<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMCORE FINANCIAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
NEVADA 6022 36-3183870
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
501 SEVENTH STREET
ROCKFORD, ILLINOIS 61104
(815) 968-2241
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOHN R. HECHT
SENIOR VICE PRESIDENT
AMCORE FINANCIAL, INC.
501 SEVENTH STREET
ROCKFORD, ILLINOIS 61104
(815) 968-2241
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<C> <C>
WILLIAM R. KUNKEL
PETER C. KRUPP KENNETH V. HALLETT
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) QUARLES & BRADY
333 WEST WACKER DRIVE 411 EAST WISCONSIN AVENUE
CHICAGO, ILLINOIS 60606 MADISON, WISCONSIN 53202
(312) 407-0700 (414) 277-5000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
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. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT OFFERING PRICE AGGREGATE
BEING REGISTERED BEING REGISTERED (1) PER UNIT OFFERING PRICE
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Common Stock ($0.33 par
value).................. 2,473,175 shares (2) $42.15 (2) $18,533,313
- ----------------------------------------------------------------------------------------------------------
Share Purchase Rights... 2,473,175 (4) (4)
==========================================================================================================
<CAPTION>
- -------------------------------------------------
TITLE OF EACH
CLASS OF SECURITIES AMOUNT OF
BEING REGISTERED REGISTRATION FEE
- -------------------------------------------------
<S> <C>
Common Stock ($0.33 par
value).................. (2) $5,616(3)
- -------------------------------------------------
Share Purchase Rights... (4)
=================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee. The
amount being registered represents the maximum number of shares of common
stock of AMCORE Financial, Inc. ("AMCORE") and associated share purchase
rights that may be issued in connection with the conversion and exchange of
all outstanding shares of common stock of Country Bank Shares Corporation
("CBSC"), subject to adjustment pursuant to the Merger Agreement, as
described herein.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)(2) based upon the book value per share of CBSC Common Stock
on December 31, 1996 ($42.15) and the 439,699 shares of CBSC Common Stock
which are to be received by the Registrant or cancelled in the transaction
discussed herein.
(3) In accordance with Rule 457(b), the registration fee paid herewith has been
reduced by $3,707 which is the amount of the fee previously paid in
connection with the Registrant's Schedule 14A filed with the Commission on
May 2, 1997.
(4) The value attributable to the share purchase rights is reflected in the
market price of the AMCORE Common Stock to which the Rights are attached.
------------------------
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> 2
COUNTRY BANK SHARES CORPORATION
100 SOUTH FIRST STREET
MT. HOREB, WISCONSIN 53572
-------------------------
NOTICE OF SPECIAL MEETING OF COUNTRY BANK SHARES CORPORATION STOCKHOLDERS
JUNE 18, 1997
-------------------------
TO THE STOCKHOLDERS OF COUNTRY BANK SHARES CORPORATION:
YOU ARE HEREBY NOTIFIED of and invited to attend a special meeting (the
"Special Meeting") of stockholders of Country Bank Shares Corporation, a
Wisconsin corporation ("CBSC"), to be held at the principal offices of CBSC at
100 South First Street, Mt. Horeb, Wisconsin 53572, on June 18, 1997, at 9:30
a.m., local time, for the purpose of considering and voting upon the following:
(1) A proposal ("Proposal") to approve and adopt the Amended and Restated
Agreement and Plan of Merger, dated as of May 1, 1997 (the "Merger
Agreement"), among AMCORE Financial, Inc., a Nevada corporation ("AMCORE"),
CBS Acquisition Corp., a Wisconsin corporation and a wholly-owned subsidiary
of AMCORE ("Newco"), and CBSC and the transactions contemplated thereby,
pursuant to which, among other things, (i) Newco will merge with and into
CBSC, with CBSC being the surviving corporation in the merger (the
"Merger"), and (ii) each outstanding share of common stock, no par value, of
CBSC ("CBSC Common Stock") (other than shares of CBSC Common Stock held by
CBSC as treasury stock immediately prior to the Effective Time (as defined
in the Merger Agreement) and shares of CBSC Common Stock held by AMCORE,
Newco, or any direct or indirect subsidiary of AMCORE, which shares will be
cancelled, and other than shares of CBSC Common Stock held by stockholders
of CBSC who have properly exercised their dissenters' rights under Wisconsin
law) will be cancelled and converted into the right to receive a number of
shares (ranging from 5.6247 to 3.7193) (the "Exchange Ratio") of common
stock, par value $0.33 per share, of AMCORE, to be determined based upon the
average per share closing price of AMCORE Common Stock as reported on the
Nasdaq National Market for the period of twenty trading days ending at the
end of the third trading day immediately preceding the date of the Special
Meeting. A description of the procedure to be used in determining the
Exchange Ratio, together with other important information, is contained in
the accompanying CBSC Proxy Statement and AMCORE Prospectus ("Proxy
Statement/Prospectus").
(2) Such other business as may properly come before the Special Meeting or any
postponements or adjournments thereof.
A copy of the Merger Agreement is attached as Annex II to the Proxy
Statement/Prospectus that accompanies this Notice of Special Meeting of Country
Bank Shares Corporation Stockholders.
Stockholders of CBSC ("CBSC Stockholders") have the statutory right to
assert dissenters' rights under Sections 180.1301 to 180.1331 of the Wisconsin
Business Corporation Law (the "WBCL"). In order to perfect this right, a
stockholder must not vote in favor of the Merger (this may be done by marking
the proxy either to vote against the Merger or to abstain from voting thereon or
by not voting at all) and must take such other action as is required by such
statute, including delivery of, prior to the vote upon the Merger, written
notice of intent to demand the "fair value" of such stockholder's shares of CBSC
Common Stock. Sections 180.1301 et seq. of the WBCL are attached to the
accompanying Proxy Statement/Prospectus as Annex III.
THE BOARD OF DIRECTORS OF CBSC HAS DETERMINED THAT THE TERMS OF THE MERGER
ARE FAIR TO AND IN THE BEST INTERESTS OF CBSC AND ITS STOCKHOLDERS, HAS APPROVED
AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND
RECOMMENDS THAT THE CBSC STOCKHOLDERS VOTE "FOR" THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
(continued on next page)
<PAGE> 3
The Board of Directors of CBSC has fixed the close of business on May 5,
1997, as the record date (the "Record Date") for determination of the
stockholders entitled to receive notice of, and to vote at, the Special Meeting.
The Special Meeting may be postponed or adjourned from time to time without any
notice other than by announcement at the Special Meeting of any postponements or
adjournments thereof, and any and all business for which notice is hereby given
may be transacted at such postponed or adjourned Special Meeting.
The affirmative vote of the holders of a majority of the shares of CBSC
Common Stock outstanding on the Record Date is required to approve the above
proposal. Please complete, date, sign and promptly return the enclosed proxy
card, which is solicited by the Board of Directors of CBSC, in the enclosed
envelope, whether or not you expect to attend the Special Meeting. The giving of
such proxy does not affect your right to vote in person in the event you attend
the Special Meeting. You may revoke the proxy at any time prior to its exercise
by filing a written notice of revocation to CBSC, delivering to CBSC a duly
executed proxy bearing a later date, or by voting in person at the Special
Meeting. Failure to return a properly executed proxy card, or to vote at the
Special Meeting, will have the same effect, in most cases, as a vote against the
Merger.
May 14, 1997 By Order of the Board of Directors
NEAL H. BRUNNER
Neal H. Brunner
President
IMPORTANT
PLEASE DO NOT SEND YOUR COMMON STOCK CERTIFICATES AT THIS TIME. IF THE MERGER IS
CONSUMMATED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF YOUR STOCK
CERTIFICATES.
<PAGE> 4
AMCORE FINANCIAL, INC.
PROSPECTUS
COUNTRY BANK SHARES CORPORATION
AMCORE FINANCIAL, INC. LOGO CBSC
PROXY STATEMENT
COMMON STOCK
This Proxy Statement/Prospectus ("Proxy Statement/Prospectus") constitutes
a prospectus of AMCORE Financial, Inc., a Nevada corporation ("AMCORE"), with
respect to shares of common stock of AMCORE to be issued pursuant to an Amended
and Restated Agreement and Plan of Merger, dated as of May 1, 1997 (the "Merger
Agreement"), providing for the merger (the "Merger") of CBS Acquisition Corp., a
Wisconsin corporation and a wholly-owned subsidiary of AMCORE ("Newco"), with
and into Country Bank Shares Corporation, a Wisconsin corporation ("CBSC"). The
Merger Agreement is set forth in Annex II and incorporated herein by reference.
This Proxy Statement/Prospectus also serves as a Proxy Statement of CBSC
for the special meeting of stockholders of CBSC to be held on June 18, 1997, and
any adjournments or postponements thereof (the "Special Meeting"). At the
Special Meeting, holders of shares of common stock of CBSC will consider and
vote upon the approval and adoption of the Merger Agreement.
Under the Merger Agreement, each outstanding share of common stock, no par
value, of CBSC ("CBSC Common Stock"), other than shares held by any stockholder
of CBSC (individually a "CBSC Stockholder" and collectively the "CBSC
Stockholders") who properly exercises and preserves his or her statutory
dissenters' rights, will be converted into the right to receive a number of
shares (ranging from 5.6247 to 3.7193) (the "Exchange Ratio") of common stock,
$0.33 par value per share, of AMCORE, and associated share purchase rights
(collectively referred to herein as "AMCORE Common Stock"), to be determined
based upon the average per share closing price of AMCORE Common Stock as
reported on the Nasdaq National Market for the period of twenty trading days
ending at the end of the third trading day immediately preceding the date of the
Special Meeting. A description of the procedure to be used in determining the
Exchange Ratio is contained elsewhere in this Proxy Statement/Prospectus. See
"THE MERGER AGREEMENT -- Conversion of Shares and Exchange Ratio."
AMCORE Common Stock is quoted on the Nasdaq National Market (the "NASDAQ").
The composite closing price of AMCORE Common Stock on the NASDAQ on May 13, 1997
was $27.75 per share.
All information herein with respect to AMCORE and Newco has been furnished
by AMCORE and all information with respect to CBSC and its subsidiaries has been
furnished by CBSC.
This Proxy Statement/Prospectus does not cover any resale of the securities
to be received by stockholders of CBSC upon consummation of the Merger and no
person is authorized to make any use of this Proxy Statement/Prospectus in
connection with any such resale.
Stockholders of record at the close of business on the record date, May 5,
1997 (the "Record Date"), are entitled to notice of, and to vote at, the Special
Meeting. As of the Record Date, approximately 433,699 shares of CBSC Common
Stock were issued and outstanding and entitled to vote at the Special Meeting.
Each share of CBSC Common Stock is entitled to one vote on each matter to be
voted upon at the Special Meeting.
A list of CBSC Stockholders of record as of the Record Date will be
available at CBSC's executive offices beginning two (2) business days after the
notice of the Special Meeting is given and continuing to the date of the Special
Meeting and will also be available at the Special Meeting. Such list may be
examined during ordinary business hours by any CBSC Stockholder of record for
any purpose germane to the meeting.
CBSC STOCKHOLDERS SHOULD NOT SEND THEIR CBSC COMMON STOCK CERTIFICATES AT THIS
TIME. IF THE MERGER IS CONSUMMATED, CBSC STOCKHOLDERS WILL BE SENT INSTRUCTIONS
REGARDING THE SURRENDER OF THEIR STOCK CERTIFICATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSIONER
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OF AMCORE COMMON 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 Proxy Statement/Prospectus is May 14, 1997.
<PAGE> 5
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, THE
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY AMCORE, NEWCO OR CBSC. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE THE
SECURITIES OFFERED HEREBY, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION
TO OR FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION
OF AN OFFER OR PROXY IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES TO WHICH THIS PROXY
STATEMENT/PROSPECTUS RELATES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AMCORE, NEWCO OR
CBSC SINCE THE DATE OF THIS PROXY STATEMENT/PROSPECTUS.
AVAILABLE INFORMATION
AMCORE is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at its regional offices at Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material may also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission and the address of such site is http://www.sec.gov.
AMCORE has filed a Registration Statement on Form S-4 (the "Registration
Statement") with the Commission under the Securities Act of 1933, as amended
(the "Securities Act") relating to the shares of AMCORE Common Stock to be
issued in connection with the Merger. This Proxy Statement/Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Such additional information may be obtained from the Commission's
principal office in Washington, D.C., as set forth above. Reference is hereby
made to the Registration Statement and related exhibits for further information
with respect to AMCORE, Newco, CBSC and the securities offered hereby.
Statements contained in this Proxy Statement/Prospectus as to the contents of
any document are not necessarily complete, and in each instance reference is
made to such document itself, each such statement being qualified in all
respects by such reference.
CBSC is not subject to the informational requirements of the Exchange Act
and does not file reports and other information with the Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS RELATING TO AMCORE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS, EXCLUDING
EXHIBITS UNLESS SPECIFICALLY INCORPORATED BY REFERENCE HEREIN, ARE AVAILABLE
WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A PROXY
STATEMENT/PROSPECTUS IS DELIVERED, UPON ORAL OR WRITTEN REQUEST TO MR. JOHN R.
HECHT, SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, AMCORE FINANCIAL,
INC., 501 SEVENTH STREET, ROCKFORD, ILLINOIS 61104 (TELEPHONE: 815-968-2241). IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
JUNE 11, 1997.
The following documents filed by AMCORE with the Commission are
incorporated herein by reference:
1. AMCORE's Annual Report on Form 10-K and Form 11-K, for the year ended
December 31, 1996;
2. AMCORE's Current Reports on Form 8-K dated February 6, 1997 and April
30, 1997; and
3. the description of AMCORE Common Stock (including the share purchase
rights) contained in AMCORE's registration statements filed pursuant to
Section 12 of the Exchange Act and any amendment or report filed for the
purpose of updating such description.
2
<PAGE> 6
All reports and other documents filed by AMCORE pursuant to Section 13 (a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the date of the Special Meeting will be deemed to be incorporated by
reference into this Proxy Statement/Prospectus and to be a part hereof from the
date of filing of such reports and other documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein (or in any
subsequently filed document which also is incorporated by reference herein)
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed to constitute a part hereof except as so modified or
superseded.
FORWARD-LOOKING STATEMENTS
THIS PROXY STATEMENT/PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE
CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 WITH RESPECT TO THE RESULTS OF OPERATIONS AND
BUSINESSES OF AMCORE AND CBSC. THESE FORWARD-LOOKING STATEMENTS INVOLVE CERTAIN
RISKS AND UNCERTAINTIES. FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE CONTEMPLATED OR PROJECTED, FORECAST, ESTIMATED OR BUDGETED
IN SUCH FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING
POSSIBILITIES: (i) HEIGHTENED COMPETITION, INCLUDING SPECIFICALLY THE
INTENSIFICATION OF PRICE COMPETITION, THE ENTRY OF NEW COMPETITORS AND THE
FORMATION OF NEW PRODUCTS BY NEW AND EXISTING COMPETITORS; (ii) ADVERSE STATE
AND FEDERAL LEGISLATION AND REGULATION; (iii) FAILURE TO OBTAIN NEW CUSTOMERS OR
RETAIN EXISTING CUSTOMERS; (iv) INABILITY TO CARRY OUT MARKETING AND/OR
EXPANSION PLANS; (v) LOSS OF KEY EXECUTIVES; (vi) CHANGES IN INTEREST RATES;
(vii) GENERAL ECONOMIC AND BUSINESS CONDITIONS WHICH ARE LESS FAVORABLE THAN
EXPECTED; (viii) UNANTICIPATED CHANGES IN INDUSTRY TRENDS; AND (ix) CHANGES IN
FEDERAL RESERVE BOARD MONETARY POLICIES. IN ADDITION, FACTORS THAT COULD CAUSE
ACTUAL RESULTS OF CBSC (ASSUMING CONSUMMATION OF THE MERGER) TO DIFFER
MATERIALLY FROM THOSE CONTEMPLATED BY OR PROJECTED, FORECAST, ESTIMATED OR
BUDGETED IN FORWARD-LOOKING STATEMENTS RELATING TO THE RESULTS OF OPERATIONS AND
BUSINESS OF CBSC FOLLOWING THE MERGER, INCLUDING (A) COST SAVINGS THAT WILL BE
REALIZED FROM THE MERGER (SEE "THE MERGER -- REASONS FOR THE MERGER;
RECOMMENDATION OF THE BOARD"), (B) THE ACTUAL NUMBER OF MINORITY SHARES OF
BELLEVILLE STATE BANK ACQUIRED IN THE BELLEVILLE TRANSACTIONS (AS DEFINED
HEREIN) AND (C) COSTS ASSOCIATED WITH THE MERGER INCLUDE, AMONG OTHERS, THE
FOLLOWING POSSIBILITIES: (i) THE EXPECTED COST SAVINGS TO BE REALIZED THROUGH
COMBINING CERTAIN FUNCTIONS OF BOTH AMCORE AND CBSC CANNOT BE FULLY REALIZED
BECAUSE THE CHANGES ARE NOT MADE OR UNANTICIPATED OFFSETTING COSTS ARE INCURRED;
AND (ii) COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION OF THE BUSINESSES OF
AMCORE AND CBSC ARE GREATER THAN EXPECTED.
