may otherwise be contemplated or permitted herein, shall be true as of the
Effective Date with the same force and effect as if such representations and
warranties were made at and as of the Effective Date, and the Corporation
shall have performed or complied with all obligations, covenants and
conditions required by this Agreement and the Consolidation Agreement to be
performed or complied with by it prior to or at the Closing. Bank shall have
been furnished with a certificate, signed by the President of the Corporation
and dated the Effective Date, to the foregoing effect.
Section 6.03. Conditions to Respective Obligations of the
Corporation and Bank. The respective obligations of the Corporation and Bank
under this Agreement and the Consolidation Agreement are subject to the
further conditions that:
(a) The holders of no more than 5% of the shares of Bank
Stock shall, at the Closing Date, be entitled to assert statutory dissenters'
appraisal rights under applicable provisions of the Wisconsin Statutes with
respect to the Consolidation.
(b) Bank and the Corporation shall have received letters
(in form and substance satisfactory to the Corporation and its counsel) from
Bank shareholders holding 5% or more of Bank Stock representing to the
Corporation and Bank that as of the Effective Date, such shareholders have no
present plan or intention to dispose of any shares of M&I Stock acquired by
reason of the Consolidation.
(c) The parties hereto shall have received final
approval of the transactions contemplated by this Agreement from all
appropriate government agencies and authorities, including the Federal
Reserve Board, the Commissioner of Banking and the FDIC, without any
condition which is not satisfactory to the Corporation, all conditions
required to be satisfied prior to the Effective Time imposed by the terms of
such approvals shall have been satisfied, and all waiting periods relating to
such approvals shall have expired. Such approvals and the transaction
contemplated hereby shall not have been contested by any federal or state
government authority nor by any other third party by formal proceeding.
(d) No statute, rule or regulation shall have been
enacted in the State of Wisconsin by any governmental or regulatory agency of
competent jurisdiction which prevents or restricts consummation of the
Consolidation.
(e) The Registration Statement shall be effective under
the 1933 Act prior to the mailing of the Prospectus/Proxy Statement to Bank's
shareholders, and at the date of the meeting of shareholders referred to in
Section 6.01 hereof and at all times thereafter to and including the
Effective Time, and no stop order suspending the effectiveness thereof shall
have been issued during such period and no proceedings for that purpose shall
have been instituted or be pending at the Effective Time. All appropriate
registrations, permits and consents required by any state securities law (or
exemptions therefrom) in connection with this Agreement shall have been
obtained and be in effect at the date of the meeting of shareholders and at
the Effective Time.
<PAGE>
(f) On the Effective Date there shall not be any
litigation, investigation, inquiry or proceeding pending or threatened in or
by any court or government agency or authority which might result in an
action to restrain, enjoin or prohibit consummation of the transactions
contemplated by this Agreement or the Consolidation Agreement, or which might
result in divestiture, rescission or damages in connection with such
transactions or involving any of the assets, properties, business or opera-
tions of Bank which might result in any material adverse change in the
financial condition, results of operations, business or prospects of Bank;
and each of the parties shall furnish the other with a certificate, dated the
Closing Date and signed by the President of Bank and the Corporation respec-
tively, to the effect that no such litigation, investigation, inquiry or
proceeding is pending, or to the best of his knowledge, threatened against
such party.
(g) All actions, proceedings, instruments and documents
required to carry out the transaction contemplated by this Agreement and the
Consolidation Agreement or incidental thereto and all other related legal
matters (including but not limited to all matters relating to the federal
income tax consequences of the Consolidation) shall have been satisfactory to
and approved by counsel to each of the parties to this Agreement and such
counsel shall have been furnished with certified copies of actions and
proceedings and such other documents and instruments as they shall have
reasonably requested.
ARTICLE VII
TERMINATION
Section 7.01. Reasons for Termination and Abandonment. This
Agreement may be terminated and abandoned before the Effective Date,
notwithstanding the approval and adoption of this Agreement or the
Consolidation Agreement by the shareholders of Bank:
(a) By mutual consent of the Boards of Directors of Bank
and the Corporation;
(b) By either Bank or the Corporation if the
Consolidation is not consummated on or before April 30, 1995;
(c) By the Corporation if any of the conditions provided
for in Sections 6.01 and 6.03 of this Agreement have not been met and have
not been waived in writing by the Corporation;
(d) By Bank, if any of the conditions of Sections 6.02
and 6.03 of this Agreement have not been met and have not been waived in
writing by Bank; or
<PAGE>
(e) By Bank, if at the time of such termination there
shall be a material adverse change in the consolidated financial condition of
the Corporation from that set forth in the Corporation's Balance Sheet
included in its Form 10-K for the year ended December 31, 1993.
Section 7.02. Notice. In the event of termination and
abandonment by any party as above provided in this paragraph, written notice
shall forthwith be given to the other parties, which notice shall
specifically describe the basis for such termination.