3
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION..................... 2
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE............................... 2
FORWARD-LOOKING STATEMENTS................ 3
SUMMARY................................... 5
THE CBSC SPECIAL MEETING.................. 17
General................................. 17
Date, Place and Time.................... 17
Matters to be Considered at the
Meeting............................... 17
Record Date; Vote Required.............. 17
Solicitation, Revocation and Use of
Proxies............................... 18
Other Matters........................... 18
THE MERGER................................ 18
Background of the Merger................ 18
Reasons for the Merger; Recommendation
of the CBSC Board..................... 21
Opinion of CBSC's Financial Advisor..... 22
Interests of Certain Persons in the
Merger................................ 26
Stockholder Voting Agreements........... 26
Management and Operations of CBSC after
the Merger............................ 27
Regulatory Approval..................... 27
Certain Federal Income Tax
Consequences.......................... 27
Accounting Treatment of the Merger...... 28
Rights of Dissenting Stockholders....... 29
Resale of AMCORE Common Stock........... 30
THE MERGER AGREEMENT...................... 30
Terms................................... 30
Date of Merger.......................... 32
Conversion of Shares and Exchange
Ratio................................. 32
Stock Option Agreements................. 33
Certain Representations and
Warranties............................ 34
Conduct of Business Pending the
Merger................................ 34
Dividends............................... 36
Employee Benefits....................... 36
Conditions to the Merger................ 36
Termination............................. 37
Termination Fees and Expenses........... 37
Amendment and Waiver.................... 38
COMPARISON OF STOCKHOLDERS' RIGHTS........ 38
General................................. 38
Merger, Consolidation and Sales of
Assets................................ 38
Preferred Stock......................... 40
Directors............................... 41
Dividends............................... 41
Amendments to the Charter............... 41
Amendments to the Bylaws................ 41
Cumulative Voting....................... 42
Structure of Board of Directors......... 42
Removal of Directors.................... 42
Rights of Dissenting Stockholders....... 42
Special Meetings of Stockholders........ 43
Action Without a Meeting................ 43
Preemptive Rights....................... 43
Liquidation and Dissolution............. 43
Indemnification and Personal Liability
of Directors and Officers............. 43
Share Purchase Rights................... 44
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AMCORE FINANCIAL, INC. ................... 46
General................................. 46
Recent Developments..................... 47
COUNTRY BANK SHARES CORPORATION........... 48
General................................. 48
Corporate Structure..................... 48
BBC/Belleville.......................... 49
Products................................ 49
Competition............................. 49
Employees............................... 49
Properties.............................. 50
Legal Proceedings....................... 50
Stock Option Agreements................. 50
Selected Financial Data................. 50
SELECTED CONSOLIDATED FINANCIAL DATA OF
CBSC.................................... 51
CBSC'S Management's Discussion and
Analysis of Results of Operations and
Financial Condition................... 51
General................................. 51
Results of Operations................... 52
Net Interest Revenue.................... 52
Provision for Loan Losses............... 52
Other Operating Revenue and Expenses.... 52
Income Taxes............................ 52
Financial Condition..................... 52
Loan Portfolio.......................... 53
Non-Performing Assets................... 54
Summary of Loan Loss Experience......... 55
Securities.............................. 56
Deposits................................ 56
Capital................................. 56
Liquidity............................... 56
Belleville Acquisition.................. 56
Recent Accounting Developments.......... 56
SUPERVISION AND REGULATION................ 57
General................................. 57
Certain Transactions with Affiliates.... 57
Payment of Dividends.................... 57
Capital Adequacy........................ 58
The Interstate Banking and Community
Development Legislation............... 58
FDIC Insurance Assessments.............. 59
FIRREA and FDICIA....................... 59
Principal Stockholders, Directors and
Officers.............................. 60
OPINIONS.................................. 61
EXPERTS................................... 61
PRO FORMA COMBINING FINANCIAL
STATEMENTS.............................. 61
INDEX TO COUNTRY BANK SHARES CORPORATION
FINANCIAL STATEMENTS.................... 67
LIST OF ANNEXES
Annex I Opinion of CBSC's Financial Advisor
Annex II Agreement and Plan of Merger
Annex III Sections 180.1301 et seq. of the
Wisconsin Business Corporation Law
</TABLE>
4
<PAGE> 8
SUMMARY
The following is a brief summary of certain information contained or
incorporated by reference elsewhere in this Proxy Statement/Prospectus. This
summary is not intended to be complete and is qualified in its entirety by
reference to the more detailed information contained elsewhere herein and in the
documents incorporated by reference herein. The Merger Agreement is set forth in
Annex II to this Proxy Statement/Prospectus, and reference is made thereto for a
complete description of the terms of the Merger. CBSC Stockholders are urged to
review carefully the entire Proxy Statement/Prospectus, each of the Annexes
hereto and the documents incorporated by reference herein. As used in this Proxy
Statement/Prospectus, the terms "AMCORE" and "CBSC" refer to such corporations,
respectively, and, where the context requires, such corporations and their
respective subsidiaries.
GENERAL
CBSC and AMCORE have entered into an Agreement and Plan of Merger, dated as
of January 30, 1997, as amended and restated on May 1, 1997 (the "Merger
Agreement"), among AMCORE, CBS Acquisition Corp., a Wisconsin corporation and a
wholly-owned subsidiary of AMCORE ("Newco"), and CBSC, pursuant to which, among
other things, Newco will merge with and into CBSC, with CBSC being the surviving
corporation in the Merger. Additionally, each outstanding share of common stock,
no par value, of CBSC ("CBSC Common Stock") (other than shares of CBSC Common
Stock held by CBSC as treasury stock immediately prior to the Effective Time (as
defined below) and shares of CBSC Common Stock held by AMCORE, Newco or any
direct or indirect subsidiary of AMCORE, which shares will be cancelled, and
other than shares of CBSC Common Stock held by CBSC Stockholders who have
properly exercised their dissenters' rights under Wisconsin law) will be
cancelled and converted into the right to receive a number (the "Exchange
Ratio") of shares of common stock, par value $0.33 per share, of AMCORE, and
associated share purchase rights (collectively referred to herein as "AMCORE
Common Stock," unless otherwise required by the context), to be determined as
follows: (i) in the event the average of the daily closing prices of a share of
AMCORE Common Stock as reported on the Nasdaq National Market during the period
of twenty (20) trading days ending at the end of the third trading day
immediately preceding the date of the Special Meeting Date (the "AMCORE Average
Price") is less than $15.00, each share of CBSC Common Stock shall be exchanged
for and converted into 5.6247 shares of AMCORE Common Stock, (ii) in the event
the AMCORE Average Price is greater than $15.00 but less than $19.50, each share
of CBSC Common Stock shall be exchanged for and converted into a number of
shares of AMCORE Common Stock determined by dividing (A) 84.37 by (B) the AMCORE
Average Price, (iii) in the event the AMCORE Average Price is greater than or
equal to $19.50 but less than or equal to $24.50, each share of CBSC Common
Stock shall be exchanged for and converted into 4.3267 shares of AMCORE Common
Stock, (iv) in the event the AMCORE Average Price is greater than $24.50 but
less than or equal to $28.50, each share of CBSC Common Stock shall be exchanged
for and converted into a number of shares of AMCORE Common Stock determined by
dividing (A) 106.00 by (B) the AMCORE Average Price or (v) in the event the
AMCORE Average Price is greater than $28.50, each share of CBSC Common Stock
shall be exchanged for and converted into 3.7193 shares of AMCORE Common Stock.
Notwithstanding the foregoing, if up to fifteen days following the Special
Meeting AMCORE enters into a letter of intent or definitive agreement for a
tender offer, merger, other business combination or sale or other disposition
involving all or substantially all of AMCORE's assets, the Exchange Ratio will
be equal to 4.3267. There can be no assurance that the closing price for AMCORE
Common Stock on the Effective Date will be equal to the AMCORE Average Price.
See "THE MERGER AGREEMENT -- Conversion of Shares and Exchange Ratio" and " --
Terms." As of May 13, 1997, the most recent practicable date prior to the
printing of this Proxy Statement/Prospectus, the average of the daily closing
prices of a share of AMCORE Common Stock during the 20-day period ending on May
13, 1997 was 27.1375 which, assuming an AMCORE Average Price equal to such
average, would result in an Exchange Ratio of 3.9060. See "THE MERGER AGREEMENT
- -- Conversion of Shares and Exchange Ratio" and "-- Terms." Upon the
consummation of the Merger, the rights of AMCORE stockholders will be governed
by Nevada law and the Restated Articles of Incorporation and Bylaws of AMCORE.
The proposed Merger is conditioned upon, among other matters, the approval
of CBSC Stockholders of the Merger.
5
<PAGE> 9
THE COMPANIES
AMCORE FINANCIAL, INC.
AMCORE is a multi-bank holding company incorporated under the laws of the
State of Nevada in 1982. AMCORE has five banks operating in 41 locations and
eight financial services companies. AMCORE's primary region of operations
includes the Illinois cities of Rockford, Elgin, Woodstock, Carpentersville,
Crystal Lake, Sterling, Dixon, Princeton, Aledo, Rochelle, Ashton, Gridley, Mt.
Morris, Mendota and Peru. At December 31, 1996, AMCORE and its subsidiaries had
total assets of $2.8 billion, total deposits of $1.9 billion and stockholders'
equity of $221 million.
On April 18, 1997, AMCORE completed the merger of FNB Acquisition, Inc., a
wholly owned subsidiary of AMCORE with and into First National Bancorp, Inc.
("FNB"), a one-bank holding company with assets of approximately $215 million at
December 31, 1996. FNB is now a wholly owned subsidiary of AMCORE. As a result
of the merger, the former stockholders of FNB received, in total, 1,881,524
shares of AMCORE Common Stock.
Additional information concerning AMCORE is included in the AMCORE reports
and documents incorporated by reference herein. See "AMCORE FINANCIAL, INC." and
"INCORPORATION OF CERTAIN INFORMATION BY REFERENCE."
The principal executive offices of AMCORE are located at 501 Seventh
Street, Rockford, Illinois 61104, and its telephone number is (815) 968-2241.
COUNTRY BANK SHARES CORPORATION
CBSC is a five-bank holding company incorporated under the laws of
Wisconsin in 1983 and registered under the Federal Bank Holding Company Act (the
"BHCA"). Its headquarters is in Mount Horeb, Wisconsin. CBSC owns all of the
outstanding common stock of the State Bank of Mount Horeb, Montello State Bank
and the State Bank of Argyle, 98.7% of the outstanding common stock of Citizens
State Bank of Clinton and 83.8% of the outstanding common stock of Belleville
State Bank (together, the "Banks"). The Banks collectively have eleven branch
locations. Through its bank subsidiaries, CBSC offers transaction, savings and
investment accounts to its customers in addition to providing commercial and
consumer loan services in southern Wisconsin communities. The primary region of
CBSC operations includes Dane, Green, Lafayette, Rock, Walworth and Marquette
Counties, Wisconsin. At December 31, 1996, prior to the subsequent Belleville
acquisition, CBSC and its subsidiaries had total assets of $261.2 million, total
deposits of $233.3 million and stockholders' equity of $15.5 million. Giving
effect to CBSC's acquisition of Belleville Bancshares Corporation ("BBC") in
February of 1997, such amounts would be equal to $301.6 million, $269.3 million
and $18.3 million, respectively. See "COUNTRY BANK SHARES CORPORATION." The
principal executive offices of CBSC are located at 100 South First Street, Mount
Horeb, Wisconsin 53572, and its telephone number is (608) 437-5566.
THE MERGER
Subject to the satisfaction of the terms and conditions set forth in the
Merger Agreement, Newco will be merged with and into CBSC. Upon consummation of
the Merger, Newco's corporate existence will terminate and CBSC will continue as
the surviving corporation. As a result of the Merger, AMCORE will directly own
100% of the stock of the surviving corporation, CBSC, and indirectly own all of
the issued and outstanding shares of common stock of the Banks, with the
exception of 1.3% of the issued and outstanding shares of common stock of
Citizens State Bank of Clinton. Currently, CBSC owns 83.8% of the issued and
outstanding shares of Belleville State Bank. Consummation of the Merger is
subject to the satisfaction of certain conditions, including the completion of
CBSC's acquisition of the outstanding shares of Belleville State Bank that it
does not already own, in an amount necessary to increase ownership of the shares
of Belleville State Bank to not less than 97.5% of the issued and outstanding
shares of Belleville State Bank (together with CBSC's acquisition of BBC, the
"Belleville Transactions"). In connection with such purchase, the minority
shareholders of Belleville State Bank will provide a full release of certain
claims and CBSC will acquire up to 1,166 shares of common stock of Belleville
State Bank for cash in the amount of $1,110 for each share of
6
<PAGE> 10
Belleville State Bank common stock. It is anticipated that the Belleville
Transactions will be completed in May or June of 1997. See "THE MERGER."
Subject to certain limitations and dissenters' rights provided by law, each
issued and outstanding share of CBSC Common Stock (other than shares of CBSC
Common Stock held by CBSC as treasury stock immediately prior to the Effective
Time and shares of CBSC Common Stock held by AMCORE, Newco or any direct or
indirect subsidiary of AMCORE, which shares will be cancelled, and other than
shares of CBSC Common Stock held by CBSC Stockholders who have properly
exercised their dissenters' rights under Wisconsin law) will be cancelled and
converted into the right to receive a number of shares of AMCORE Common Stock to
be determined as follows: (i) in the event the AMCORE Average Price is less than
$15.00, each share of CBSC Common Stock shall be exchanged for and converted
into 5.6247 shares of AMCORE Common Stock, (ii) in the event the AMCORE Average
Price is greater than $15.00 but less than $19.50, each share of CBSC Common
Stock shall be exchanged for and converted into a number of shares of AMCORE
Common Stock determined by dividing (A) 84.37 by (B) the AMCORE Average Price,
(iii) in the event the AMCORE Average Price is greater than or equal to $19.50
but less than or equal to $24.50, each share of CBSC Common Stock shall be
exchanged for and converted into 4.3267 shares of AMCORE Common Stock, (iv) in
the event the AMCORE Average Price is greater than $24.50 but less than or equal
to $28.50, each share of CBSC Common Stock shall be exchanged for and converted
into a number of shares of AMCORE Common Stock determined by dividing (A) 106.00
by (B) the AMCORE Average Price or (v) in the event the AMCORE Average Price is
greater than $28.50, each share of CBSC Common Stock shall be exchanged for and
converted into 3.7193 shares of AMCORE Common Stock. Notwithstanding the
foregoing, if up to fifteen days following the Special Meeting AMCORE enters
into a letter of intent or definitive agreement for a tender offer, merger,
other business combination or sale or other disposition involving all or
substantially all of AMCORE's assets, the Exchange Ratio will be equal to
4.3267. There can be no assurance that the closing price for AMCORE Common Stock
on the Effective Date will be equal to the AMCORE Average Price. Upon
consummation of the Merger, the rights of holders of AMCORE Common Stock will be
governed by Nevada law and the Restated Articles of Incorporation and Bylaws of
AMCORE. See "THE MERGER AGREEMENT -- Conversion of Shares and Exchange Ratio"
and "-- Terms."
The Merger will become effective upon the filing of the Articles of Merger
with the State of Wisconsin (the "Effective Time"). Promptly after the Effective
Time, a letter of transmittal containing instructions with respect to the
surrender of stock certificates for CBSC Common Stock will be furnished to each
holder of CBSC Common Stock outstanding as of the Effective Time of the Merger
for use in exchanging such stock certificates for shares of AMCORE Common Stock
in connection with the Merger. See "THE MERGER AGREEMENT -- Conversion of Shares
and Exchange Ratio."
THE SPECIAL MEETING
The Special Meeting will be held at the offices of CBSC, located at 100
South First Street, Mount Horeb, Wisconsin, on June 18, 1997, at 9:30 a.m.
(local time) (the "Special Meeting Date"). At the Special Meeting, CBSC
Stockholders will consider and vote upon a proposal to approve the Merger
Agreement and transact such other business as may properly come before the
Special Meeting. Only holders of record of CBSC Common Stock at the close of
business on May 5, 1997 (the "Record Date") will be entitled to notice of and to
vote at the Special Meeting. At such date, there were outstanding and entitled
to vote approximately 433,699 shares of CBSC Common Stock. Each share of CBSC
Common Stock is entitled to one vote. For additional information relating to the
Special Meeting, see "THE CBSC SPECIAL MEETING."
RECORD DATE; VOTE REQUIRED
The Wisconsin Business Corporation Law (the "WBCL") requires that the
Merger Agreement be approved by the affirmative vote of a majority of the
outstanding shares of CBSC Common Stock. At the Record Date, the directors and
executive officers of CBSC and their affiliates and certain other significant
shareholders beneficially owned approximately 306,853 shares of CBSC Common
Stock. At the Record Date, the directors and executive officers of AMCORE and
its subsidiaries did not beneficially own any shares of
7
<PAGE> 11
CBSC Common Stock. At the Record Date, subsidiaries of CBSC and subsidiaries of
AMCORE, acting as fiduciaries, custodians or agents, had voting power over no
outstanding shares of CBSC Common Stock. Each of the directors and executive
officers of CBSC (with one exception) and certain significant shareholders have
entered into voting agreements with AMCORE and CBSC (the "Stockholder Voting
Agreements"), pursuant to which such directors and executive officers and
certain other significant shareholders have agreed to vote all of their shares
of CBSC Common Stock in favor of the Merger Agreement, constituting in the
aggregate approximately 71% of the outstanding shares of CBSC Common Stock. See
"THE SPECIAL MEETING -- Record Date; Vote Required" and "THE MERGER --
Stockholder Voting Agreements."
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF CBSC RECOMMENDS THAT CBSC STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT. The Board of Directors of CBSC (the "CBSC
Board") believes that the terms of the Merger Agreement are fair and that the
Merger is in the best interest of CBSC and the CBSC Stockholders. In making its
recommendation, the CBSC Board has sought the advice of an independent financial
advisor. See "THE MERGER -- Background of the Merger"; "-- Reasons for the
Merger, Recommendation of the Board" and " -- Opinion of CBSC's Financial
Advisor."
OPINION OF FINANCIAL ADVISOR
CBSC's financial advisor, ABN AMRO Chicago Corporation ("AACC"), rendered a
verbal opinion in December, 1996, updated the verbal opinion in April 1997 and
rendered a written opinion dated as of the date of this Proxy
Statement/Prospectus to the CBSC Board to the effect that, as of the date of
such opinion, the consideration to be received by the holders of CBSC Common
Stock upon consummation of the Merger is fair, from a financial point of view,
to such holders. The opinion of AACC, attached to this Proxy
Statement/Prospectus as Annex I, sets forth the assumptions made, the matters
considered and the limitations in the review undertaken in rendering such
opinion. See "THE MERGER -- Opinion of CBSC's Financial Advisor."
DISSENTERS' RIGHTS
Under the provisions of the WBCL, any CBSC Stockholders who assert
dissenters' rights will have a statutory right to demand payment of the "fair
value" of their CBSC Common Stock in cash. To perfect this right, a CBSC
Stockholder must not vote such shares in favor of the Merger Agreement at the
Special Meeting (this may be done by marking the proxy either to vote against
the Merger Agreement or to abstain from voting thereon or by not voting at all)
and must take such other action as is required by the provisions of Sections
180.1301 to 180.1331 of the WBCL, including delivering written notice of intent
to demand the "fair value" of CBSC Common Stock. A copy of Sections 180.1301 to
180.1331 of the WBCL is attached hereto as Annex III. See "THE MERGER -- Rights
of Dissenting CBSC Stockholders."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The consummation of the Merger is conditioned, among other things, upon the
receipt by CBSC of an opinion of Quarles & Brady, special counsel to CBSC, to
the effect that the Merger will be treated as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Such opinion will be dated the date of the closing of the Merger, will be based
upon certain customary representations, and will be subject to certain customary
assumptions and limitations set forth therein. No ruling will be sought from the
Internal Revenue Service (the "IRS") regarding the Merger, and the IRS may
disagree with the conclusions expressed in such opinion of counsel.
In accordance with such opinion, no gain or loss will be recognized by a
CBSC Stockholder upon the conversion of such holder's shares of CBSC Common
Stock into shares of AMCORE Common Stock pursuant to the Merger (except to the
extent that cash is received in lieu of fractional shares of AMCORE Common
Stock). See "THE MERGER -- Certain Federal Income Tax Consequences."
8
<PAGE> 12
EACH CBSC STOCKHOLDER IS ADVISED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR
AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER UNDER FEDERAL,
STATE, LOCAL, FOREIGN INCOME AND OTHER APPLICABLE TAX LAWS.
ACCOUNTING TREATMENT
The Merger will be accounted for as a "pooling of interests." See "THE
MERGER -- Accounting Treatment of the Merger." It is a condition to the Merger
that independent public accountants deliver an opinion to the effect that, on
the basis of a review of the Merger Agreement and the transactions contemplated
thereby, the Merger will be accounted for as a "pooling of interests." See "THE
MERGER AGREEMENT -- Conditions to the Merger."
RESALES OF AMCORE COMMON STOCK BY AFFILIATES
Resales of AMCORE Common Stock issued to "affiliates" of CBSC have not been
registered under applicable securities laws in connection with the Merger. Such
shares may only be sold (a) under a separate registration for distribution
(which AMCORE has not agreed to provide), (b) pursuant to Rule 145 under the
Securities Act, or (c) pursuant to some other exemption from registration. For
AMCORE to be able to account for the Merger as a "pooling of interests," certain
additional restrictions have been placed on affiliates of CBSC and AMCORE with
respect to dispositions of CBSC Common Stock and AMCORE Common Stock during the
period beginning 30 days before the Merger and ending once the results of at
least 30 days of post-Merger combined operations have been published. See "THE
MERGER -- Resale of AMCORE Common Stock."
DATE OF THE MERGER
The Merger Agreement provides that the Merger will be consummated on a date
no later than five business days after the satisfaction or waiver of the
conditions to the Merger Agreement, including the receipt of all necessary
approvals of governmental agencies and authorities and expiration of the
statutory 30-day waiting period following approval by the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") or on another mutually
agreed upon date (the "Closing Date"). With the approval of the Federal Reserve
Board and the Department of Justice, the waiting period following approval of
the Federal Reserve Board may be reduced to no less than 15 days. See "THE
MERGER AGREEMENT -- Terms"; "-- Date of Merger"; and "-- Conditions to the
Merger."
TERMS AND CONDITIONS OF THE MERGER; REGULATORY APPROVAL
The Merger is conditioned upon approval by the CBSC Stockholders, the
Federal Reserve Board and the State of Wisconsin, Division of Banking (the
"Wisconsin Division") and upon the satisfaction of other terms and conditions of
the Merger Agreement, including the consummation of the Belleville Transactions
and treatment of the Merger as a "pooling of interests" for accounting purposes.
There can be no assurance that the Federal Reserve Board or the Wisconsin
Division will approve the Merger and, if the Merger is approved, there can be no
assurance concerning the date of any such approval. See "THE MERGER --
Regulatory Approval"; "THE MERGER AGREEMENT -- Terms" and "-- Conditions to the
Merger."
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Certain executive officers of CBSC and the directors of Newco prior to the
Merger will continue as officers and directors of the surviving corporation.
Following the Merger, CBSC will survive as a separate wholly-owned subsidiary of
AMCORE. AMCORE intends that CBSC will continue to operate the Banks at their
present locations and that CBSC will expand its products and services by
providing certain products and services currently offered by AMCORE affiliates.
See "THE MERGER -- Management and Operations of CBSC After the Merger."
9
<PAGE> 13
TERMINATION; TERMINATION FEES AND EXPENSES
The Merger Agreement may be terminated under certain circumstances,
including at any time before the Closing Date (i) by mutual written consent of
the Board of Directors of AMCORE and CBSC, (ii) by either AMCORE or CBSC if (a)
any condition set forth in Articles VIII, IX or X of the Merger Agreement has
not been substantially satisfied or waived in writing by September 30, 1997, (b)
any warranty or representation made by the other party in the Merger Agreement
is discovered to have become untrue, incomplete or misleading in any material
respect, where such change has not been cured within ten business days of
notice, or (c) the other party commits one or more material breaches of the
Merger Agreement considering all such breaches in the aggregate, where such
breach has not been cured within 20 business days of notice, (iii) by CBSC if
the CBSC Board receives a Superior Proposal (as hereinafter defined) and
promptly thereafter, after providing notice and certain information to AMCORE,
enters into a definitive acquisition, merger or similar agreement to effect such
proposal, (iv) by AMCORE if (a) the CBSC Board withdraws or modifies in a manner
adverse to AMCORE its approval or recommendation of the Merger or fails to
reconfirm such recommendation within five business days of a reasonable written
request for such confirmation by AMCORE, or (b) AMCORE's good-faith estimate of
certain environmental remediation costs relating to certain real properties held
or previously held by CBSC is equal to $700,000 or more. In the event the Merger
Agreement is terminated under certain circumstances, CBSC will be obligated to
pay AMCORE a fee of $1 million plus AMCORE's out-of-pocket expenses (not to
exceed $400,000) in connection with the Merger Agreement. See "THE MERGER
AGREEMENT -- Termination;" and "-- Termination Fees and Expenses."
WAIVERS AND AMENDMENTS
AMCORE and CBSC may amend, modify or waive certain terms and conditions of
the Merger Agreement. Any such action taken by CBSC following a favorable vote
by its stockholders may be taken only if, in the opinion of the CBSC Board, the
action will not have a material adverse effect on the benefits intended for its
stockholders. See "THE MERGER AGREEMENT -- Amendment and Waiver."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of CBSC management and the CBSC Board may be deemed to have
certain interests in the Merger in addition to their interests as stockholders
of CBSC. Certain executive officers of CBSC will be executive officers of the
surviving corporation following the Merger. See "THE MERGER -- Management and
Operations of CBSC After the Merger." CBSC has option agreements with four
executive officers of CBSC, entitling each individual to acquire shares of CBSC
Common Stock upon certain terms and conditions. At the Effective Time, each of
such options will be converted into options to purchase a number of shares of
AMCORE Common Stock equal to (a) the number of shares of CBSC Common Stock that
could have been purchased under any such options multiplied by (b) the Exchange
Ratio, at a price per share of AMCORE Common Stock equal to (i) the option
exercise price determined pursuant to such option agreements divided by (ii) the
Exchange Ratio. See "THE MERGER AGREEMENT -- Stock Option Agreements." AMCORE
has agreed to indemnify the executive officers and directors of CBSC and its
subsidiaries for a period of six years after the Effective Time to the same
extent such persons are currently indemnified pursuant to CBSC's Articles of
Incorporation and Bylaws. See "THE MERGER -- Interests of Certain Persons in the
Merger."
MARKETS AND MARKET PRICES
The following table sets forth the closing price per share of AMCORE Common
Stock as reported on the NASDAQ on the dates set forth, which includes October
2, 1996, the last trading day preceding public announcement of the proposed
Merger, October 3, 1996, the day on which the proposed Merger was publicly
announced and October 4, 1996, the day following the public announcement of the
Merger, as well as the equivalent per share prices for CBSC Common Stock. The
table also includes the closing price per share of AMCORE Common Stock on
January 31, 1997, the day on which the signing of the Merger Agreement was
publicly announced and on May 13, 1997, the most recent practicable date prior
to the printing of this Proxy
10
<PAGE> 14
Statement/Prospectus. Pursuant to the Merger Agreement, each issued and
outstanding share of CBSC Common Stock will be cancelled and converted into the
right to receive a number of shares of AMCORE Common Stock to be determined as
follows: (i) in the event the AMCORE Average Price is less than $15.00, each
share of CBSC Common Stock shall be exchanged for and converted into 5.6247
shares of AMCORE Common Stock, (ii) in the event the AMCORE Average Price is
greater than $15.00 but less than $19.50, each share of CBSC Common Stock shall
be exchanged for and converted into a number of shares of AMCORE Common Stock
determined by dividing (A) 84.37 by (B) the AMCORE Average Price, (iii) in the
event the AMCORE Average Price is greater than or equal to $19.50 but less than
or equal to $24.50, each share of CBSC Common Stock shall be exchanged for and
converted into 4.3267 shares of AMCORE Common Stock, (iv) in the event the
AMCORE Average Price is greater than $24.50 but less than or equal to $28.50,
each share of CBSC Common Stock shall be exchanged for and converted into a
number of shares of AMCORE Common Stock determined by dividing (A) 106.00 by (B)
the AMCORE Average Price or (v) in the event the AMCORE Average Price is greater
than $28.50, each share of CBSC Common Stock shall be exchanged for and
converted into 3.7193 shares of AMCORE Common Stock. The equivalent per share
price of CBSC Common Stock at each specified date listed below represents the
closing price of a share of AMCORE Common Stock on such date multiplied by an
assumed exchange ratio. In each case, such assumed exchange ratio has been
determined as if the AMCORE Average Price was equal to the market value per
share of AMCORE Common Stock specified at each date. See "THE MERGER AGREEMENT
- -- Terms" and "-- Conversion of Shares and Exchange Ratio."
<TABLE>
<CAPTION>
AMCORE EQUIVALENT CBSC
COMMON STOCK PER SHARE PRICE
------------ ---------------
<S> <C> <C>
Market Value Per Share at:
May 13, 1997................................. $27.750 $106.000
January 31, 1997............................. $23.875 $103.300
October 2, 1996.............................. $20.750 $ 89.780
October 3, 1996.............................. $21.125 $ 91.401
October 4, 1996.............................. $20.750 $ 89.780
</TABLE>
Because the market price of AMCORE Common Stock is subject to fluctuation
the market value of the shares of AMCORE Common Stock that holders of CBSC
Common Stock will receive in the Merger may increase or decrease prior to the
Merger. CBSC Stockholders are advised to obtain current market quotations for
AMCORE Common Stock and current trading prices, if any, of CBSC Common Stock.
There is no established public trading market for CBSC Common Stock. In the
ordinary course of its business, AACC may from time to time trade the securities
of CBSC or AMCORE for its own account or the accounts of its customers and
accordingly, may at any time hold long or short positions of such securities.
AMCORE Common Stock is quoted on the NASDAQ.
11
<PAGE> 15
The following table sets forth the market value of AMCORE Common Stock for
the periods indicated as reported on the NASDAQ:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1997:
First quarter........................................... $29.25 $23.00
Second quarter (through May 13, 1997)................... 28.50 25.75
1996:
First quarter........................................... $21.75 $20.25
Second quarter.......................................... 21.25 19.50
Third quarter........................................... 21.25 18.875
Fourth quarter.......................................... 27.25 20.375
1995:
First quarter........................................... $21.25 $18.25
Second quarter.......................................... 19.75 17.00
Third quarter........................................... 23.25 18.50
Fourth quarter.......................................... 24.00 19.75
</TABLE>
Prior to the fourth quarter of 1996, CBSC had not paid dividends since its
formation. The Merger Agreement provides that between execution of the Merger
Agreement and the Closing Date, CBSC can pay cash dividends, for the quarter
ending December 31, 1996, and each quarter thereafter ending prior to the
consummation of the Merger, provided such dividends are paid prior to the
consummation of the Merger and do not exceed for any quarter $0.6923 per share;
and further provided, that CBSC cannot declare or pay any dividends in any
amount on CBSC Common Stock in any calendar quarter in which the Effective Time
is expected to occur and in which the CBSC Stockholders are entitled to receive
dividends on the shares of AMCORE Common Stock into which their shares of CBSC
Common Stock will be converted. CBSC has declared and paid a $0.6923 per share
dividend for the fourth quarter of 1996 and declared a $0.6923 per share
dividend for the first quarter of 1997, paid on April 21, 1997. Because the
dividend policy of CBSC is subject to the discretion of the Board of Directors
of CBSC, cash needs and general business conditions, there can be no assurance
as to the amount of future dividends on CBSC Common Stock prior to the Closing
Date.
12
<PAGE> 16
COMPARATIVE PER SHARE DATA
The following table presents selected comparative unaudited per share data
for AMCORE Common Stock on a historical and pro forma combined basis and for
CBSC Common Stock on a pro forma equivalent basis giving effect to the Merger on
a "pooling of interests" accounting basis. For a description of the "pooling of
interests" accounting basis with respect to the Merger and the related effects
on the historical financial statements of AMCORE, see "THE MERGER -- Accounting
Treatment of the Merger." The information is derived from the consolidated
historical financial statements of AMCORE, including the related notes thereto,
incorporated by reference into this Proxy Statement/Prospectus. This information
should be read in conjunction with such historical and pro forma financial
statements and the related notes thereto. See "INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE" and "PRO FORMA COMBINING FINANCIAL STATEMENTS."
This information is not necessarily indicative of the results of the future
operations of the combined entity or the actual results that would have occurred
had the Merger been consummated prior to the periods indicated.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Per Share of AMCORE Common Stock:
Book Value:
Historical(1)............................... $14.81 $14.08 $12.57
Pro forma(2)................................ 14.34 13.59 12.02
Cash dividends:
Historical(1)............................... $ 0.60 $ 0.54 $ 0.51
Pro forma(2)................................ 0.56 0.49 0.46
Net income:
Historical(1)............................... $ 1.77 $ 1.30 $ 1.51
Pro forma(2)................................ 1.75 1.30 1.45
Per Share of CBSC Common Stock:
Book Value:
Historical(3)............................... $42.15 $37.16 $28.90
Pro forma equivalent(2)..................... 57.36 54.36 48.08
Cash dividends:
Historical(3)............................... $ 0.69 $ 0.00 $ 0.00
Pro forma equivalent(2)..................... 2.24 1.96 1.84
Net income:
Historical(3)............................... $ 6.17 $ 5.32 $ 3.94
Pro forma equivalent(2)..................... 7.00 5.20 5.80
</TABLE>
- -------------------------
(1) AMCORE Historical per share amounts have been restated to give effect to the
merger with FNB which occurred on April 18, 1997 and was accounted for using
the pooling-of-interests method, and 1996 per share amounts have been
restated for issuance of trust preferred securities.
(2) Based upon an exchange ratio of 4.000 shares of AMCORE Common Stock for each
share of CBSC Common Stock, assuming an AMCORE Average Price of $26.50.
(3) CBSC Historical per share amounts have been restated to give effect to the
merger with Belleville which occurred on February 6, 1997 and was accounted
for using the pooling-of-interests method.
13
<PAGE> 17
SELECTED FINANCIAL DATA
The following tables set forth certain historical consolidated financial
information for AMCORE and CBSC, giving effect to the Merger under the "pooling
of interests" method of accounting. AMCORE historical consolidated financial
information has been restated to include the effect of the merger with FNB which
was accounted for as a pooling-of-interests, and includes the effects of the
issuance of trust preferred securities in the 1996 information. See "THE MERGER
- -- Accounting Treatment of the Merger."
AMCORE FINANCIAL, INC.
SELECTED CONSOLIDATED FINANCIAL DATA (HISTORICAL)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME:
Interest Income................... $213,394... $ 180,235 $ 152,732 $ 150,412 $ 149,331
Interest expense.................. 119,765 93,146 67,412 65,597 69,517
Net interest income............... 93,629 87,089 85,320 84,815 79,814
Provision for loan losses......... 5,206 2,753 628 2,124 5,547
Non-interest income............... 40,065.... 35,331 32,414 30,806 27,013
Operating expense................. 89,608 92,998 84,583 81,958 72,508
Income before income taxes........ 38,880 26,669 32,523 31,539 28,772
Net income........................ $ 28,495 $ 20,689 $ 23,999 $ 23,483 $ 20,326
PER COMMON SHARES:
Net income........................ $ 1.77 $ 1.30 $ 1.51 $ 1.48 $ 1.31
Cash dividends.................... 0.60...... 0.54 0.51 0.39 0.35
Book value........................ 14.81 14.08 12.57 11.97 10.76
Dividend payout ratio............. 33.9% 41.5% 33.8% 26.4% 26.7%
Average Common Shares Outstanding
(in thousands)................. 16,095 15,964 15,904 15,853 15,540
SELECTED FINANCIAL RATIOS:
Return on average assets.......... .98% 0.85% 1.07% 1.09% 1.03%
Return on average equity.......... 12.70% 9.87% 12.20% 12.96% 2.04%
Net interest margin(1)............ 3.76% 4.17% 4.50% 4.62% 4.75%
Average equity to average
assets......................... 7.68% 8.58% 8.76% 8.44% 8.47%
BALANCE SHEET INFORMATION:
Total assets...................... $3,055,511 $2,625,035 $2,344,034 $2,165,587 $2,121,448
Loans and leases, net of unearned
income......................... 1,601,206.. 1,428,130 1,290,531 1,147,264 1,098,688
Securities........................ 1,232,112.. 958,515 835,614 773,425 770,362
Deposits.......................... 2,082,258 1,959,983 1,880,488 1,804,701 1,796,482
Long-term borrowings.............. 151,036... 108,343 28,087 34,275 35,442
Stockholders' equity.............. 238,434 225,979 200,194 190,273 171,316
</TABLE>
- -------------------------
(1) On a fully tax equivalent basis.