Section 7.03. Effect of Termination. If the Consolidation is
not consummated as the result of termination of this Agreement, the
Corporation and Bank each shall pay their own fees and expenses incident to
the negotiation, preparation and execution of this Agreement, their
respective shareholders' meetings and actions and all other acts incidental
to, contemplated by or in pursuance of the transactions contemplated by this
Agreement, including fees and expenses of their respective counsel,
accountants and other experts and advisors and this Agreement shall
immediately terminate and neither Bank nor the Corporation shall have any
liability under this Agreement for damages or otherwise.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Survival of Representations and Warranties. All
representations, warranties and covenants in this Agreement shall survive the
Closing and any investigation by the parties hereto; provided, however, that
no officer, director or shareholder of Bank or the Corporation shall have any
liability hereunder except in the case of gross negligence, bad faith or
fraud.
Section 8.02. Notices. Any notice given hereunder shall be in
writing and shall be mailed by first class mail, postage prepaid, to the
parties at the following addresses:
If to M&I, then to:
Marshall & Ilsley Corporation
770 North Water Street
Milwaukee, Wisconsin 53201
Attention: M. A. Hatfield, Senior Vice President
With a copy to:
Mr. James A. Sheriff
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
<PAGE>
If to Bank, then to:
Sharon State Bank
P.O. Box 504
Sharon, Wisconsin 53585
Attention: Mr. Rymund Wurlitzer
With a copy to:
Mr. Prescott Wurlitzer
104 North 5th Street
Delavan, Wisconsin 53115
Section 8.03. Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their respective successors
and assigns, but shall not be assigned by either party without the prior
written consent of the other party.
Section 8.04. Articles and Other Headings. Articles and other
headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Section 8.05. Entire Agreement. This agreement embodies the
entire agreement between the parties and supersedes all prior arrangements,
understandings, agreements or covenants between the parties.
Section 8.06. Governing Law. This Agreement shall be governed
by the laws of the State of Wisconsin applicable to contracts made and to be
performed therein.
Section 8.07. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts shall together constitute but one and the
same instrument.
Section 8.08. Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, at any time before or after the approval of the Consolidation by
the shareholders of Bank as contemplated by Section 5.03 hereof, by written
agreement of Bank, and the Corporation, but after such approval of the
shareholders of Bank, no such amendment, modification or supplement shall
reduce or change the form of the consideration being paid pursuant to
Sections 2.02 and 2.03 hereof, or change any of the terms and conditions of
the Agreement in a manner which materially and adversely affects the rights
of Bank's shareholders hereunder without the approval of such shareholders.
Section 8.09. Expenses. Each party to this Agreement shall pay
their own expenses in connection with the transactions contemplated hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
MARSHALL & ILSLEY CORPORATION
Attest: By: /s/ M.A. Hatfield
______________________________
M. A. Hatfield
Its: Senior Vice President
_________________________
SHARON STATE BANK
Attest: By: /s/ Rymund Wurlitzer
______________________________
Rymund Wurlitzer
Its: Chairman
_________________________
JAS-M&I SHARON AGR 1
shar-m&i.jas
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF CONSOLIDATION
THIS AGREEMENT AND PLAN OF CONSOLIDATION dated as of January 12,
1995 between CITIZENS BANK OF DELAVAN, a Wisconsin banking corporation
("Citizens"), and SHARON STATE BANK, a Wisconsin banking corporation
(hereinafter separately called "Sharon" or together with Citizens, one of the
"Consolidating Banks").
RECITALS
This Agreement provides for the consolidation of Sharon with and
into Citizens pursuant to the provisions of Section 221.25 of the Wisconsin
Statutes. The consolidation provided for herein is also described and set
forth in that certain Agreement and Plan of Reorganization (the
"Reorganization Agreement") dated August 31, 1994, between Sharon and
Marshall & Ilsley Corporation ("M&I"), a Wisconsin corporation. Citizens
Bancorp of Delavan, Inc. ("Citizens Bancorp"), the parent corporation and
sole shareholder of Citizens, also has entered into an Agreement and Plan of
Reorganization with M&I, dated August 31, 1994, pursuant to which Citizens
Bancorp will merge with and into M&I Interim Corp. and the Surviving
Corporation, as defined therein, will merge into M&I. Thereafter, M&I will
control Citizens within the meaning of Section 368(c) of the Internal Revenue
Code. It is the intent of the Consolidating Banks and M&I that the
consolidation provided hereunder shall occur following consummation of M&I's
acquisition of control of Citizens, as described above. As of the date
hereof, Citizens has outstanding 4,000 shares of common stock, par value
$100.00 per share ("Citizens Stock"), all of which are owned by Citizens
Bancorp. Sharon has issued and outstanding 1,000 shares of common stock, par
value $100.00 per share ("Sharon Stock"). This Agreement has been approved
by the Boards of Directors of each Consolidating Bank and will become
effective upon its approval by the requisite vote of the shareholders of each
Consolidating Bank and upon satisfaction of certain other conditions as
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and
agreements hereafter set forth, the parties hereto agree as follows:
ARTICLE I
Consolidation of Sharon Into Citizens
1.1. Consolidation. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as hereinafter defined),
Sharon shall be consolidated with and into Citizens (the "Consolidation")
pursuant to the provisions of Section 221.25 of Wisconsin Statutes, and
Sharon and Citizens shall become a single banking corporation (the
"Consolidated Bank") which shall exist under and by virtue of the banking
laws of the State of Wisconsin.