14
<PAGE> 18
COUNTRY BANK SHARES CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA (HISTORICAL)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME:
Interest Income.................. $ 23,488 $ 22,033 $ 19,547 $ 18,807 $ 18,651
Interest expense................. 12,216 11,265 9,349 9,012 9,831
Net interest income.............. 11,272 10,768 10,198 9,795 8,820
Provision for loan losses........ 221 412 1,123 638 340
Other income..................... 1,989 1,543 1,477 1,887 1,444
Other expenses................... 8,829 8,259 7,959 7,682 6,744
Income before income taxes....... 4,211 3,640 2,593 3,362 3,180
Net income....................... $ 2,676 $ 2,308 $ 1,710 $ 2,206 $ 2,116
PER COMMON SHARES:
Net income....................... $ 6.17 $ 5.32 $ 3.94 $ 5.09 $ 4.88
Cash dividends................... 0.69 0.00 0.00 0.00 0.00
Book value....................... 42.15 37.16 28.90 28.40 22.32
Dividend payout ratio............ 11.2% 0.0% 0.0% 0.0% 0.0%
Average Common Shares Outstanding
(in thousands)................ 434 434 434 434 434
SELECTED FINANCIAL RATIOS:
Return on average assets......... 0.93% 0.85% 0.67% 0.92% 0.98%
Return on average equity......... 15.58% 15.98% 13.71% 20.62% 24.37%
Net interest margin(1)........... 4.21% 4.27% 4.24% 4.35% 4.49%
Average equity to average
assets........................ 5.95% 5.32% 4.85% 4.46% 4.03%
BALANCE SHEET INFORMATION:
Total assets..................... $301,601 $278,247 $263,592 $255,517 $231,611
Loans............................ 205,622 192,236 190,966 172,939 152,243
Securities....................... 62,641 56,230 49,369 54,786 54,671
Deposits......................... 269,346 248,855 238,575 229,040 209,695
Long term borrowing.............. 6,376 7,409 2,070 929 548
Stockholders' equity............. 18,281 16,117 12,377 12,316 9,678
</TABLE>
15
<PAGE> 19
AMCORE FINANCIAL, INC. AND SUBSIDIARIES
COUNTRY BANK SHARES CORPORATION AND SUBSIDIARIES
SELECTED PRO FORMA COMBINED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
STATEMENT OF INCOME:
Interest income........................................ $ 236,409 $ 202,268 $ 172,279
Interest expense....................................... 131,385 104,411 76,761
Net interest income.................................... 105,024 97,857 95,518
Provision for loan losses.............................. 5,427 3,165 1,751
Non-interest income.................................... 42,054 36,874 33,891
Operating expense...................................... 98,479 101,336 92,604
Income before income taxes............................. 43,172 30,230 35,054
Net income............................................. $ 31,236 $ 22,960 $ 25,685
PER COMMON SHARE:
Net income............................................. $ 1.75 $ 1.30 $ 1.45
Cash dividends......................................... 0.56 0.49 0.46
Book value............................................. 14.34 13.59 12.02
Dividend payout ratio.................................. 32.00% 37.69% 31.72%
Average Common Shares Outstanding (in thousands)....... 17,855 17,725 17,664
SELECTED FINANCIAL RATIOS:
Return on average assets............................... .98% 0.85% 1.03%
Return on average equity............................... 12.90% 10.24% 12.28%
Net interest margin(1)................................. 3.83% 4.19% 4.48%
Average equity to average assets....................... 7.61% 8.25% 8.36%
BALANCE SHEET INFORMATION:
Total assets........................................... $3,349,930 $2,903,282 $2,607,626
Loans and leases, net of unearned income............... 1,806,828 1,620,366 1,481,497
Securities............................................. 1,286,873 1,014,745 884,983
Deposits............................................... 2,351,604 2,208,838 2,119,063
Long-term borrowings................................... 153,759 115,752 30,157
Stockholders' equity................................... 256,780 242,096 212,571
</TABLE>
- -------------------------
(1) On a fully tax-equivalent basis.
16
<PAGE> 20
THE CBSC SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished in connection with the
solicitation on behalf of the CBSC Board of Directors of proxies to be voted at
the Special Meeting to be held at the principal offices of CBSC, 100 South First
Street, Mt. Horeb, Wisconsin 53572, on June 18, 1997, at 9:30 a.m. local time,
and any adjournment or postponements thereof.
This Proxy Statement/Prospectus is also furnished by AMCORE to CBSC
Stockholders as a prospectus in connection with the issuance by AMCORE of shares
of AMCORE Common Stock upon consummation of the Merger. This Proxy
Statement/Prospectus, the attached Notice of Special Meeting of Country Bank
Shares Corporation Stockholders, and the form of proxy enclosed herewith are
first being mailed to CBSC Stockholders on or about May 14, 1997.
DATE, PLACE AND TIME
The Special Meeting will be held at the principal offices of CBSC, 100
South First Street, Mount Horeb, Wisconsin, on June 18, 1997, at 9:30 a.m.,
local time (the "Special Meeting Date").
MATTERS TO BE CONSIDERED AT THE MEETING
At the Special Meeting, holders of shares of CBSC Common Stock as of the
Record Date will be asked to consider and vote upon a proposal to approve and
adopt the Merger Agreement and the transactions contemplated thereby. See "THE
MERGER AGREEMENT." The description of the Merger and the Merger Agreement in
this Proxy Statement/Prospectus is, of necessity, selective and is, therefore,
qualified in its entirety by reference to the Merger Agreement, a copy of which
is attached to this Proxy Statement/Prospectus as Annex II.
RECORD DATE; VOTE REQUIRED
The CBSC Board of Directors has fixed May 5, 1997 as the Record Date for
the determination of the CBSC Stockholders entitled to notice of and to vote at
the Special Meeting. On the Record Date, approximately 433,699 shares of CBSC
Common Stock were issued and outstanding. Shares of CBSC Common Stock are the
only outstanding voting securities of CBSC. Each holder of record of shares of
CBSC Common Stock on the Record Date is entitled to cast one vote per share,
exercisable in person or by properly executed proxy, upon each matter properly
submitted for the vote of the CBSC Stockholders at the Special Meeting. The
presence, in person or by properly executed proxy, of the holders of a majority
of the shares of CBSC Common Stock outstanding and entitled to vote at the
Special Meeting is necessary to constitute a quorum at the Special Meeting.
THE CBSC BOARD OF DIRECTORS HAS DETERMINED THAT THE TERMS OF THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, CBSC AND THE CBSC STOCKHOLDERS, HAS
APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, AND RECOMMENDS THAT THE CBSC STOCKHOLDERS VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
Holders of shares of CBSC Common Stock on the Record Date will be entitled
to dissenters' rights under the WBCL in connection with the Merger. CBSC
Stockholders who vote in favor of the Merger, however, will waive their
dissenters' rights. See "THE MERGER -- Rights of Dissenting CBSC Stockholders"
and Annex III -- Sections 180.1301 et seq. of the WBCL.
The affirmative vote of the holders of a majority of the outstanding shares
of CBSC Common Stock is required under applicable law to approve and adopt the
Merger Agreement. All shares of CBSC Common Stock which are entitled to vote and
are represented at the Special Meeting by properly executed proxies received and
not duly and timely revoked will be voted at the Special Meeting in accordance
with the instructions contained therein. In the absence of contrary
instructions, such shares will be voted "FOR" the approval and adoption of the
Merger Agreement. The directors and executive officers of CBSC (with one
17
<PAGE> 21
exception) and certain other significant shareholders, who collectively
beneficially own approximately 306,853 shares of CBSC Common Stock
(approximately 71% of the outstanding shares of CBSC Common Stock as of the
Record Date) have entered into Stockholder Voting Agreements with CBSC and
AMCORE. Pursuant to such Stockholder Voting Agreements, the directors and
executive officers of CBSC have agreed to vote their shares in favor of the
Merger Agreement and the transactions contemplated thereby, provided that the
Merger Agreement has not been terminated. In addition, such directors and
officers have agreed not to transfer shares in violation of the "pooling of
interests" rules. See "THE MERGER -- Stockholder Voting Agreements."
SOLICITATION, REVOCATION AND USE OF PROXIES
CBSC will bear all expenses of the solicitation of proxies, including the
cost of mailing this Proxy Statement/Prospectus. In addition to solicitation by
use of the mails, proxies may be solicited by directors, officers and employees
of CBSC in person or by telephone, facsimile or by other means of communication.
Such directors, officers and employees will not be additionally compensated, but
may be reimbursed for reasonable out-of-pocket expenses, in connection with such
solicitation. Arrangements will be made with banks and brokerage firms and other
custodians, nominees and fiduciaries for forwarding of proxy solicitation
materials to the beneficial owners of shares held of record by such custodians,
nominees and fiduciaries, and CBSC will reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith.
A stockholder may revoke any proxy given pursuant to this solicitation at
any time prior to its exercise by the execution of a proxy signed at a later
date or by the giving of written notice of revocation to the Secretary of CBSC
at any time before the taking of the vote at the Special Meeting. Any written
notice of revocation should be delivered to Country Bank Shares Corporation, 100
South First Street, Mount Horeb, Wisconsin 53572, Attention: Thomas D. Heuerman,
Secretary, before the taking of the vote at the Special Meeting. Furthermore, a
stockholder giving a proxy may revoke such proxy by attending the Special
Meeting and voting the stockholder's shares in person.
HOLDERS OF CBSC COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO CBSC IN THE ENCLOSED ENVELOPE. CBSC
STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS. IF THE
MERGER IS CONSUMMATED, CBSC STOCKHOLDERS WILL BE SENT INSTRUCTIONS REGARDING THE
SURRENDER OF THEIR STOCK CERTIFICATES.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the CBSC Board does not
intend to bring any other business before the Special Meeting and, so far as is
known to the CBSC Board, no matters are to be brought before the Special Meeting
except as specified in the Notice of Special Meeting of Country Bank Shares
Corporation Stockholders. However, as to any other business that may properly
come before the meeting, the proxy holders intend to vote the proxies in respect
thereof in accordance with their judgment and discretion.
THE MERGER
The following description of the Merger does not purport to be complete and
is qualified in its entirety by reference to the Merger Agreement, which is
incorporated by reference into this Proxy Statement/Prospectus. All CBSC
Stockholders are urged to read the Merger Agreement in its entirety.
BACKGROUND OF THE MERGER
The past several years have been a period of substantial and rapid change
in the banking industry, characterized by, among other things, intensifying
competition and increasing consolidation. This consolidation is an outgrowth, in
part, of the removal of many interstate barriers limiting expansion of banking
institutions. During this period, the Boards of Directors of both AMCORE and
CBSC have periodically
18
<PAGE> 22
reviewed their strategic alternatives and taken various steps to maintain and
enhance their long-term competitive positions and profitability in the face of
these changing regulatory and market conditions.
From time to time, the CBSC Board has considered and discussed alternative
strategic directions for CBSC to take for the benefit of its shareholders,
including a possible acquisition of CBSC by another entity, further expansion of
CBSC or other options.
In 1994, the CBSC Board took action to acquire BBC. BBC, which was
partially owned by two executive officers of CBSC, was considered to be an
attractive acquisition candidate for CBSC because of BBC's market area and
CBSC's ability to supply additional management resources to enhance the
performance of BBC. Because CBSC's capital status in 1994 was somewhat below
preferred regulatory guidelines, CBSC was advised by regulators that the
regulators would be unlikely to approve such a combination until CBSC had
enhanced its capital status. CBSC, therefore, withdrew its proposed acquisition
of BBC.
In early 1996, CBSC determined that its capital had grown sufficiently to
allow it to obtain regulatory approval to acquire BBC. Due to common ownership
between CBSC and BBC, the CBSC Board determined that it would be advisable to
obtain an independent opinion from an investment advisor as to the fairness of
the transaction, as well as an evaluation of the likely effect of an acquisition
of BBC on a possible future decision to seek affiliation of CBSC with another
entity. The CBSC Board retained AACC to conduct such a review.
In April of 1996, AACC reported the results of its review to the CBSC
Board. On the basis of that review and other factors, the CBSC Board determined
to proceed with the acquisition of BBC. In addition, based upon AACC's
preliminary evaluation of a combined enterprise, and consultations with several
other large CBSC shareholders who were not members of the CBSC Board, the CBSC
Board determined it would be appropriate to engage AACC to solicit possible
indications of interest of other entities in acquiring CBSC.
During the same period, the Board of Directors of AMCORE (the "AMCORE
Board") continued to review its long-term business goals and explore means to
maintain its competitiveness in the banking industry and to enhance stockholder
value. In this regard, AMCORE considered strategic alternatives, including a
number of opportunities in the Wisconsin area. AMCORE reviewed recent
combinations of Wisconsin banking companies as well as the potential for
increased competition resulting from future combinations in Wisconsin, the
prospect for future growth of AMCORE through future mergers and acquisitions in
Wisconsin and other states, and the ability of AMCORE to develop new customers
on a profitable basis. In light of the foregoing, throughout the remainder of
1995 and early 1996, AMCORE considered several possible acquisitions in the
Wisconsin area.
In May of 1996, AACC approached various Midwestern bank holding companies
which it believed may have had an interest in the acquisition of CBSC and would
have the ability to effect such an acquisition on terms likely to be acceptable
to CBSC. Based upon initial discussions, AACC provided further information with
respect to CBSC to several requesting financial institutions. As a result of
this process, in June 1996, AACC and CBSC received informal expressions of
interest from three bank holding companies, including AMCORE.
AACC contacted Messrs. Meuleman and Gagnier at AMCORE to discuss a possible
business combination between CBSC and AMCORE. AACC had informed the CBSC Board
that AMCORE had expressed an interest in acquiring a bank serving communities in
Wisconsin. AACC provided Messrs. Meuleman and Gagnier with evaluation material
prepared by AACC on behalf of CBSC.
Upon review of initial expressions of interest from the bank holding
companies, the CBSC Board determined that none of the proposals was within a
range which would be acceptable to CBSC. However, the Board noted that the
expression of interest from AMCORE was superior to other indications of
interest, both in its amount as well as the profile of a potential acquiring
company and the opportunity for future enhancement of value. Based upon this
determination, AACC and CBSC management were authorized to conduct additional
informal discussions with AMCORE, which proceeded in June of 1996, to determine
if AMCORE would enhance its proposal.
19
<PAGE> 23
On June 12, 1996, the Executive Committee of the AMCORE Board (the
"Executive Committee") met to review the discussions that Messrs. Meuleman and
Gagnier had held with AACC concerning a possible transaction with CBSC.
On July 9, 1996, the Executive Committee met with senior management of
AMCORE to discuss the possible acquisition of CBSC. Following a full discussion,
the Executive Committee recommended that the senior officers of AMCORE present
an enhanced indication of interest to CBSC.
As a result of further discussions and review, AMCORE presented an enhanced
expression of interest to AACC and CBSC. The CBSC Board, together with AACC and
its other advisors, reviewed that proposal and met with representatives of
AMCORE in late July of 1996. AACC also presented to the CBSC Board an analysis
of AMCORE and AMCORE's proposal. As a result of those discussions, reviews and
its consideration, the CBSC Board agreed (with one director dissenting) to enter
into an exclusivity arrangement with AMCORE, whereby AMCORE restated its
interest in pursuing a possible acquisition, CBSC gave AMCORE an exclusive
period of time in which to conduct further diligence with respect to CBSC, and
CBSC could conduct additional diligence with respect to AMCORE.
On August 23, 1996, the Executive Committee reviewed with the AMCORE Board
the preliminary discussions that had taken place to date with CBSC. At that
time, the AMCORE Board also reviewed its potential affiliation with other
Wisconsin bank holding companies, including its potential acquisition of FNB.
The AMCORE Board determined that AMCORE senior management should pursue further
discussions with both CBSC and FNB.
On October 3, 1996, CBSC and AMCORE entered into a letter of intent
requiring continued exclusivity of negotiations and confidential treatment of
information concerning CBSC and AMCORE until December 31, 1996 (such letter
agreement was subsequently amended to extend its terms to January 31, 1997).
Execution of the letter of intent was announced on that day by AMCORE and CBSC.
To permit AMCORE to complete additional diligence, and to accommodate delays in
the regulatory approval process relating to the proposed acquisition of BBC by
CBSC, final negotiation of a definitive agreement between AMCORE and CBSC was
deferred until after regulatory approval of CBSC's acquisition of BBC was
obtained.
Regulatory approval of the BBC acquisition was obtained by CBSC in December
1996, and negotiation of a definitive agreement between CBSC and AMCORE then
resumed.
On December 23, 1996, AACC rendered an oral opinion to the CBSC Board that
the consideration to be received by the CBSC Stockholders was fair to such
stockholders from a financial point of view. See "THE MERGER -- Opinion of
CBSC's Financial Advisor." Following the delivery of such opinion, the CBSC
Board determined, with one exception, that the Merger was in the best interests
of the CBSC Stockholders and recommended approval of the Merger Agreement. The
CBSC Board authorized completion of negotiations and execution of the Merger
Agreement.
On January 29, 1997, the Executive Committee, together with its legal
advisors, reviewed the discussions which senior management had with CBSC,
certain environmental issues discovered during the due diligence investigation
and the proposed terms of the Merger Agreement. Upon completion of its review,
the Executive Committee approved the Merger Agreement and the other documents
contemplated by the Merger.
The Merger Agreement and other documents contemplated by the Merger were
executed by authorized officers of AMCORE and CBSC on January 30, 1997. The
Merger Agreement, as executed in January of 1997 contained a fixed Exchange
Ratio of 4.3267.
The execution of the Merger Agreement was publicly announced on January 31,
1997.
The Merger Agreement, as executed on January 30, 1997, included termination
rights pursuant to which (i) CBSC had the right to abandon the Merger under
certain circumstances if the AMCORE Average Price was less than $19.00, unless
AMCORE elected to cancel such termination by agreeing to adjust the Exchange
Ratio to fix a minimum value for CBSC, and (ii) AMCORE had the right to abandon
the Merger under certain circumstances if the AMCORE Average Price was greater
than $24.00 unless CBSC elected to cancel such termination by agreeing to adjust
the Exchange Ratio to fix a maximum value for CBSC. During the first
20
<PAGE> 24
two weeks of April of 1997, the market value of AMCORE Common Stock as reported
on the Nasdaq National Market averaged in excess of $26.00 per share. In
response to the increased market value of AMCORE Common Stock, the parties
negotiated an amendment to the Merger Agreement to establish a fixed range of
value for CBSC and to eliminate the termination rights based upon an increase or
decrease in the market value of AMCORE Common Stock. In addition, AMCORE and
CBSC agreed to eliminate any adjustment to the Exchange Ratio based upon
environmental remediation costs related to certain real properties held or
previously held by CBSC.
During the course of negotiating the amendment, in April 1997, AACC orally
advised the CBSC Board that the amendment to the Merger Agreement would be fair
to CBSC from a financial point of view.
The AMCORE Executive Committee approved the amended and restated Merger
Agreement on April 29, 1997. On April 30, 1997, the CBSC Board approved the
amended and restated Merger Agreement. The amended and restated Merger Agreement
was executed on May 1, 1997.