<PAGE>
1.2. Effective Time of Consolidation. The Consolidation shall
become effective at the time specified in Section 6.03 of the Reorganization
Agreement (the "Effective Time" or the "Effective Date").
1.3. Consequences of Consolidation. At and as of the Effective
Time and as a result of the Consolidation:
1.31. Continued Existence of Citizens. The corporate
identity, existence, purposes, powers, franchises, rights and
immunities of Citizens shall continue and be unaffected and unimpaired,
except that it is the intent of the parties hereto and M&I that the
name of the Consolidated Bank shall be changed to "M&I Bank of
Delavan."
1.32. Effect on Sharon. The corporate identity,
existence, purposes, powers, franchises, rights and immunities of
Sharon shall be merged with and into Citizens and the Consolidated Bank
shall be fully vested therewith. The separate legal existence of
Sharon, except as it may be continued by reason of the Wisconsin
banking laws, shall cease and the assets and liabilities of Sharon
shall thereafter be reported by the Consolidated Bank. The rights,
interests and franchises of Sharon in and to every species of property,
real, personal and mixed and choices in action thereto belonging, shall
be deemed transferred to and vested in the Consolidated Bank without
any deed, endorsement or other instrument of transfer and the
Consolidated Bank shall take, hold and enjoy the same and all rights of
property, franchises and interests in the same manner and to the same
extent as were held and enjoyed by Sharon at the time of the
Consolidation.
1.33. Effect on Trust Powers. To the extent that either
of the Consolidating Banks is then authorized under the laws of
Wisconsin to perform fiduciary services, the Consolidated Bank shall,
at the Effective Time, succeed to all rights, obligations, relations
and trusts, and the duties and liabilities connected therewith, held by
either of the Consolidating Banks, and without further appointment
shall act as trustee, executor, administrator or in any other fiduciary
capacity in which either of the Consolidating Banks was acting at the
Effective Time, and shall execute and perform each and every trust or
relation in the same manner as if the Consolidated Bank itself had
assumed the trust or relation, including the obligations and lia-
bilities connected therewith. The Consolidated Bank shall be entitled
to be appointed or to act as trustee or executor or other fiduciary to
the same extent and with the same effect as would either Consolidating
Bank which, prior to the Effective Time, had been designated as trustee
or any other fiduciary in any trust deed or other writing, or has been
nominated as executor in any will.
<PAGE>
1.34. Offices. The home office of the Consolidated Bank
shall be at 104 N. 5th Street, Delavan, Wisconsin, being the home
office of Citizens immediately prior to the Effective Time. All remote
paying and receiving facilities, transit facilities, customer bank
communications terminals or other facilities operated by either of the
Consolidating Banks at and prior to the Effective Date shall continue
as facilities of the Consolidated Bank at and after the Effective Date.
1.35. Charter. From and after the Effective Date, the
Charter (Articles of Incorporation) of Citizens as in effect
immediately prior to the Effective Date shall continue as the Charter
of the Consolidated Bank unless and until further amended or repealed
as provided therein or by law.
1.36. By-Laws. From and after the Effective Date, the
By-Laws of Citizens as in effect immediately prior to the Effective
Date shall continue as the By-Laws of the Consolidated Bank unless and
until further amended or repealed as provided therein or by law.
1.37. Directors and Officers. The directors and officers
of Citizens holding office immediately prior to the Effective Date
shall continue from and after the Effective Date as directors and
officers of the Consolidated Bank until the election of their
respective successors or until their resignation or removal as provided
by law or in the Charter or By-Laws of the Consolidated Bank. If on
the Effective Date any vacancy shall exist on the Board of Directors or
in the officers of Citizens such vacancy may be filled in the manner
provided by the By-Laws of the Consolidated Bank.
1.38. Name of Consolidated Bank. From and after the
Effective Date, the name of the Consolidated Bank shall be "M&I Bank of
Delavan."
1.4. Further Assurances. If at any time after the Effective
Date the Consolidated Bank shall consider or be advised that any further
assignments or assurances in law or any other things are necessary or
desirable to carry out the provisions of this Agreement or to vest, perfect
or confirm, of record or otherwise, in the Consolidated Bank or its
<PAGE>
transferees the title to any property or right of either Consolidating Bank
acquired or to be acquired by reason of the Consolidation, the officers and
directors of either Consolidating Bank in office immediately prior to the
Effective Date shall in the name and on behalf of each Consolidating Bank
execute and deliver all such proper deeds, assignments and assurances or
other documents and do all things necessary and proper to vest, perfect or
confirm in the Consolidated Bank or its transferees title to and possession
of the properties, rights, privileges, immunities, powers or purposes of each
of the Consolidating Banks or to otherwise carry out the purposes of this
Agreement and the proper officers and directors of each of the Consolidating
Banks are hereby authorized, in the name of either Consolidating Bank or
otherwise, to take any and all such action.