REASONS FOR THE MERGER; RECOMMENDATION OF THE CBSC BOARD
REASONS FOR MERGER--AMCORE
The AMCORE Board and Executive Committee considered a number of factors,
including, among other things, the financial condition of CBSC and projected
synergies which are anticipated to result from the Merger. The Executive
Committee concluded that the Merger presents an unique opportunity for AMCORE to
increase its presence in Wisconsin through the acquisition of an established
banking organization having operations in the targeted area. AMCORE's decision
to pursue discussions with CBSC was primarily a result of AMCORE's assessment of
the value of CBSC's banking franchise, its substantial asset base within the
Wisconsin area, the potential of other acquisitions in the Wisconsin area and
the compatibility of the businesses of the two banking organizations. The AMCORE
Board and Executive Committee believe that the Merger will benefit AMCORE's
stockholders.
The AMCORE Board and Executive Committee considered that the Merger would
be effective in fulfilling AMCORE's long-term objective of enhancing its market
presence in Wisconsin. The AMCORE Board and Executive Committee also considered
that the Merger would extend AMCORE's advanced consumer banking technology and
customer services to CBSC's retail customer base, while similarly extending a
broader range of corporate and private banking services to its Wisconsin
customers.
The AMCORE Board further considered the gains to be achieved through the
application of AMCORE's Acquisition Integration Policy which is used as a
framework for the integration and consolidation of institutions which it
acquires. Integration involves the process of including a new subsidiary in the
products, services, practices, and general operating philosophies of AMCORE,
thereby employing the combined resources of AMCORE and CBSC to better serve the
communities and offer a broad array of products and services through an expanded
branch network. The AMCORE Board and Executive Committee considered that such
gains may be further enhanced with the acquisition of FNB.
The foregoing discussion of the information and factors considered by the
AMCORE Board and the Executive Committee is not intended to be exhaustive, but
includes the material factors considered by the AMCORE Board and the Executive
Committee in approving the Merger.
REASONS FOR MERGER--CBSC
CBSC's Board of Directors believes that the proposed Merger between CBSC
and AMCORE is fair and in the best interests of CBSC and the CBSC Stockholders.
In approving the Merger Agreement, the CBSC Board considered a variety of
factors, although it did not assign any relative or specific weight to any
factor. Among the factors considered were the following material factors:
- AMCORE offered acquisition consideration in an amount which the CBSC
Board deemed to be attractive. In part, the CBSC Board has based this
determination upon the advice of its investment advisor that the
transaction was fair from a financial point of view and the relative
value of the offer as
21
<PAGE> 25
compared to other indications of interest received by CBSC. See "THE MERGER --
Opinion of CBSC's Financial Advisor."
- The Merger is structured to provide tax-free reorganization treatment to
CBSC stockholders. The CBSC Board considered this to be a significant
benefit in view of the relatively low basis of many CBSC stockholders as
compared to the acquisition value.
- Stockholders of CBSC will receive shares of AMCORE Common, which has a
trading market on NASDAQ. There is no current independent market for
CBSC Common Stock.
- The CBSC Board believes that AMCORE Common Stock will provide a good
opportunity for potential future appreciation. Affiliation with AMCORE
will provide CBSC stockholders with ownership of a company with a sound
franchise value, operations that are more geographically diverse than
CBSC's and greater capital resources than CBSC. The CBSC Board also
noted that AMCORE Common Stock had recently traded at a relatively
modest price to earnings ratio and premium to book value.
- Additionally, the CBSC Board believed that an affiliation with a holding
company such as AMCORE which emphasizes local autonomy and service to
relatively small communities is in the best interests of stockholders
and customers, because that approach enhances bank customer
relationships and thereby business opportunities for the subsidiary
banks.
- Affiliation with a larger holding company would provide the opportunity
to realize economies of scale and increased efficiencies of operations,
to the benefit of shareholders and customers. Affiliation with AMCORE
will also enhance the development of new products and services, as
changes in the banking industry are becoming increasingly difficult to
address by smaller holder companies.
- Potential benefits and opportunities for employees of the CBSC
subsidiary banks, as a result of both employment in a larger enterprise
and AMCORE's benefit plans and policies.
- Growth of CBSC without affiliation with a larger bank holding company
would likely be somewhat limited because of CBSC's need for increasing
capital resources to support that growth. Without such a combination,
the CBSC Board believed it would be necessary to obtain additional
capital resources beyond those which could be obtained from operations,
in order to achieve a size which the CBSC Board believed would be
necessary to maintain CBSC as a viable independent entity.
FOR THESE REASONS, THE CBSC BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE MERGER AND TO APPROVE THE TRANSACTIONS CONTEMPLATED BY THE
AGREEMENT.
OPINION OF CBSC'S FINANCIAL ADVISOR
On March 19, 1996, the CBSC Board entered into an agreement with ABN AMRO
Chicago Corporation ("AACC") pursuant to which AACC agreed to provide financial
advisory and investment banking services to CBSC and the CBSC Board. The
services to be provided were in connection with: (i) the possible acquisition of
BBC; (ii) a possible merger with or acquisition of another bank or savings
association; (iii) the possible sale of CBSC. As part of AACC's engagement, AACC
agreed, if requested by the CBSC Board, to render an opinion as to the fairness,
from a financial point of view, of any proposed transaction. AACC delivered a
verbal opinion to the CBSC Board in April 1996 that the consideration to be paid
to the stockholders of BBC was fair, from a financial point of view, to the
stockholders of CBSC (the "BBC Opinion").
AACC delivered a verbal opinion to the CBSC Board in December 1996 and
updated the verbal opinion in April 1997 that, based upon and subject to the
considerations set forth in its opinion, the consideration to be received by the
stockholders of CBSC in the Merger is fair, from a financial point of view. AACC
also delivered an updated written Opinion to the CBSC Board dated as of the date
of this Proxy Statement/Prospectus (the "Opinion"). The updated Opinion is based
upon a review of the financial and other information reviewed by AACC in
rendering its verbal opinions along with a review of the information set
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forth in this Proxy Statement/Prospectus and the financial results for CBSC and
AMCORE since April 23, 1997. The full text of the Opinion, which sets forth
assumptions made, matters considered, and limitations on the review undertaken,
is attached as Annex I to this Proxy Statement/Prospectus. CBSC Stockholders are
urged to read the Opinion in its entirety.
During the course of its engagement, and as a basis for arriving at the
Opinion, AACC reviewed and analyzed material bearing upon the financial and
operating condition of CBSC and AMCORE and material prepared in connection with
the Merger, including, among other things, the following: (i) the Merger
Agreement and related documents; (ii) certain publicly-available information
concerning CBSC and AMCORE, including financial statements and reports of
condition and income for each of the three fiscal years ended December 31, 1996,
1995, and 1994, and for the interim period ending March 31, 1997; (iii) the
operating characteristics of certain other financial institutions deemed
relevant to the contemplated Merger; (iv) the nature and terms of recent sale
and merger transactions involving banks and bank holding companies and other
financial institutions that AACC considered relevant; and (v) historical and
current market data for AMCORE Common Stock and financial and other information
provided to AACC by management of CBSC and AMCORE. In addition, AACC conducted
meetings with members of senior management of CBSC and AMCORE for the purpose of
reviewing the future prospects of CBSC and AMCORE. AACC evaluated the pro forma
ownership of AMCORE Common Stock by CBSC stockholders, relative to the pro forma
contribution of the assets, liabilities, equity, and earnings of CBSC to the pro
forma company. AACC also took into account its experience in other transactions,
as well as its knowledge of the banking industry and its general experience in
securities valuation.
In preparing the Opinion, AACC assumed and relied upon the accuracy and
completeness of all financial and other information reviewed by it for purposes
of the Opinion, and did not independently verify such information or undertake
an independent evaluation or appraisal of the assets or liabilities of CBSC or
AMCORE, nor was it furnished with any such evaluation or appraisal. AACC is not
an expert in the evaluation of allowances for loan losses and has not made an
independent evaluation of the adequacy of the allowance for loan losses of CBSC
or AMCORE; it assumed that the aggregate allowances for loan losses is adequate
to cover such losses. AACC assumed and relied upon the senior managements of
CBSC and AMCORE as to the reasonableness and achievability of the financial and
operating forecasts and the assumptions utilized by AACC in its analyses. The
Opinion is necessarily based on economic, market, and other conditions as in
effect on, and the information made available to AACC as of the date of this
Proxy Statement/Prospectus.
THE OPINION IS DIRECTED ONLY TO THE FINANCIAL CONSIDERATION TO BE PAID TO
THE CBSC STOCKHOLDERS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY CBSC
STOCKHOLDER AS TO HOW EACH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING OR AS
TO THE ADVISABILITY OF RETAINING OR DISPOSING OF SHARES OF AMCORE COMMON STOCK
RECEIVED PURSUANT TO THE MERGER.
The following is a summary of the analyses conducted in April 1997,
December 1996 and July 1996 which has been updated for the written Opinion dated
as of the date of this Proxy Statement/Prospectus.
COMPARABLE COMPANY ANALYSIS. AACC compared financial ratios for the twelve
months ended December 31, 1996 and trading multiples as of April 22, 1997 of
selected comparable companies which AACC deemed to be reasonably similar to CBSC
in size, financial and operating character, and/or geographic market. The
comparable companies, which consist of selected publicly-traded commercial bank
holding companies headquartered in the Midwest with total assets ranging from
$200 million to $500 million, included: Franklin Bank N.A.; ANB Corporation;
People's Bank Corporation of IN; Capitol Bancorp Ltd.; Cass Commercial
Corporation; Northern States Financial Corporation; Princeton National Bancorp,
Inc.; S.Y. Bancorp, Inc.; German American Bancorp; Allegiant Bancorp, Inc.;
Belmont Bancorp; Wayne Bancorp; Ohio Valley Banc Corporation; Indiana United
Bancorp; State Financial Services Corporation; Premier Financial Bancorp, Inc.;
BNCCORP, Inc.; Mahaska Investment Company; Oak Hill Financial, Inc.; Community
Bank Shares; and United Bancorp Inc.
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The analysis indicated that, as of April 22, 1997, the common stock of the
comparable companies sold at a median of 14.42x and an average of 15.21x
trailing twelve months earnings per share, or EPS, through December 31, 1996;
(ii) a median of 12.30x and an average of 12.87x estimated 1997 EPS; (iii) a
median of 1.68x and an average of 1.80x December 31, 1996 book value; (iv) a
median of 1.72x and an average of 1.89x December 31, 1996 tangible book value.
AACC also compared financial ratios for the twelve months ended December
31, 1996 and trading multiples as of April 22, 1997, of AMCORE to those of
selected comparable companies which AACC deemed to be reasonably similar to
AMCORE in size, financial and operating character, and/or geographic market. The
comparable companies, which consist of selected publicly-traded commercial bank
holding companies headquartered in the Midwest with total assets ranging from
$2.0 billion to $10 billion, included: Commerce Bancshares, Inc.; Provident
Bancorp, Inc.; UMB Financial Corporation; FirstMerit Corporation; Magna Group,
Inc.; Old National Bancorp; Associated Banc-Corp.; CNB Bancshares, Inc.;
Citizens Banking Corporation; First Michigan Bank Corporation; Fort Wayne
National Corporation; First Midwest Bancorp, Inc.; Community First Bankshares,
Inc.; First Financial Bancorp.; Mid Am, Inc.; Corus Bankshares, Inc.; 1st Source
Corporation; First Commerce Bancshares, Inc.; Firstbank of Illinois Co.; and
Trans Financial Inc.
The analysis indicated that, as of April 22, 1997, AMCORE Common Stock sold
at price of: (i) 14.11x trailing twelve months EPS through December 31, 1996,
compared to a median of 15.78x and an average of 15.77x for the comparable
companies; (ii) 12.21x estimated 1997 EPS, compared to a median of 13.31x and an
average of 13.69x for the comparable companies; (iii) 1.70x December 31, 1996
book value, compared to a median of 2.05x and an average of 2.09x for the
comparable companies; (iv) 1.80x December 31, 1996 tangible book value, compared
to a median of 2.15x and an average of 2.22x for the comparable companies.
COMPARABLE TRANSACTION ANALYSIS. AACC reviewed two sets of comparable
merger and acquisition transactions based on publicly-available data: (i)
selected mergers and acquisitions of commercial banks and bank holding companies
in which the acquired company was headquartered in the Midwest and had total
assets ranging from $200 million to $500 million ("Midwest Transactions"); and
(ii) selected mergers and acquisitions of commercial banks and bank holding
companies in which the acquired company was headquartered in Wisconsin and had
total assets greater than $50 million ("Wisconsin Transactions").
The twenty two Midwest Transactions included (the acquiror is the first
name and is italicized followed by the seller): Commerce Bancshares, Shawnee
Bank Shares; AMCORE Financial, Inc., First National Bancorp; United Community
Bankshares, Park Financial Corporation; Union Planters Corporation, Financial
Bancshares, Inc.; Old Kent Financial Corp., Seaway Financial Corporation;
Associated Banc-Corp., Greater Columbia Bancshares; Matewan Bancshares, Bank One
- - Pikeville, N.A.; First Bank System, Inc., Midwestern Services; National City
Corporation, United Bancorporation of Kentucky; Community First Bankshares,
Inc., Abbott Bank Group; Illinois Financial Services, Alpha Financial
Corporation; First Bank System, Inc., First Western Corporation; Commerce
Bancshares, Inc., Peoples Mid-Illinois Corporation; Community First Bankshares,
Inc., Minowa Bancshares, Inc.; Mercantile Bancorporation Inc., Wedge Bank;
FirsTier Financial Inc., Cornerstone Bank Group; Banc One Corporation, American
Holding Co.; KeyCorp, First Citizens Bancorporation of Indiana; Investor Group,
Indecorp; Firstar Corporation, First Southeast Banking Corporation; First of
America Bank Corporation, First Park Ridge Corporation; and Dickinson Financial
Corporation, First American Bankshares.
The fourteen Wisconsin Transactions included (the acquiror is the first
name and is underlined followed by the seller): AMCORE Financial, Inc., First
National Bancorp; St. Francis Capital, Kilbourn State Bank; F&M Bancorporation,
East Troy Bancshares; Associate Banc-Corp, Centra Financial; First State
Bancorp, Inc., First Bancorporation, Inc.; Associated Banc-Corp., F&M Bankshares
of Reedsburg Inc.; F&M Bancorporation, Community State Bank; Associated
Banc-Corp., Greater Columbia Bancshares; Associated Banc-Corp., SBL Capital Bank
Shares Inc.; Marshall & Ilsley Corporation, Citizens Bancorp of Delavan;
Marshall & Ilsley Corporation, Bank of Burlington; F&M Bancorporation, Union
State Bank; Firstar Corporation, First Southeast Banking Corporation; and
Capital Commerce Bancorp, Milwaukee Western Bank.
For the Midwest Transactions, the offer value to last twelve months EPS
ranged from a low of 9.71x to a high of 19.38x with a median of 15.39x and an
average of 14.88x; the offer value to book value ranged from a
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low of 1.33x to a high of 2.59x with a median of 1.86x and an average of 1.88x;
the offer value to tangible book value ranged from a low of 1.36x to a high of
2.89x with a median of 1.89x and an average of 2.04x. For the Wisconsin
Transactions, the offer value to last twelve months EPS ranged from a low of
6.70x to a high of 19.66x with a median of 15.45x and an average of 15.05x; the
offer value to book value ranged from a low of 1.31x to a high of 2.33x with a
median of 1.78x and an average of 1.78x; the offer value to tangible book value
ranged from a low of 1.31x to a high of 2.89x with a median of 1.78x and an
average of 1.83x.
Based on an assumed Exchange Ratio of 3.9274 (determined pursuant to the
Merger Agreement and an AMCORE Average Price of $26.99), the value of the Merger
Consideration represented a multiple of 17.02x CBSC's trailing twelve months EPS
through March 31, 1997; the value of the Merger Consideration to CBSC's March
31, 1997 book value represented a multiple of 2.55x; the value of the Merger
Consideration to CBSC's March 31, 1997 tangible book value represented a
multiple of 2.73x.
CONTRIBUTION ANALYSIS. AACC prepared a contribution analysis displaying the
percentages of assets, deposits, loans, total equity, tangible equity and 1996
net income contributed to the combined company on a pro forma basis by both CBSC
and AMCORE. This analysis showed that CBSC, as of December 31, 1996, would
contribute 9.05% of pro forma consolidated total assets, 11.45% of deposits,
11.36% of gross loans, 7.12% of total equity, 7.08% of tangible equity and 9.21%
of 1996 net income. Based on an assumed Exchange Ratio of 3.9274 (determined
pursuant to the Merger Agreement and an AMCORE Average Price of 26.99), CBSC
Stockholders would own 9.66% of AMCORE following the Merger.
NET PRESENT VALUE ANALYSIS. AACC prepared a net present value analysis
which estimated future cash flows that CBSC might produce over the period from
January 1, 1997 through December 31, 2001. These cash flows were then discounted
to a present value. AACC also estimated the terminal value of CBSC common equity
at December 31, 2001 by applying a range of multiples to projected calendar year
2001 earnings. The multiples were chosen based on past and current trading
multiples of comparable institutions and past and current multiples of
comparable merger and acquisition transactions. The result of this analysis
indicated a theoretical value range for CBSC of $28.3 million to $36.2 million.
The market value of the AMCORE Common Stock to be issued in the Merger would be
$46.6 million (assuming an AMCORE Average Price and market value of $26.99 per
share).
The summary of AACC analyses set forth above is a fair summary thereof, but
does not purport to be a complete description of the presentations by AACC to
the CBSC Board. AACC believes that its analyses and the summary set forth above
must be considered as a whole and that selecting portions of the analyses,
without considering all factors, could create an incomplete view of the process
by which a fairness opinion is rendered. In connection with its analyses, AACC
assumed that there would not be any material adverse change in general economic,
business, market, and/or regulatory conditions, all of which are beyond the
control of CBSC and AMCORE. The analyses performed by AACC are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses.
The CBSC Board retained AACC based upon its experience and expertise with
regard to the banking industry and merger and acquisition transactions. AACC is
an investment banking and securities firm with membership on all principal U.S.
security exchanges. As part of its investment banking services, AACC is
regularly engaged in the independent valuation of securities in connection with
negotiated underwritings, private placements, merger and acquisition
transactions, and recapitalizations.
Pursuant to the engagement, AACC has received a retainer fee of $25,000
from CBSC and a fee of $25,000 for the BBC Opinion. CBSC has also agreed to pay
AACC a cash fee of approximately 1.25% of the transaction value at Closing. AACC
will also receive reimbursement for certain out-of-pocket expenses, and CBSC has
agreed to indemnify AACC against certain liabilities, including liabilities
which may arise under the securities laws.