ARTICLE II
Conversion and Exchange of Securities
2.1. Manner of Conversion. Subject to the terms and conditions
set forth herein and in the Reorganization Agreement, as of the Effective
Time, by virtue of the Consolidation, and without any action on the part of
any holder of shares of Sharon Stock:
(a) All shares, if any, of Sharon Stock owned by Sharon
shall be cancelled and no M&I Common Stock, $1.00 par value ("M&I
Stock") shall be delivered and exchanged therefor.
(b) Each outstanding share of Sharon Stock as to which
shareholders pursuant to Section 221.25 of Wisconsin Statutes have
voted against adoption and approval of the Consolidation or given
notice in writing at or prior to the taking of such vote that they
dissent from the Consolidation and (ii) within 20 days after the date
the notice of approval of the Consolidation by the Wisconsin Office of
Commissioner of Banking is mailed or delivered to such shareholder,
such shareholder notifies Sharon that he or she dissents from the Plan
of Consolidation as adopted and approved and desires to withdraw from
Sharon, then such shares shall not be converted into M&I Stock
hereunder (all such shares of Sharon Stock are hereafter called
"Dissenting Shares"). Sharon shall give M&I prompt notice upon receipt
by Sharon of any such written objection to the Consolidation by any
Sharon stockholder (a "Dissenting Stockholder"). Sharon agrees that
prior to the Effective Time it will not, except with prior written
consent of the M&I, voluntarily make any payment with respect to, or
settle or offer to settle, any such objection. Each Dissenting
<PAGE>
Stockholder who becomes entitled, pursuant to the provisions of Section
221.25 of Wisconsin Statutes, to payment for his or her Sharon Stock
shall receive payment therefor from the Consolidated Bank from funds
provided by M&I (but only after the amount thereof shall have been
agreed upon or finally determined pursuant to the provisions of the
aforesaid statute) and such shares of Sharon Stock shall be cancelled.
If any Dissenting Stockholder shall fail to perfect or shall
effectively withdraw or lose his right to appraisal of and payment for
his shares of Sharon Stock under Section 221.25 of Wisconsin Statutes,
his or her shares shall thereupon be converted into M&I Stock in
accordance with the provisions of Section (c) herein.
(c) Each share of Sharon Stock (except shares described in
subparagraph (a) hereof and Dissenting Shares) issued and outstanding
as of the Effective Time shall by virtue of the Consolidation and
without any action on the part of the holder thereof be converted into
the right to receive that number of shares of M&I Stock which is equal
to the result obtained by dividing 220,000 by the number of issued and
outstanding shares of Sharon Stock at the Effective Time, and rounding
such result (if not a whole number) to the nearest hundredth of a
percentage.
(d) The Exchange Agent shall send a notice in transmittal
form to each holder of a certificate which represents shares of Sharon
Stock prior to the Consolidation and which has not theretofore been
submitted to the Exchange Agent, advising such holder of the terms of
the exchange effected by the Consolidation and the procedure for
surrendering to the Exchange Agent such certificate for exchange into
one or more certificates evidencing shares of M&I Stock. Until so
surrendered, each outstanding certificate which prior to the Effective
Time represented shares of Sharon Stock will be deemed for all purposes
to evidence the right to receive ownership of the number of full shares
of M&I Stock into which such shares of Sharon Stock were converted;
provided, however, that until such certificates are so surrendered, no
dividend payable to holders of record of shares of M&I Stock as of any
date subsequent to the Effective Time shall be paid to the holder(s) of
such certificates in respect of M&I Stock represented thereby. Upon
surrender of certificates for Sharon Stock which have been converted
into shares of M&I Stock, there shall be paid (without interest) to the
record holder of the certificates for M&I Stock issued and exchanged
therefor (i) on or as soon as practicable after such date of surrender,
the amount of dividends which as of any date subsequent to the
Effective Time became payable and were not paid to such holder with
respect to such shares of M&I Stock and
<PAGE>
(ii) on the appropriate payment date occurring subsequent to the date
of surrender, the amount of such dividends, if the record date in
respect thereof occurred after the Effective Time but prior to the date
of surrender.
(e) No certificates or script representing fractional
shares of M&I Stock shall be issued upon surrender for exchange of
certificates; no dividend or distribution with respect to M&I Stock
shall be payable on or with respect to any fractional share, and such
fractional share's interest shall not entitle the owner thereof to vote
or to any other rights of a stockholder of M&I. In lieu of any such
fractional share, M&I shall pay to each former Sharon stockholder who
otherwise would be entitled to receive a fractional share of M&I Stock
an amount in cash determined by multiplying (i) the closing sales price
of M&I Stock as reported in the Midwest Edition of the Wall Street
Journal on the Effective Date, by (ii) the fraction of a share of M&I
Stock to which such holder would otherwise be entitled.