In the ordinary course of its business, AACC may from time to time trade
the securities of AMCORE for its own account or the accounts of its customers
and accordingly, may at any time hold long or short positions in such
securities.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors and officers of CBSC may be deemed to have interests in
the Merger in addition to their interest solely as CBSC Stockholders, as
described below.
OFFICERS OF THE SURVIVING CORPORATION
The Merger Agreement provides that the directors of Newco and the officers
of CBSC immediately prior to the Effective Time will become the officers of the
surviving corporation. See "THE MERGER -- Management and Operations of CBSC
after the Merger."
STOCK OPTIONS
CBSC has entered into four stock option agreements (the "Stock Option
Agreements") with certain key employees of CBSC granting such employees options
to purchase shares of CBSC common stock (each a "CBSC Option" and collectively,
the "CBSC Options"), each with an exercise price of $41.12, per share. Under the
terms of the Stock Option Agreements, any shares remaining unexercised upon the
ten year anniversary of the date of the grant of each of the CBSC Options will
lapse. Currently, there are 6,000 awarded but unexercised options outstanding,
held by Mr. Thomas D. Heuerman (2,000 shares), Mr. Leon J. Holschbach (1,500
shares), Mr. Wayne W. Pivotto (1,500 shares) and Mr. John M. Jones (1,000
shares). At the Effective Time, each CBSC Option that is outstanding and
unexercised immediately prior to the Effective Time will cease to represent a
right to acquire shares of CBSC Common Stock. All such options will be
automatically converted at the Effective Time into options to purchase a number
of shares of AMCORE Common Stock equal to the number of shares of CBSC Common
Stock that could have been purchased under such CBSC Option, multiplied by the
Exchange Ratio. See "THE MERGER AGREEMENT -- Stock Option Agreements."
INDEMNIFICATION
Pursuant to the Merger Agreement, AMCORE has agreed to indemnify the
executive officers and directors of CBSC and its subsidiaries for a period of
six years after the Effective Time to the same extent such persons are currently
indemnified pursuant to CBSC's Articles of Incorporation and Bylaws.
The AMCORE Board and the CBSC Board were each aware of these interests and
considered them, among other matters, in approving the Merger Agreement and the
transactions contemplated thereby. Neither AMCORE nor CBSC is aware of any other
manner in which directors or executive officers of AMCORE or CBSC will benefit
from consummation of the Merger other than in their capacities as stockholders
of the respective companies to the extent that it will affect their stock of
CBSC.
STOCKHOLDER VOTING AGREEMENTS
Concurrent with the execution of the Merger Agreement, AMCORE, CBSC and
each of the directors and executive officers of CBSC, with one exception, and
certain other significant shareholders executed a separate Stockholder Voting
Agreement (each a "Voting Agreement," and collectively, the "Voting Agreements")
by which each such person agreed that he will vote all shares of CBSC Common
Stock owned or subsequently acquired in favor of the Merger and the Merger
Agreement at any meeting of CBSC Stockholders. Additionally, until the earliest
to occur of the Effective Time of the Merger, the termination of the Voting
Agreements or the abandonment of the Merger, each such person agreed that he
will not vote any such shares in favor of the approval of any other action,
proposal or agreement which would result in conditions under the Merger
Agreement not being fulfilled or against any extraordinary corporate
transaction, or sale or transfer of subsidiaries. Each such stockholder also
agreed not to transfer shares of CBSC Common Stock owned by such person without
the prior written consent of AMCORE and to the entry of stop transfer
instructions with CBSC against the transfer of such shares. The Voting
Agreements will terminate upon the termination of the Merger Agreement or at the
Effective Time. As of the Record Date, persons who had executed Voting
Agreements owned beneficially an aggregate of approximately 306,853 shares of
CBSC Common Stock, or approximately 71% of the issued and outstanding shares.
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The foregoing summary of the Voting Agreements is qualified in its entirety
by the text of the Voting Agreements, the form of which is attached as Exhibit B
to Annex II hereto and which is incorporated herein by reference.
MANAGEMENT AND OPERATIONS OF CBSC AFTER THE MERGER
The Merger Agreement provides that, on the Closing Date, Newco will be
merged with and into CBSC. The surviving entity will be CBSC and the separate
corporate existence of Newco will terminate. As a result of the Merger, CBSC
will become and be operated as a wholly-owned subsidiary of AMCORE, and the
Banks, which are now owned by CBSC, will be controlled by AMCORE.
The directors of Newco and the officers of CBSC immediately prior to the
Merger will continue as the directors and officers of the surviving corporation
following the Merger. After the Merger, AMCORE contemplates that CBSC will
continue to maintain its separate corporate identity and name, and that the
officers of CBSC as the surviving entity will be the same individuals who
currently serve as CBSC's officers. Following the Merger, AMCORE will manage and
direct the operations of the Banks as it manages and directs its present bank
subsidiaries.
REGULATORY APPROVAL
The Merger is subject to prior approval by the Federal Reserve Board under
the BHCA, which requires that the Federal Reserve Board take into consideration
the financial and managerial resources and future prospects of the respective
institutions and the convenience and needs of the communities to be served. The
BHCA prohibits the Federal Reserve Board from approving the Merger 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 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 Merger are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the communities to be served. The Federal
Reserve Board has the authority to deny an application if it concludes that the
combined organizations would have an inadequate capital position. Furthermore,
the Federal Reserve Board must also assess the records of the depository
subsidiaries of AMCORE and CBSC under the Community Reinvestment Act of 1977, as
amended (the "CRA"). The CRA requires that the Federal Reserve Board analyze,
and take into account when evaluating an application, each depository
institution's record of meeting the credit needs of its local communities,
including low and moderate-income neighborhoods, consistent with safe and sound
operation. See "SUPERVISION AND REGULATION."
Under the BHCA, the Merger may not be consummated until the 30th day
following the date of Federal Reserve Board approval, during which time the
United States Department of Justice may challenge the Merger 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. With the approval of the Federal Reserve Board and the Department of
Justice, the waiting period following Federal Reserve Board approval may be
reduced to no less than fifteen days. The BHCA provides for the publication of
notice and public comment on the application and authorizes the regulatory
agency to permit interested parties to intervene in the proceedings. See
"SUPERVISION AND REGULATION."
The Merger is also subject, under the Wisconsin Statutes, to the approval
of the State of Wisconsin, Department of Financial Institutions, Division of
Banking.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary description of the material federal income tax
consequences of the Merger to the CBSC Stockholders. The discussion is based
upon the provisions of the Code, applicable Treasury Regulations promulgated
thereunder, judicial decisions and administrative rulings and practices, all as
in effect on the date of this Proxy Statement/Prospectus and all of which are
subject to possible prospective or
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retroactive change. The discussion does not address any state, local or foreign
income or other tax consequences of the Merger.
The following discussion is not a complete description of all of the
federal income tax consequences of the Merger to CBSC Stockholders, and, in
particular, does not address all aspects of federal income taxation that may be
relevant to a particular CBSC Stockholder in light of such holder's personal
investment or tax circumstances, or to a CBSC Stockholder that is subject to
special treatment under the federal income tax laws (including life insurance
companies, foreign persons, tax-exempt entities, financial institutions, broker-
dealers, or holders who acquired CBSC Common Stock pursuant to the exercise of
employee stock options or otherwise as compensation). In addition, no
information is provided as to the tax consequences of the Merger to any CBSC
Stockholder who exercises and perfects dissenters' rights. The discussion
further assumes that the CBSC Common Stock will be held as capital assets by the
CBSC Stockholders at the Effective Time of the Merger.
EACH CBSC STOCKHOLDER IS ADVISED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR AS TO
THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
The consummation of the Merger is conditioned, among other things, upon the
receipt by CBSC of an opinion of Quarles & Brady, special counsel to CBSC, to
the effect that the Merger will be treated as a tax-free reorganization under
Section 368(a) of the Code. Such opinion, which has not yet been rendered and
will be dated the Closing Date, will be based upon certain customary
representations that are expected to be made at the Effective Time of the Merger
by executives of CBSC and AMCORE and by certain CBSC Stockholders, and will be
subject to certain customary assumptions and limitations set forth therein. It
should be noted that a ruling will not be sought from the IRS regarding the
Merger. The opinion of counsel referred to above will not be binding on the IRS,
and the IRS may disagree with the conclusions expressed in such opinion.
Quarles & Brady has advised CBSC that, in accordance with its opinion
referred to above, the material federal income tax consequences of the Merger to
the CBSC Stockholders, assuming tax-free reorganization treatment, will be as
follows:
(i) No gain or loss will be recognized by a CBSC Stockholder upon the
conversion of the holder's shares of CBSC Common Stock solely into shares of
AMCORE Common Stock pursuant to the Merger. A CBSC Stockholder that receives
cash in lieu of a fractional share of AMCORE Common Stock will recognize gain or
loss, which will be capital gain or loss, equal to the difference between the
amount of cash received and the ratable portion of the holder's tax basis in the
shares of CBSC Common Stock being converted pursuant to the Merger that is
allocable to such fractional share.
(ii) The aggregate tax basis of the shares of AMCORE Common Stock received
by a former CBSC Stockholder pursuant to the Merger will be the same as the
holder's aggregate tax basis in the shares of CBSC Common Stock being converted
pursuant to the Merger, reduced by the ratable portion of such tax basis that is
allocable to any fractional share of AMCORE Common Stock with respect to which
cash is being received.
(iii) The holding period of the shares of AMCORE Common Stock received by a
former CBSC Stockholder pursuant to the Merger will include the holder's holding
period with respect to the shares of CBSC Common Stock being converted pursuant
to the Merger.
ACCOUNTING TREATMENT OF THE MERGER
It is anticipated that the acquisition of CBSC will be accounted for as a
"pooling of interests" transaction under generally accepted accounting
principles. Under such accounting method, holders of CBSC Common Stock will be
deemed to have combined their existing voting common stock interest with that of
holders of AMCORE Common Stock. Accordingly, the book value of the assets,
liabilities and stockholders' equity of CBSC will be carried over to the
consolidated balance sheet of AMCORE and no goodwill will be created. In order
for the Merger to qualify for "pooling of interests" accounting treatment, among
other criteria,
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substantially all (90% or more) of the outstanding CBSC Common Stock must be
exchanged for AMCORE Common Stock.
The Merger is conditioned upon the receipt by AMCORE of a letter from
McGladrey and Pullen, LLP to the effect that the Merger qualifies for "pooling
of interests" accounting treatment. See "THE MERGER AGREEMENT -- Conditions to
the Merger."
The unaudited pro forma combined financial information contained in this
Proxy Statement/Prospectus has been prepared using the "pooling of interests"
accounting method to account for the Merger. See "PRO FORMA COMBINING FINANCIAL
INFORMATION."
RIGHTS OF DISSENTING STOCKHOLDERS
Under the provisions of Section 180.1301 et seq. of the WBCL, a copy of
which is attached to this Proxy Statement/Prospectus as Annex III, any holder of
record or beneficial stockholder of CBSC Common Stock has the statutory right to
dissent from the Merger and obtain payment of the fair value of his or her
shares in cash. However, certain stockholders of CBSC have contractually agreed
with AMCORE to vote in favor of the Merger. See "THE MERGER -- Stockholder
Voting Agreements." Any holder electing to exercise his or her statutory
dissenters' rights must deliver written notice of his or her intent to demand
payment for his or her shares to CBSC and not vote in favor of the Merger
Agreement. Such notice must be delivered to CBSC before the vote on the Merger
Agreement is taken. Further, AMCORE's obligations under the Merger Agreement are
conditioned upon holders of not more than five percent of CBSC Common Stock
outstanding as of the Record Date having undertaken steps to perfect their right
to object under the WBCL. A stockholder may object as to less than all of the
shares registered in his or her name only if the stockholder dissents with
respect to all shares beneficially owned by any one person and notifies CBSC in
writing of the name and address of each person on whose behalf he or she asserts
dissenters' rights, subject to the provisions of Section 180.1303 of the WBCL.
A PROXY OR VOTE AGAINST THE MERGER AGREEMENTS WILL NOT, OF ITSELF, BE
REGARDED AS A WRITTEN NOTICE OF INTENT TO DEMAND PAYMENT FOR PURPOSES OF
ASSERTING DISSENTERS' RIGHTS.
The Effective Time of the Merger will occur upon the filing of the Articles
of Merger with the Department of Financial Institutions of the State of
Wisconsin. Within 10 days of the Effective Time, CBSC will give a written
dissenters' notice to each dissenting stockholder who has made demand in
accordance with Section 180.1321(1), containing a form for demanding payment, a
statement indicating where the holder must send the payment demand, an
explanation of the extent to which the transfer of shares will be restricted
after the payment demand is received and a date by which the payment demand must
be received by CBSC. A holder to whom a dissenters' notice is sent, must demand
payment in writing and certify whether he or she acquired beneficial ownership
of the shares before the date specified in the dissenters' notice.
As soon as the Merger is effected or upon receipt of a demand for payment,
whichever is later, CBSC will pay each holder who has complied with the
provisions of Section 180.1301 et seq. the amount that the corporation estimates
to be the fair value of the holder's shares, plus accrued interest. Such payment
will be accompanied by a copy of CBSC's latest available financial statement, a
statement of the corporation's estimate of the fair value of the shares, an
explanation of how the interest was calculated, a statement of the dissenter's
right to demand payment under Section 180.1328 of the WBCL if he or she is
dissatisfied with the payment and a copy of Sections 180.1301 to 180.1331 of the
WBCL.
CBSC may elect to withhold the payment required by Section 180.1325 from a
dissenter unless the dissenter was the beneficial owner of the shares before the
date specified in the dissenter's notice under Section 180.1322(2)(c) as the
date of the first announcement to news media or to stockholders of the terms of
the Merger. To the extent CBSC makes such an election, it must estimate the fair
value of the shares, plus accrued interest and pay that amount to each dissenter
who agrees to accept it in full satisfaction of his or her demand. CBSC will
send with its offer a statement of its estimate of the fair value of the shares,
an
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explanation of how the interest was calculated and a statement of the
dissenter's right to demand payment under Section 180.1328 if the dissenter is
dissatisfied with the offer.
Any dissenter may notify the corporation of his or her estimate of the fair
value of his or her shares and demand payment of such estimate less any payment
received from the corporation or reject the corporation's payment or offer of
payment for any one of the following reasons: (i) the dissenter believes that
the amount paid or offered by the corporation is less than the fair value of his
or her shares or that the accrued interest is incorrectly calculated; (ii) the
corporation fails to make the payment within 60 days after the date for
demanding payment set out in the dissenters' notice; or (iii) CBSC fails to
effect the Merger and does not return the deposited shares within 60 days of the
date set for demand of payment.
In the event any holder of CBSC Common Stock fails to comply strictly with
the applicable statutory requirements, he or she will be bound by the terms of
the Merger Agreement and will not be entitled to payment for his or her shares
under such statute. ANY HOLDER OF CBSC COMMON STOCK WHO WISHES TO OBJECT TO THE
MERGER AND DEMAND PAYMENT FOR HIS OR HER SHARES OF CBSC COMMON STOCK SHOULD
CONSIDER CONSULTING HIS OR HER OWN LEGAL ADVISOR.
Since an executed proxy relating to CBSC Common Stock on which no voting
direction is made will be voted at the Special Meeting in favor of the Merger
Agreement, an objecting stockholder who wishes to have his or her shares of CBSC
Common Stock represented by proxy at the Special Meeting, but preserve his or
her rights of appraisal, must mark his or her proxy either to vote against the
Merger Agreement or to abstain from voting thereon, make the required objection
and demand, and make the required submission of stock certificates as described
herein.
The foregoing, while a summary of all material provisions of Section
180.1301 et seq. of the WBCL, is qualified in its entirety by reference to the
text of such statutory provision, which is set forth in Annex III hereto.
RESALE OF AMCORE COMMON STOCK
The shares of AMCORE Common Stock to be issued in the Merger to holders of
CBSC Common Stock will be issued pursuant to a Registration Statement under the
Securities Act, and thus may be freely traded by holders of CBSC Common Stock,
who are not "affiliates" of CBSC (and are not affiliates of AMCORE at the time
of the proposed resale). Pursuant to the Merger Agreement, AMCORE has received a
written undertaking from each person CBSC identified to AMCORE as a shareholder
who is an executive officer or director of CBSC or a holder of five percent (5%)
or more of the outstanding shares of CBSC Common Stock, to the effect that (a)
such person will not sell or dispose of AMCORE Common Stock acquired by such
person in the Merger, except (i) under a separate registration for distribution
(which AMCORE has not agreed to provide), or (ii) pursuant to Rule 145
promulgated under the Securities Act, or (iii) pursuant to some other exemption
from registration; and (b) such person will not otherwise dispose of the AMCORE
Common Stock or otherwise reduce his or her risk relative to the AMCORE Common
Stock (i) during the 30-day period immediately preceding the Effective Time or
(ii) prior to the publication by AMCORE of an earnings statement covering at
least 30 days of combined operations after the Closing Date.
THE MERGER AGREEMENT
TERMS
At the Effective Time, Newco will merge with and into CBSC, with CBSC as
the surviving corporation, and CBSC will become a wholly-owned subsidiary of
AMCORE. At the Effective Time, each outstanding share of CBSC Common Stock
(other than shares of CBSC Common Stock held by CBSC as treasury stock
immediately prior to the Effective Time and shares of CBSC Common Stock held by
AMCORE, Newco or any direct or indirect subsidiary of AMCORE, which shares will
be cancelled, and other than shares of CBSC Common Stock held by CBSC
Stockholders who have properly exercised their dissenters' rights under
Wisconsin law) will be cancelled and converted into the right to receive a
number of shares of AMCORE
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<PAGE> 34
Common Stock, to be determined as follows: (i) in the event the AMCORE Average
Price is less than $15.00, each share of CBSC Common Stock shall be exchanged
for and converted into 5.6247 shares of AMCORE Common Stock, (ii) in the event
the AMCORE Average Price is greater than $15.00 but less than $19.50, each share
of CBSC Common Stock shall be exchanged for and converted into a number of
shares of AMCORE Common Stock determined by dividing (A) 84.37 by (B) the AMCORE
Average Price, (iii) in the event the AMCORE Average Price is greater than or
equal to $19.50 but less than or equal to $24.50, each share of CBSC Common
Stock shall be exchanged for and converted into 4.3267 shares of AMCORE Common
Stock, (iv) in the event the AMCORE Average Price is greater than $24.50 but
less than or equal to $28.50, each share of CBSC Common Stock shall be exchanged
for and converted into a number of shares of AMCORE Common Stock determined by
dividing (A) 106.00 by (B) the AMCORE Average Price or (v) in the event the
AMCORE Average Price is greater than $28.50, each share of CBSC Common Stock
shall be exchanged for and converted into 3.7193 shares of AMCORE Common Stock.