2.2. Further Powers. The Board of Directors of M&I shall have
the right, either before or after the Effective Date, to adopt additional
rules and regulations with respect to the surrender of Sharon Certificates
and disbursements with respect thereto not inconsistent with the provisions
of this Agreement.
2.3. No Additional Shares Issued. No shares of capital stock of
the Consolidated Bank shall be issued in connection with the Consolidation.
ARTICLE III
Conditions
3.1. Conditions to Consolidation. Effectuation of the
Consolidation herein provided is conditioned upon fulfillment or waiver of
all conditions set forth in the Reorganization Agreement.
ARTICLE IV
Termination, Amendment, Waiver
4.1. Termination. This Consolidation Agreement may be
terminated in the manner set forth in Article VII of the Reorganization
Agreement and may be amended in the manner set forth in Article VIII of the
Reorganization Agreement.
<PAGE>
ARTICLE V
Miscellaneous
5.1. Necessary Action; Best Efforts. From and after the date
hereof each of the parties hereto covenants and agrees to use its best
efforts to consummate the transactions contemplated hereby and to obtain all
requisite third party consents and approvals.
5.2. Notices. All notices or other communications required or
permitted to be given under this Agreement shall be in writing and personally
delivered in a manner sufficient for the service of legal process under the
laws of Wisconsin or sent by first class mail, postage prepaid, to the
parties hereto at their respective addresses as set forth on the signature
pages hereof or to such changed address as a party may designate by notice
duly given. Copies of all such notices shall be delivered or mailed to
Marshall & Ilsley Corporation, 770 North Water Street, Milwaukee, Wisconsin
53202, Attention: M. A. Hatfield, Secretary, or to such other address as M&I
may hereafter designate by notice given to both of the Consolidating Banks.
5.3. Binding Effect; No Third Party Action. This Agreement
shall be binding upon and inure to the benefit of the Consolidating Banks
parties hereto and no shareholder or creditor of a party or any other person
shall have any right to enforce or maintain any action under this Agreement
or by reason hereof.
5.4 Defined Terms. All capitalized terms not otherwise defined
herein shall be defined as in the Reorganization Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CITIZENS BANK OF DELAVAN
Attest:
By: /s/ Rymund Wurlitzer
__________________________ _______________________________
Rymund Wurlitzer, Chairman
104 N. 5th St., P.O. Box 307
Delavan, WI 53115
SHARON STATE BANK
Attest:
By: /s/ Rymund Wurlitzer
__________________________ _______________________________
Rymund Wurlitzer, Chairman
P.O. Box 504
Sharon, Wisconsin 53585
JAS-M&I DELAVAN-SHARON CONSOLID
sharcons.jas-1/11/95
<PAGE>
EXHIBIT B
AFFILIATE LETTER
- ---------------------
- ---------------------
- ---------------------
- ---------------------
Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of the Sharon State Bank, a Wisconsin state bank
(the "Bank"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"),
and/or (ii) used in and for purposes of Accounting Series, Releases 130 and
135, as amended, of the Commission. Pursuant to the terms of the Agreement
and Plan of Reorganization dated as of ______________, 1994 (the
"Agreement"), between Marshall & Ilsley Corporation, a Wisconsin corporation
(the "Corporation"), and the Bank, the Bank will be merged with and into the
Citizens Bank of Delavan, following the Corporation's acquisition of the
Citizens Bank of Delavan (the "Merger").
As a result of the Merger, I may receive shares of Corporation
common stock par value $1.00 per share (the "Corporation Securities"). I
would receive such shares in exchange of shares owned by me of Bank common
stock, par value $______ per share (the "Bank Securities").
I represent, warrant and covenant to the Corporation that in the
event I receive any Corporation Securities as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Corporation Securities in violation of the Act or
the Rules and Regulations.
<PAGE>
B. I have carefully read this letter and the Agreement
and discussed its requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Corporation
Securities to the extent I felt necessary, with my counsel or counsel
for the Bank.
C. I have been advised that the issuance of Corporation
Securities to me pursuant to the Merger has been registered with the
Commission under the Act on a Registration Statement on Form S-4.
However, I have also been advised that, since at the time the Merger
was submitted for a vote of the stockholders of the Bank, I may be
deemed to have been an affiliate of the Bank, and since the distribu-
tion by me of the Corporation Securities has not been registered under
the Act, and that I may not sell, transfer or otherwise dispose of
Corporation Securities issued to me in the Merger unless (i) such sale,
transfer or other disposition has been registered under the Act, (ii)
such sale, transfer or other disposition is made in conformity with the
volume and other limitations of Rule 145 promulgated by the Commission
under the Act, or (iii) in the opinion of counsel reasonably acceptable
to the Corporation, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
D. I understand that the Corporation is under no
obligation to register the sale, transfer or other disposition of the
Corporation Securities by me or on my behalf under the Act or to take
any other action necessary in order to make compliance with an
exemption from such registration available.
E. I also understand that stop transfer instructions
will be given to the Corporation's transfer agents with respect to the
Corporation Securities and that there will be placed on the
certificates for the Corporation Securities issues to me, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
_________________ BETWEEN THE REGISTERED HOLDER HEREOF AND THE
CORPORATION, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF THE CORPORATION."
<PAGE>
F. I also understand that unless the transfer by me of
my Corporation Securities has been registered under the Act or is a
sale made in conformity with the provisions of Rule 145, the
Corporation reserves the right to put the following legend on the
certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF SECURITIES ACT OF
1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in
paragraph E and F above shall be removed by delivery of substitute
certificates without such legend as soon as the Rule 145 resale restrictions
cease to apply thereto under Rule 145(d), or if the undersigned shall have
delivered to the Corporation a copy of a letter from the staff of the
Commission, or an opinion of counsel in form and substance reasonably
satisfactory to the Corporation, to the effect that such legend is not
required for purposes of the Act.
Very truly yours,
______________________________
Name:
Accepted this _____ day of
_________________, 1994, by
CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
<PAGE>
APPENDIX B
WISCONSIN STATUTES SECTION 221.25
221.25. Consolidation of banks. (1) Any 2 or more banks may, with the
approval of the commissioner of banking, consolidate into one bank under the
charter of either existing bank on such terms and conditions as may be
lawfully agreed upon by a majority of the board of directors of each bank
proposing to consolidate and be ratified and confirmed by the affirmative
vote of the stockholders of each such bank owning at least two-thirds of its
capital stock outstanding and at least two-thirds of any outstanding
preferred stock having voting rights, at a meeting to be held on call of the
directors, after sending notice of the time, place and object of the meeting
to each shareholder of record by registered mail at least 30 days prior to
said meeting; provided that the capital stock of such consolidated bank shall
not be less than that required under existing law for the organization of a
state bank in the place in which it is located. When such consolidation is
approved by the commissioner, any shareholder of either of the banks so
consolidated who has not voted for such consolidation shall be given notice
of the approval by the bank in which the shareholder holds an interest and of
the shareholder's right to receive the appraised value for the shareholder's
shares. If within 20 days after the date that notice of approval is mailed
or delivered to a shareholder the shareholder notifies the directors of the
bank in which the shareholder is interested that the shareholder dissents
from the plan of consolidation as adopted and approved and desires to
withdraw from such bank, the shareholder shall be entitled to receive in cash
the value of the shares so held by the shareholder, to be ascertained by an
appraisal made by a committee of 3 persons, one to be selected by the
shareholders, one by the directors, and the 3rd by the 2 so chosen; the
expense of such appraisal shall be borne by the bank; and in case the value
so fixed shall not be satisfactory to the shareholder he or she may within 5
days after being notified of the appraisal appeal to the commissioner, who
shall cause a reappraisal to be made by an appraiser or appraisers to be
named by said commissioner, which appraisal shall be final and binding, and
if said reappraisal shall exceed the value fixed by said committee the bank
shall pay the expense of reappraisal, otherwise the shareholder shall pay
said expense, and the value so ascertained and determined shall be deemed to
be a debt due and be forthwith paid to said shareholder from said bank, and
the share or shares so paid shall be surrendered and after such notice as the
board of directors may provide, be sold at public auction within 30 days
after the final appraisement provided for by this section.
(2) The bank or banks consolidating with another bank under sub. (1)
shall not be required to go into liquidation but their assets and liabilities
shall be reported by the bank with which they have consolidated; and all the
rights, franchises and interests of said banks so consolidated in and to
every species of property, personal and mixed, and choses in action thereto
belonging, shall be deemed to be transferred to and vested in such bank into
which it is consolidated without any deed or other transfer, and the said
consolidated bank shall hold and enjoy the same and all rights of property,
<PAGE>
franchises and interests in the same manner and to the same extent as was
held and enjoyed by the bank or banks so consolidated therewith.
(3) The commissioner may after consultation with the banking review
board make recommendations to any bank or trust company within this state as
to advisability of consolidation with other banks and may make
recommendations as to terms for consolidation or merger of banks in order to
avoid a condition of oversupply of banks in any community or area of the
state. The commissioner may also, if requested so to do, act as mediator or
arbitrator to fix any of the terms of any such consolidation or merger. It
shall be within the power of the board of directors of any bank or trust
company organized under the laws of this state to appropriate a reasonable
amount from the assets of the bank toward assisting in bringing about a
consolidation or merger of banks or to aid in reorganization or in avoiding
the closing of a bank where such action is deemed to be in the interests of
safe banking and the maintenance of credit and banking facilities in the
county in which such bank is located.
(4) Application for approval of a consolidation under sub. (1) shall be
made on a form prescribed by the commissioner. The application shall be
accompanied by a fee of $5,000, except that if more than 3 banks are to be
consolidated the fee is $5,000 plus $1,000 for each bank after the 3rd bank.