Notwithstanding the foregoing, if up to fifteen days following the Special
Meeting AMCORE enters into a letter of intent or definitive agreement for a
tender offer, merger, other business combination or sale or other disposition
involving all or substantially all of AMCORE's assets, the Exchange Ratio will
be equal to 4.3267. There can be no assurance that the closing price for AMCORE
Common Stock on the Effective Date will be equal to the AMCORE Average Price,
subject to statutory dissenters' rights. As of May 13, 1997, the most recent
practicable date prior to the printing of this Proxy Statement/Prospectus, the
average of the daily closing prices of a share of AMCORE Common Stock during the
20-day period ending on May 13, 1997 was 27.1375 which, assuming an AMCORE
Average Price equal to such average, would result in an Exchange Ratio of
3.9060. See "THE MERGER AGREEMENT -- Conversion of Shares and Exchange Ratio"
and "THE MERGER -- Rights of Dissenting Stockholders."
Set forth below is a table setting forth several numerical examples of the
Exchange Ratio that would be used to determine the number of shares of AMCORE
Common Stock that stockholders of CBSC would receive in the Merger per share of
CBSC Common Stock, based on assumed AMCORE Average Prices.
EXAMPLES OF CALCULATION OF THE EXCHANGE RATIO
<TABLE>
<CAPTION>
ASSUMED
AMCORE EXCHANGE
AVERAGE PRICE RATIO(1)
- ------------- --------
<S> <C>
15.00 (and below)........................................... 5.6247
16.50....................................................... 5.1133
17.50....................................................... 4.8211
18.50....................................................... 4.5605
19.50-24.50................................................. 4.3267
25.50....................................................... 4.1569
26.50....................................................... 4.0000
27.50....................................................... 3.8545
28.50 (and above)........................................... 3.7193
</TABLE>
- -------------------------
(1) Represents the number of shares of AMCORE Common Stock to be issued for each
share of CBSC Common Stock. THERE CAN BE NO ASSURANCE THAT THE CLOSING PRICE
FOR AMCORE COMMON STOCK ON THE EFFECTIVE DATE WILL BE EQUAL TO THE AMCORE
AVERAGE PRICE. See "THE MERGER -- Conversion of Shares and Exchange Ratio."
The Articles of Incorporation and the Bylaws of Newco in effect at the
Effective Time will govern the surviving corporation until amended or repealed
in accordance with applicable law. The directors of Newco and the officers of
CBSC immediately prior to the Effective Time will be the directors and officers
of the surviving corporation, each of such directors and officers to hold office
in accordance with the Articles of Incorporation and Bylaws of the surviving
corporation. The terms of the Merger were determined on the basis of
arm's-length negotiations. See "THE MERGER -- Management and Operations of CBSC
After the Merger."
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<PAGE> 35
DATE OF MERGER
Under the BHCA, the Merger requires the prior approval of the Federal
Reserve Board. The Merger cannot take effect before the 30th calendar day or,
absent an extension granted by the Federal Reserve Board, later than three
months following the date of approval by the Federal Reserve Board. With the
approval of the Federal Reserve Board and the Department of Justice, the waiting
period may be reduced to no less than fifteen days. In addition, the Merger must
be approved by the State of Wisconsin, Department of Financial Institutions,
Division of Banking. See "THE MERGER -- Regulatory Approval"; and "THE MERGER
AGREEMENT -- Conditions to the Merger."
Under the Merger Agreement, the Merger will occur within five days of
satisfaction of all of the conditions to the Merger, including the expiration of
the statutory waiting period after Federal Reserve Board approval, or on such
date as AMCORE and CBSC may both agree to, and will take effect upon the date
Newco and CBSC file the Articles of Merger. There can be no assurances as to if
or when such approvals will be obtained or that the Merger will be consummated.
If the Merger is not effected on or before September 30, 1997, the Merger
Agreement may be terminated by either AMCORE or CBSC. See "THE MERGER --
Conditions to the Merger" and "-- Termination."
The Merger will become effective upon the filing of the Articles of Merger
with the Department of Financial Institutions of the State of Wisconsin. It is
anticipated that such filing will be made immediately after the closing under
the Merger Agreement.
CONVERSION OF SHARES AND EXCHANGE RATIO
At the Effective Time of the Merger, all the issued and outstanding shares
of CBSC Common Stock, except any Dissenting Shares, will be acquired in exchange
for AMCORE Common Stock or cash in lieu of any fractional shares of AMCORE
Common Stock. Each outstanding share of CBSC Common Stock (other than shares of
CBSC Common Stock held by CBSC as treasury stock immediately prior to the
Effective Time (as defined below) and shares of CBSC Common Stock held by
AMCORE, Newco or any direct or indirect subsidiary of AMCORE, which shares will
be cancelled, and other than shares of CBSC Common Stock held by CBSC
Stockholders who have properly exercised their dissenters' rights under
Wisconsin law) will be cancelled and converted into the right to receive a
number of shares of AMCORE Common Stock to be determined as follows: (i) in the
event the AMCORE Average Price (as described below) is less than $15.00, each
share of CBSC Common Stock shall be exchanged for and converted into 5.6247
shares of AMCORE Common Stock, (ii) in the event the AMCORE Average Price is
greater than $15.00 but less than $19.50, each share of CBSC Common Stock shall
be exchanged for and converted into a number of shares of AMCORE Common Stock
determined by dividing (A) 84.37 by (B) the AMCORE Average Price, (iii) in the
event the AMCORE Average Price is greater than or equal to $19.50 but less than
or equal to $24.50, each share of CBSC Common Stock shall be exchanged for and
converted into 4.3267 shares of AMCORE Common Stock, (iv) in the event the
AMCORE Average Price is greater than $24.50 but less than or equal to $28.50,
each share of CBSC Common Stock shall be exchanged for and converted into a
number of shares of AMCORE Common Stock determined by dividing (A) 106.00 by (B)
the AMCORE Average Price or (v) in the event the AMCORE Average Price is greater
than $28.50, each share of CBSC Common Stock shall be exchanged for and
converted into 3.7193 shares of AMCORE Common Stock. Notwithstanding the
foregoing, if up to fifteen days following the Special Meeting AMCORE enters
into a letter of intent or definitive agreement for a tender offer, merger,
other business combination or sale or other disposition involving all or
substantially all of AMCORE's assets, the Exchange Ratio will be equal to
4.3267. The AMCORE Average Price will be an amount equal to the average of the
daily closing prices of a share of AMCORE Common Stock as reported on the NASDAQ
during the period of twenty (20) trading days ending at the end of the third
trading day immediately preceding the Special Meeting. There can be no assurance
that the closing price for AMCORE Common Stock on the Effective Date will be
equal to the AMCORE Average Price. As of May 13, 1997, the most recent
practicable date prior to the printing of this Proxy Statement/Prospectus, the
average of the daily closing prices of a share of AMCORE Common Stock during the
20-day period ending on May 13, 1997 was 27.1375 which, assuming an AMCORE
Average Price
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<PAGE> 36
equal to such average, would result in an Exchange Ratio of 3.9060. See "THE
MERGER AGREEMENT -- Terms" and "THE MERGER -- Rights of Dissenting
Stockholders."
Each CBSC Option that is outstanding and unexercised immediately prior the
Effective Time will cease to represent a right to acquire shares of CBSC Common
Stock. At the Effective Time, all such options will be automatically converted
into options to purchase a number of shares of AMCORE Common Stock equal to the
number of shares of CBSC Common Stock that could have been purchased under such
CBSC Option, multiplied by the Exchange Ratio at an exercise price per share
equal to the original exercise price divided by the Exchange Ratio. See "THE
MERGER AGREEMENT -- Stock Option Agreements."
No fractional shares of AMCORE Common Stock will be issued in the Merger.
Each holder of CBSC Common Stock who would otherwise be entitled to receive a
fractional share will receive cash in an amount equal to the cash value of the
fraction, which cash value will be based upon the average market value of AMCORE
Common Stock on the NASDAQ for the five trading days immediately preceding the
date of the Effective Time.
Within five business days after the Effective Time, CBSC or an agent acting
on its behalf (the "Exchange Agent") will send to each holder of CBSC Common
Stock a letter of transmittal containing instructions with respect to the
surrender of stock certificates of CBSC Common Stock for exchange into one or
more certificates evidencing AMCORE Common Stock, as provided in the Merger
Agreement. Until so surrendered, each outstanding certificate which, prior to
the Effective Time represented shares of CBSC Common Stock will be deemed for
all purposes to evidence only the right to receive the shares of AMCORE Common
Stock into which such shares of CBSC Common Stock have been converted; provided,
however, unless and until such certificates representing CBSC Common Stock are
so surrendered, no stock certificates representing the shares of AMCORE Common
Stock, nor any dividends or other distributions of any kind payable in respect
of shares of AMCORE Common Stock into which such CBSC Common Stock has been
converted, shall be paid or delivered to the holder of an unsurrendered
certificate and no interest shall be earned on such cash dividend amounts. After
the Effective Time, upon surrender of certificates representing shares of CBSC
Common Stock, there shall be delivered to the record holder of the certificates
representing AMCORE Common Stock issued in exchange therefor, on or as soon as
practicable after such date of surrender, the amount of any such dividends, or
other distributions, and the certificates representing the CBSC Common Stock,
which as of any date subsequent to the Effective Time, but prior to the
surrender of CBSC certificates, became payable or deliverable and were not paid
or delivered to such holder with respect to such shares.
STOCK OPTION AGREEMENTS
The Merger Agreement provides that each of CBSC and AMCORE will take such
action as may be necessary to cause each unexpired and unexercised CBSC Option
granted under any of CBSC's Stock Option Agreements to be automatically
converted at the Effective Time into an option (a "New AMCORE Option") to
purchase a number of shares of AMCORE Common Stock equal to the number of shares
of CBSC Common Stock that could have been purchased under the CBSC Option,
multiplied by the Exchange Ratio, at a price per share of AMCORE Common Stock
equal to the option exercise price determined pursuant to the CBSC Stock Option
Agreements divided by the Exchange Ratio. Such New AMCORE Option will be subject
to substantially similar terms and conditions as the CBSC Option. The Merger
Agreement also provides that AMCORE will (i) as of the Effective Time, assume
all of CBSC's obligations with respect to CBSC Options as so converted, (ii) on
or prior to the Effective Time, reserve for issuance the number of shares of
AMCORE Common Stock that will become subject to New AMCORE Options pursuant to
the Merger Agreement, (iii) from and after the Effective Time, upon exercise of
the New AMCORE Options in accordance with the terms thereof, make available for
issuance all shares of AMCORE Common Stock covered thereby and (iv) at the
Effective Time, issue to each holder of an outstanding CBSC Option a document
evidencing the foregoing assumption by AMCORE.
AMCORE has agreed to file as soon as practicable, but in no event later
than 30 days after the Effective Time, a registration statement on Form S-8
under the Securities Act covering the shares of AMCORE
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<PAGE> 37
Common Stock issuable upon the exercise of the New AMCORE Options created upon
the assumption by AMCORE of CBSC Options.
CERTAIN REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of AMCORE,
Newco and CBSC customary for transactions of this nature. These include, among
other things, representations and warranties of AMCORE and Newco as to (i) their
respective due organization, existence, good standing, organizational documents
and similar corporate matters, (ii) their respective capital structures, (iii)
their authority relative to the execution and delivery of, and performance of
their respective obligations under the Merger Agreement, (iv) no prior
activities of Newco, (v) their compliance with applicable laws and the absence
of any (A) conflict with their organizational documents, applicable law or
certain contracts, or (B) governmental or regulatory authorization, consent or
approval required to consummate the Merger, (vi) reports and other documents,
including financial statements, filed by AMCORE with the Commission, (vii) the
absence of material adverse changes since September 30, 1996, (viii) litigation;
(ix) the accuracy of the information supplied for inclusion in this Proxy
Statement/Prospectus, (x) the absence of actions that would jeopardize the
"pooling of interests" treatment, (xi) no current plan to liquidate, merge or
sell the stock of CBSC after the consummation of the Merger, and (xii) the
absence of ownership of CBSC Common Stock by certain persons.
CBSC's representations and warranties with respect to itself and its
subsidiaries include, among other things, those as to (i) their due
organization, existence, good standing, organizational documents and similar
corporate matters, (ii) their respective capital structures, (iii) their
authority relative to the execution and delivery of, and performance of their
obligations under the Merger Agreement, (iv) their compliance with applicable
laws and the absence of any (A) conflict with their organizational documents,
applicable law or certain contracts, or (B) governmental or regulatory
authorization, consent or approval required to consummate the Merger; (v) CBSC's
audited consolidated financial statements, (vi) the absence of certain changes
or events since December 31, 1995, (vii) litigation, (viii) the accuracy of
information supplied in this Proxy Statement/Prospectus, (ix) the absence of
actions that would jeopardize the "pooling of interests" treatment; (x) title
and condition of properties, (xi) intellectual property, employee benefit plans,
and insurance matters, (xii) certain contracts and commitments, (xiii) opinion
of financial advisor; (xiv) certain environmental matters, (xv) the absence of
undisclosed liabilities, (xvi) Affiliate's Undertakings and Stockholder Voting
Agreements, (xvii) tax matters, (xviii) continuity of interest in CBSC Common
Stock, (xix) administration of trust accounts, (xx) allowance for loan and lease
losses and non-performing assets, (xxi) the absence of undisclosed agreements
between CBSC and directors, officers and stockholders, and (xxii) certain
interest rate management instruments.
CONDUCT OF BUSINESS PENDING THE MERGER
The Merger Agreement provides that CBSC and AMCORE will take or refrain
from taking certain actions prior to the Closing Date.
Pursuant to the Merger Agreement, unless AMCORE's prior written consent is
obtained, CBSC will, and will cause each of its subsidiaries to, operate its
business only in accordance with sound banking and business practices and in the
usual, regular and ordinary course as conducted prior to the date of the Merger
Agreement. CBSC will (i) preserve intact its business organization and assets
taken as a whole, (ii) use its best efforts to retain the services of its
officers and key employees and to maintain its relationships with its customers,
(iii) upon AMCORE's request, subject to certain conditions, modify certain of
its procedures and practices and will regularly confer with representatives of
AMCORE on the general status of its operations, (iv) advise AMCORE of actions
taken at meetings, furnish monthly financial statements and inform AMCORE of any
proposed action to be taken with respect to loans of $800,000 or more that are
nonperforming assets and (v) promptly notify AMCORE of any material change in
the normal course of its business.
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<PAGE> 38
In addition, CBSC has agreed that it and its subsidiaries will not, among
other things, (i) declare or pay dividends or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or the capital stock of its subsidiaries or any securities or
obligations convertible into or exchangeable for any shares of its capital stock
or issue any additional shares of capital stock or capital stock of its
subsidiaries, except pursuant to certain exceptions set forth in the Merger
Agreement, including that CBSC Stockholders shall receive either payment of cash
dividends on their shares of CBSC Common Stock or the payment of cash dividends
as holders of shares of AMCORE Common Stock received in the Merger for the
calendar quarter during which the Effective Time shall occur, though not both;
(ii) sell, lease, license or dispose of any of its properties or assets or make
any acquisition or investment except in the ordinary course of business
consistent with past practice; (iii) amend its certificate of incorporation,
bylaws or similar organizational documents; (iv) split, combine or reclassify
any of its outstanding capital stock; (v) merge or consolidate with another
entity; (vi) acquire or purchase (A) any shares of AMCORE Common Stock except in
its fiduciary capacity or (B) any business, other than passive instruments in
the ordinary course of business and consistent with past practice; (vii) enter
into, renew, amend or terminate any material contract, commitment or transaction
(other than renewals in the ordinary course of business after consultation with
AMCORE); (viii) incur, assume or prepay any indebtedness or become otherwise
responsible for the obligations of any other party; (ix) adopt, terminate or
amend (except as may be required to comply with applicable law) any employee
benefit plan or benefit or welfare of any director, (x) grant an increase in the
compensation or fringe benefits of, or pay any bonus to, any director or any
employee, except for normal increases in compensation in the ordinary course of
business and consistent with past practice or as required by law; (xi) make any
change in methods of accounting in effect at December 31, 1995 unless to comply
with generally accepted accounting principles; (xii) make any equity investment
in real estate, except foreclosure and debt restructuring in the ordinary course
of business consistent with prudent banking practices; (xiii) enter into any new
line of business; or (xiv) agree in writing or otherwise to do any of the
foregoing.
In the Merger Agreement, CBSC has agreed not to solicit, initiate or
encourage (including by way of furnishing information) or take any other action
to facilitate any inquiries or the making of any proposal that constitutes or
may lead to any Transaction Proposal (as hereinafter defined). However, CBSC may
engage in discussions with a third party in response to an unsolicited Superior
Proposal (as hereinafter defined) if the CBSC Board determines (i) in good faith
on the basis of advice of its financial advisors and an opinion of outside
counsel that failure to take such action could reasonably be expected to violate
the fiduciary obligations of the CBSC Board, (ii) CBSC requires such third party
to execute a confidentiality agreement with terms no less favorable than those
contained in the confidentiality agreement between CBSC and AMCORE and (iii)
CBSC promptly notifies AMCORE of all relevant details of such proposal
(including such third party's identity) and provides AMCORE with copies of all
materials delivered to such person. "Transaction Proposal" means, in general,
any of the following involving CBSC or the Banks: a bona fide proposal to
acquire more than 25% of the outstanding shares of CBSC Common Stock or shares
of the Banks; any merger or other business combination involving CBSC or the
Banks; a sale or other disposition of a substantial portion of assets of CBSC or
the Banks; the acquisition by any person (other than AMCORE or any subsidiary of
CBSC) of beneficial ownership of 25% or more of the outstanding shares of CBSC
Common Stock; any reclassification of securities or recapitalization of CBSC or
the Banks that effectively changes control of either; any transaction having an
effect similar to the foregoing, or a public announcement with respect to a
proposal, plan of intention by any person to effect any of the foregoing
transactions. "Superior Proposal" means, in general, a bona fide, written and
unsolicited proposal or offer made with respect to a Transaction Proposal (i) on
terms which the CBSC Board determines in good faith, and in the exercise of
reasonable judgment, to be more favorable to CBSC and the CBSC Stockholders than
the transactions contemplated hereby.