PMK-Sharon State Bank Proxy Statement
SharProx.PMK
2/23/95
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 180.0851 of the Wisconsin Business Corporation Law (the "WBCL")
requires Marshall & Ilsley Corporation ("M&I") to indemnify a director or
officer, to the extent such person is successful on the merits or otherwise
in the defense of a proceeding, for all reasonable expenses incurred in the
proceeding, if such person was a party to such proceeding because he or she
was a director or officer of M&I unless it is determined that he or she
breached or failed to perform a duty owed to M&I and such breach or failure
to perform constitutes: (i) a willful failure to deal fairly with M&I or its
shareholders in connection with a matter in which the director or officer has
a material conflict of interest; (ii) a violation of criminal law, unless the
director or officer had reasonable cause to believe his or her conduct was
lawful or no reasonable cause to believe his or her conduct was unlawful;
(iii) a transaction from which the director or officer derived an improper
personal profit; or (iv) willful misconduct.
Section 180.0858 of the WBCL provides that subject to certain
limitations, the mandatory indemnification provisions do not preclude any
additional right to indemnification or allowance of expenses that a director
or officer may have under M&I's Articles of Incorporation or Bylaws, a
written agreement between the director or officer and M&I, or a resolution of
the Board of Directors or the shareholders.
Unless otherwise provided in the articles of incorporation or bylaws,
or by written agreement between the director or officer and M&I, an officer
or director seeking indemnification is entitled to indemnification if
approved in any of the following manners as specified in Section 180.0855 of
the WBCL: (i) by majority vote of a disinterested quorum of the Board of
Directors: (ii) by independent legal counsel chosen by a quorum of
disinterested directors or its committee; (iii) by a panel of three
arbitrators (one of which is chosen by a quorum of disinterested directors);
(iv) by the vote of the shareholders; (v) by a court; or (vi) by any other
method permitted in Section 180.0858 of the WBCL.
Reasonable expenses incurred by a director or officer who is a party to
a proceeding may be reimbursed by M&I, pursuant to Section 180.0853 of the
WBCL, at such time as the director or officer furnishes to M&I written
affirmation of his good faith that he has not breached or failed to perform
his duties; and written confirmation to repay any amounts advanced if it is
determined that indemnification by M&I is not required.
Section 180.0859 of the WBCL provides that it is the public policy of
the State of Wisconsin to require or permit indemnification, allowance of
expenses and insurance to the extent required or permitted under Sections
180.0850 to 180.0858 of the WBCL for any liability incurred in connection
with any proceeding involving a federal or state statute, rule or regulation
regulating the offer, sale or purchase of securities.
As permitted by Section 180.0858, M&I has adopted indemnification
provisions in its By-Laws which closely track the statutory indemnification
provisions with certain exceptions. In particular, Section 7.1 of M&I's
By-Laws, among other items, provides that (i) an individual shall be
indemnified unless it is proven by a final judicial adjudication that
indemnification is prohibited and (ii) payment or reimbursement of expenses,
subject to certain limitations, will be mandatory rather than permissive.
M&I has purchased directors' and officers' liability insurance which has
coverage limits of $40 million per occurrence and insures M&I's officers and
directors against certain liabilities which may arise under the Securities
Act of 1933.
<PAGE>
Item 21. Exhibits and Financial Statement Schedules.
a. Exhibits
Exhibit No.
- -----------
2 Agreement and Plan of Reorganization dated as of August 31, 1994,
by and between Marshall & Ilsley Corporation and Sharon State
Bank (incorporated by reference to Appendix A to the
Prospectus/Proxy Statement included as part of this Registration
Statement)
5 Opinion of Godfrey & Kahn, S.C. regarding legality *
8 Opinion of Godfrey & Kahn, S.C. regarding tax matters *
23.1 Consent of Arthur Andersen LLP (relating to M&I)
23.2 Consent of Arthur Andersen LLP (relating to Sharon Bank) *
23.3 Consent of Godfrey & Kahn, S.C. (contained in Exhibits 5 and 8) *
24 Powers of Attorney for the Directors of Marshall & Ilsley
Corporation *
99 Form of Sharon State Bank Proxy
______________________________
* Previously filed
b. Financial Statement Schedules
No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) or (c) of this Form S-4.
Item 22. Undertakings.
(1) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(2) The undersigned Registrant hereby undertakes as follows:
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(3) The Registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (2) immediately preceding, or (ii) that
purports to meet the requirements of section 10(a)(3) of the Act and is
used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new
<PAGE>
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions referred to in Item 20 of this registration statement, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(5) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
Prospectus/Proxy Statement pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request.
(6) The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was
not the subject of and included in the registration statement when it
became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Milwaukee, State of Wisconsin, on April 19, 1995.
MARSHALL & ILSLEY CORPORATION
(Registrant)
By: /s/ J.B. Wigdale
------------------------------
J.B. Wigdale
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dated indicated:
/s/ J.B. Wigdale Date: April 19, 1995
- --------------------------------------------------
J.B. Wigdale,
Chairman of the Board and a Director
(Chief Executive Officer)
/s/ G.H. Gunnlaugsson Date: April 19, 1995
- -----------------------------------------------
G.H. Gunnlaugsson,
Executive Vice President and a Director
(Chief Financial Officer)
/s/ P.R. Justiliano Date: April 19, 1995
- ----------------------------------------------------
P.R. Justiliano
Senior Vice President and Corporate Controller
(Principal Accounting Officer)
Directors: Richard A. Abdoo, Oscar C. Boldt, J.P. Bolduc, Wendell F. Bueche,
J.F. Chait, Glenn A. Francke, G.H. Gunnlaugsson, Burleigh E.
Jacobs, Jack F. Kellner, James F. Kress, D.J. Kuester, Edward L.
Meyer, Jr., Don R. O'Hare, San W. Orr, Jr., Peter M. Platten,
III, J.A. Puelicher, Stuart W. Tisdale, J.B. Wigdale, James O.
Wright and Gus A. Zuehlke.
/s/ M.A. Hatfield Date: April 19, 1995
- -------------------------------------------------
M.A. Hatfield
As Attorney-in-Fact*
* Pursuant to authority granted by powers of attorney, copies of which are
filed herewith.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
2 Agreement and Plan of Reorganization dated as of August 31, 1994, by
and between Marshall & Ilsley Corporation and Sharon State Bank
(incorporated by reference to Appendix A to the Prospectus/Proxy
Statement included as part of this Registration Statement).. . . . . . *
5 Opinion of Godfrey & Kahn, S.C. regarding legality . . . . . . . . . . **
8 Opinion of Godfrey & Kahn, S.C. regarding tax matters. . . . . . . . . **
23.1 Consent of Arthur Andersen LLP (relating to M&I) . . . . . . . . . . .
23.2 Consent of Arthur Andersen LLP (relating to Sharon Bank) . . . . . . . **
23.3 Consent of Godfrey & Kahn, S.C. (contained in Exhibits 5 and 8). . . . **
24 Powers of Attorney for the Directors of Marshall & Ilsley Corporation. **
99 Form of Sharon State Bank Proxy. . . . . . . . . . . . . . . . . . . .
- --------------
* Incorporated by reference as noted.
** Previously filed.
PMK-Sharon State Bank Proxy Statement
SharProx.PMK
3/2/95
<PAGE>
EXHIBIT 23.1
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-4 of our
report dated January 27, 1995 in Marshall & Ilsley Corporation's Annual
Report on Form 10-K for the year ended December 31, 1994, and to all
references to our firm in this Registration Statement.
/s/ Arthur Andersen LLP
-----------------------------
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
April 18, 1995
<PAGE>
EXHIBIT 99
<PAGE>
Sharon State Bank
PROXY SOLICITED ON BEHALF OF SHARON BANK'S
BOARD OF DIRECTORS
Please sign and return immediately
Known all men by these presents that, I, the undersigned
shareholder of Sharon State Bank, do hereby appoint Rymund P. Wurlitzer
and Howard Haas as my true and lawful attorneys, with full power of
substitution, for me and in my name, to vote at the special meeting of
stockholders of said bank, to be held on the 30th day of May, 1995, or
any adjournment of said meeting, with all powers I should have
if personally present, hereby revoking all proxies heretofore given, as
follows:
Agreement and Plan of Reorganization
Proposal to approve the Agreement and Plan of Reorganization
dated August 31, 1994, as amended, between Sharon Bank and
Marshall & Ilsley Corporation ("M&I") and a related Agreement and
Plan of Consolidation between Citizen's Bank of Delavan
("Citizens Bank"), which, at the time of the Consolidation, will
be a wholly-owned subsidiary of M&I, and Sharon Bank, pursuant to
which Sharon Bank will be consolidated with and into Citizens
Bank (the "Consolidation") and each outstanding share of Sharon
Bank's Common Stock, $100 par value, will be converted into the
right to receive 220 shares of M&I's Common Stock, $1.00 par
value, and cash in lieu of fractional shares.
VOTE FOR VOTE AGAINST ABSTAIN
[ ] [ ] [ ]
The above item is proposed by the Board of Directors, and it
recommends a vote in favor of such item.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
I confer discretionary authority on the above-named individuals
with respect to any other matters which properly come before the meeting,
which approval shall not constitute ratification of actions taken at that
meeting.
IN EXERCISING DISCRETIONARY AUTHORITY, SHARES WILL BE VOTED
ACCORDING TO THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
Dated: , 1995
-------------
(please fill in date) -----------------------------------
(Signature of Stockholder)
----------------------------------
(Signature of Stockholder)
(When signing as personal representative, trustee, guardian, etc., please
give your full title. If more than one trustee, all should sign, unless any
one person is authorized to act. If shares are held in joint names, either
or both may sign.)