CBSC and AMCORE have agreed to use their reasonable best efforts to
promptly prepare and file all necessary documentation to effect all
applications, notices, petitions and filings, and to obtain and to cooperate in
obtaining permits, consents, approvals and authorizations of all third parties
and governmental entities necessary or advisable to consummate the transactions
contemplated by the Merger Agreement and to comply with the terms and conditions
of all such permits, consents, approvals and authorizations. CBSC and AMCORE
have, subject to the restrictions set forth in the Merger Agreement, each
agreed, upon request, to
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<PAGE> 39
furnish to the other party all information concerning themselves and their
subsidiaries, directors, officers and shareholders and such other matters as may
be necessary in furtherance of the Merger. CBSC and AMCORE have also agreed,
subject to the terms and conditions of the Merger Agreement, to use their best
efforts to take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party or its subsidiaries and to consummate the Merger. AMCORE has further
agreed to use all reasonable efforts to cause the shares of AMCORE Common Stock
to be issued in the Merger to be approved for listing on the NASDAQ, subject to
official notice of issuance.
The Merger Agreement contemplates that, prior to the Effective Time, the
parties will continue to conduct environmental site assessments of certain real
properties held or previously held by CBSC. In the event that AMCORE's
good-faith estimate of certain environmental remediation costs is equal to
$700,000 or more, AMCORE may choose to terminate the Merger Agreement by
notifying CBSC of such termination on or prior to the Special Meeting Date.
DIVIDENDS
Under the Merger Agreement, CBSC cannot declare or pay any dividend on, or
make any other distribution in respect of, its outstanding shares of CBSC Common
Stock, except for cash dividends on CBSC Common Stock for the quarter ending
December 31, 1996, and each quarter thereafter ending prior to the Effective
Time, each of which dividends shall be paid prior to the Effective Time and
shall not exceed for any quarter $0.6923 per share. Further, CBSC cannot declare
or pay any dividends or make any distributions in any amount on CBSC Common
Stock for any calendar quarter in which the Effective Time is expected to occur
and in which the stockholders of CBSC Common Stock will be entitled to receive
dividends on the shares of AMCORE Common Stock into which their shares of CBSC
Common Stock will be converted. The intent is that the holders of CBSC Common
Stock will not receive and will not become entitled to receive for the same
calendar quarter period a payment of cash dividends both as holders of CBSC
Common Stock and as holders of AMCORE Common Stock.
EMPLOYEE BENEFITS
The Merger Agreement requires AMCORE to honor all employment, severance and
other compensation agreements disclosed to AMCORE in the Merger Agreement in
accordance with their terms. The Merger Agreement provides that AMCORE will
honor and assume all employee benefit plans and other similar agreements of CBSC
for all current or former CBSC employees as of the Closing Date. In the event
that AMCORE amends or terminates an existing employee benefit plan or similar
agreement of CBSC, prior to the first anniversary of the Closing Date, AMCORE
agrees to provide to such benefits which in the aggregate are comparable to the
employee benefits provided by CBSC as of the Closing Date. Employees of CBSC
will be given credit for service at CBSC for purposes of determining the
eligibility and vesting of such employees in the plans of AMCORE in which such
employees participate.
CONDITIONS TO THE MERGER
The obligations of AMCORE, Newco and CBSC to consummate the Merger are
subject to the satisfaction or waiver of certain conditions, including (i)
approval of the Merger Agreement by the requisite holders of CBSC Common Stock,
(ii) receipt and continued effectiveness of all regulatory approvals necessary
to consummate the Merger and expiration of all applicable statutory waiting
periods, (iii) the Registration Statement shall have become effective by an
order of the Commission and the AMCORE Common Stock issued in the Merger shall
have been qualified or exempted under all state securities laws, and (iv)
absence of any suit or proceeding pending or overtly threatened by any
governmental agency to restrain or prohibit the consummation of the Merger and
(v) the Merger Agreement not having been earlier terminated.
The obligations of AMCORE and Newco to consummate the Merger are also
subject to the satisfaction or waiver by AMCORE of certain conditions, including
(i) each obligation of CBSC under the Merger Agreement must have been performed
in all material respects, CBSC's representations and warranties contained in the
Merger Agreement must be true in all material respects as of the Effective Time
(except to
36
<PAGE> 40
the extent such representations and warranties refer to an earlier date) and
AMCORE having received certificates signed by the chief executive officer of
CBSC to such effect, (ii) the absence of any material adverse change since
December 31, 1995 to the Closing Date, in the condition (financial or
otherwise), assets, liabilities, reserves, results of operations or business of
CBSC and its subsidiaries taken as a whole, (iii) the absence of any suit,
action or proceeding pending or overtly threatened involving the assets or
business of CBSC or its subsidiaries that would reasonably be expected to have a
material adverse effect, (iv) the receipt by AMCORE, within five days prior to
the Closing Date, of a letter from McGladrey & Pullen, LLP to the effect that
the Merger will be accounted for as a "pooling of interests," (v) the receipt by
AMCORE of certain letter agreements from CBSC affiliates, (vi) the receipt of
all consents or approvals from third parties required under agreements between
CBSC and such third parties, other than those agreements for which failure to
obtain such consents or approvals would not, in the reasonable opinion of
AMCORE, have a material adverse effect on AMCORE, individually or in the
aggregate, (vii) holders of not more than five percent (5%) of the outstanding
shares of CBSC Common Stock perfecting their dissenters rights, (viii) in the
event that the Closing Date shall occur on or after February 15, 1997, receipt
by AMCORE of audited consolidated financial statements for the fiscal year ended
December 31, 1996 of CBSC and its subsidiaries, (ix) receipt of good standing
certificates from the states of Nevada and Wisconsin and a statement from the
Wisconsin Division of Banking within 15 days prior to the Closing Date, (x)
completion of the Belleville Transactions and (xi) delivery by Arthur Andersen
LLP of letters addressed to AMCORE covering matters reasonably requested by
AMCORE and Newco with respect to CBSC's financial condition.
The obligations of CBSC to consummate the Merger are also subject to
satisfaction or waiver by CBSC of certain conditions, including (i) each
obligation of AMCORE and Newco under the Merger Agreement must have been
performed in all material respects, AMCORE's and Newco's representations and
warranties contained in the Merger Agreement must be true in all material
respects as of the Effective Time (except to the extent such representations and
warranties refer to an earlier date) and CBSC having received certificates
signed by the chief financial officer of AMCORE to such effect, (ii) the absence
of any material adverse change in the consolidated condition (financial or
otherwise), assets, liabilities, results of operation or business of AMCORE from
December 31, 1995 to the Closing Date, and (iii) the receipt by CBSC of an
opinion from Quarles & Brady that the Merger will be treated as a reorganization
within the meaning of Section 368(a) of the Code.
TERMINATION
The Merger Agreement is terminable (i) by the mutual consent of the
parties, (ii) by either party after September 30, 1997 if the Merger has not
occurred as a result of failure to satisfy any condition to the Merger, (iii) by
either party upon material breach of a representation, warranty or covenant by
the other party, which breach is not cured within twenty (20) business days of
receipt of notice, (iv) by AMCORE if AMCORE's good-faith estimate of
environmental remediation costs relating to certain real properties held or
previously held by CBSC is equal to $700,000 or more, (v) by CBSC, subject to
certain conditions, if the CBSC Board determines to accept a Superior Proposal
pursuant to its fiduciary duties, or (vi) by AMCORE if the CBSC Board rescinds
its recommendation of the transactions contemplated by the Merger Agreement, or
fails to recommend such transactions, or takes any action or public position
consistent with approving a competing transaction. Termination of the Merger
Agreement pursuant to its terms will not relieve any party from liability for
any intentional breach of the Merger Agreement.
TERMINATION FEES AND EXPENSES
CBSC has agreed to pay AMCORE a $1 million termination fee if the Merger
Agreement is terminated as a result of: (i) the determination by the CBSC Board
of the existence of a Superior Proposal, where CBSC terminates the Merger
Agreement after giving AMCORE full information on the competing proposal and
after five business days still determines the competing proposal to be a
Superior Proposal and promptly thereafter enters into a definitive agreement for
such Superior Proposal, (ii) the CBSC Board failing to recommend the Merger to
the CBSC Stockholders, or modifying or rescinding its prior recommendation of
the Merger to the CBSC Stockholders, (iii) CBSC taking any action or public
position consistent with the
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approval of a competing proposal, or (iv) as a result of (A) the failure of CBSC
to satisfy its conditions to the Merger by September 30, 1997 or (B) upon
material breach of a representation, warranty or covenant by CBSC, which breach
is not cured within twenty (20) business days of receipt of notice from AMCORE
(other than CBSC's failure to obtain an opinion letter from its accountant that
the transaction qualifies for treatment as a "pooling of interests").
The Merger Agreement contains a provision that provides for fees and
expenses to be paid by one party to the other in the event the Merger Agreement
is terminated for certain specified reasons. Each party has agreed to pay up to
$400,000 of the other party's expenses if the Merger Agreement is terminated (i)
as a result of the failure of such party to satisfy its conditions to the Merger
by September 30, 1997 or (ii) upon material breach of a representation, warranty
or covenant by such party, which breach is not cured within twenty (20) business
days of receipt of notice from the other party (other than as a result of
material governmental litigation regarding the transaction or CBSC's failure to
obtain an opinion letter from its accountant that the transaction qualifies for
treatment as a "pooling of interests"). In addition, CBSC has agreed to pay up
to $400,000 of AMCORE's expenses if the Merger Agreement is terminated (i) by
AMCORE if certain estimated environmental remediation costs related to certain
real properties held or previously held by CBSC are equal to $700,000 or more,
(ii) by CBSC if the CBSC Board decides to accept a Superior Proposal pursuant to
its fiduciary duties, or (iii) by AMCORE if, without the prior approval of
AMCORE, the CBSC Board rescinds its recommendation of the transactions under the
Merger Agreement, or fails to recommend such transactions.
AMENDMENT AND WAIVER
AMCORE and CBSC may each waive, as to the other, performance of any of the
obligations and compliance with any of the covenants or conditions of the Merger
Agreement (other than items (i), (ii) and (iii) in the first paragraph of the
"Conditions to the Merger" section above) and may amend or modify the Merger
Agreement. Any such action by CBSC taken following a favorable vote on or
consent to the Merger by its stockholders may be taken only if, in the opinion
of the CBSC Board, the action would not have a material adverse effect on the
benefits intended for its stockholders under the Merger Agreement.
COMPARISON OF STOCKHOLDERS' RIGHTS
GENERAL
AMCORE is incorporated under the laws of the State of Nevada. Accordingly,
the rights of AMCORE stockholders are governed by AMCORE's Restated Articles of
Incorporation (the "AMCORE Charter"), its Bylaws and Nevada law. CBSC is
incorporated under the laws of the State of Wisconsin and, accordingly, the
rights of CBSC Stockholders are governed by CBSC's Articles of Incorporation
(the "CBSC Charter"), its Bylaws and Wisconsin law. The Nevada and Wisconsin
corporation laws differ in many respects, as do the respective Charters and
Bylaws of AMCORE and CBSC. AMCORE and CBSC are both bank holding companies
regulated by the Federal Reserve Board under the BHCA. Newco is chartered under
the laws of the State of Wisconsin and is therefore subject to regulation under
such laws and to regulation and examination by the State of Wisconsin Division
of Banking.
Upon consummation of the Merger, CBSC Stockholders will become stockholders
of AMCORE and, as such, all of their rights will be governed by the AMCORE
Charter, Bylaws and Nevada law.
The following summary of the material differences that may affect the
rights and interests of CBSC Stockholders is not intended to be an all-inclusive
discussion of such differences.
MERGER, CONSOLIDATION AND SALES OF ASSETS
Nevada law requires that certain extraordinary corporate actions, such as
most mergers, consolidations, dissolutions or sales of substantially all of a
corporation's assets, be approved by the vote of a majority of the corporation's
outstanding shares and by a majority of each class entitled to vote thereon
unless a higher percentage is required by the corporation's charter.
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Nevada law also contains a "control share" statute that would require the
acquiror of a "controlling interest" of certain Nevada corporations (an "Issuing
Corporation") to obtain the approval of the holders of a majority of the
outstanding shares of the Issuing Corporation not owned by such acquiror and
officers and employee-directors of the Issuing Corporation in order to receive
voting rights for (i) shares acquired or proposed to be acquired in an
acquisition in which such acquiror obtained or proposed to acquire a
"controlling interest" in the Issuing Corporation, and (ii) all shares acquired
within 90 days immediately preceding the date the acquiror obtained or proposed
to acquire a "controlling interest" in the Issuing Corporation. Under this
statute, a person is deemed to have acquired a "controlling interest" in an
Issuing Corporation if, subject to certain exceptions, such person acquires
voting power equal to or more than 20% of the outstanding voting power of the
Issuing Corporation.
This statute applies only to corporations organized in Nevada having 200 or
more stockholders, at least 100 of whom are stockholders of record and residents
of Nevada, that do business in Nevada directly or through an affiliated
corporation. The provisions of this statute are applicable to any acquisition of
a controlling interest in an issuing corporation unless, before an acquisition
is made, the articles of incorporation or bylaws of the corporation in effect on
the 10th day following the acquisition of a controlling interest by an acquiring
person provide that the provisions of those sections do not apply. The AMCORE
Charter and Bylaws do not provide that such sections of the statute do not apply
to AMCORE, though AMCORE does not believe this statute is currently applicable
to AMCORE.
The AMCORE Charter requires the approval of at least 70% of the outstanding
shares of AMCORE Common Stock entitled to vote if a transaction involves a
Business Combination (as hereinafter defined) with, or proposed by or on behalf
of, any Interested Stockholder (as hereinafter defined) or any Affiliate or
Associate (as hereinafter defined) of any Interested Stockholder or any person
who thereafter would be an Affiliate or Associate of such Interested
Stockholder, unless certain fair price criteria and procedural requirements are
satisfied or the transaction is approved by a majority of Continuing Directors
(as hereinafter defined).
An "Interested Stockholder" is any person who is or has announced or
publicly disclosed an intention to become the beneficial owner of 30% or more of
the voting stock of AMCORE. The terms "Affiliate" and "Associate" have the same
meanings ascribed for such terms in Rule 12b-2 under the Exchange Act as in
effect on February 12, 1986. A "Business Combination" includes certain
transactions with or proposed by or on behalf of an Interested Stockholder or
related parties, including, among others, (i) a merger or consolidation of
AMCORE or any subsidiary; (ii) the sale or disposition by AMCORE or any
subsidiary of any assets or securities having an aggregate value of $5 million
or more or constituting more than 10% of the book value of the total assets or
of the stockholders' equity of the entity in question; (iii) the adoption of any
plan or proposal for the liquidation or dissolution of AMCORE or for any
amendment of AMCORE's bylaws; or (iv) any reclassification of securities,
recapitalization, merger or other transaction with the effect, directly or
indirectly, of increasing an Interested Stockholder's proportionate share of the
outstanding capital stock of AMCORE or a subsidiary. A "Continuing Director" is
a member of the AMCORE Board of Directors who is not affiliated with an
Interested Stockholder or was a director before any Interested Stockholder
became an Interested Stockholder or was recommended or elected by a majority of
Continuing Directors.
The Business Combination provisions of the AMCORE Charter are intended to
prevent certain of the potential inequities of Business Combinations that are
part of "two-step" transactions. In the absence of such provisions, a purchaser
who acquired control of AMCORE could subsequently, by virtue of such control
force the remaining stockholders to sell or exchange their shares at a price
that would not reflect any premium such purchaser may have paid in order to
acquire its controlling interest. Such provisions may also discourage the
accumulation of large blocks of AMCORE's stock which could be disruptive to the
stability of AMCORE'S important relationships with its employees, customers and
the communities that it serves. Such an accumulation could precipitate a change
of control of AMCORE on terms unfavorable to AMCORE's other stockholders.
The Business Combination provisions of the AMCORE Charter may render more
difficult or discourage a merger with or takeover of AMCORE, the acquisition of
control of AMCORE by a large stockholder and
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the removal of incumbent management. Such provisions would also discourage some
takeover attempts by persons who intend to acquire AMCORE in two steps and
eliminate remaining stockholder interests by means of a Business Combination
involving less consideration per share than the acquiring person would propose
to pay for its initial interest in AMCORE equal to or greater than 30% (but less
than 100%) of the outstanding voting stock of AMCORE. To the extent that this
provision discourages certain business combinations, AMCORE's stockholders may
be deprived of higher market prices for their stock that often prevail as a
result of such events.
Section 180.1150 of the WBCL provides that in particular circumstances the
voting of shares of a Wisconsin "issuing public corporation" (a Wisconsin
corporation which has at least 100 Wisconsin resident stockholders, 500 or more
stockholders of record and total assets exceeding $1 million) held by any person
in excess of 20% of the voting power is limited to 10% of the full voting power
of such excess shares. Full voting power may be restored under Section 180.1150
if a majority of the voting power of shares represented at a meeting, including
those held by the party seeking restoration, are voted in favor of such
restoration.
In addition, Section 180.1132 of the WBCL sets forth certain fair price
provisions which govern mergers and share exchanges with, or sales of
substantially all a Wisconsin issuing public corporation's assets to, a 10%
stockholder, mandating that any such transaction meet one of two requirements.
The first requirement is that the transaction be approved by 80% of all
stockholders and two-thirds of "disinterested" stockholders, which generally
exclude the 10% stockholder. The second requirement is the payment of a
statutory fair price, which is intended to insure that stockholders in the
second step merger, share exchange or asset sale receive at least what
stockholders received in the first step.
Further, Section 180.1134 of the WBCL requires stockholder approval for
certain transactions in the context of a tender offer or similar action for in
excess of 50% of a Wisconsin issuing public corporation's stock. Stockholder
approval is required for the acquisition of more than 5% of the corporation's
stock at a price above market value, unless the corporation makes an equal offer
to acquire all shares. Stockholder approval is also required for the sale or
option of assets which amount to at least 10% of the market value of the
corporation, but this requirement does not apply if the corporation meets
certain minimum outside director standards.
Sections 180.1140 through 180.1144 of the WBCL prohibit certain "business
combinations" between a "resident domestic corporation" and a person
beneficially owning 10% or more of the outstanding voting stock of such
corporation (an "interested shareholder") within three years after the date such
person became a 10% beneficial owner (the "acquisition date"), unless the
business combination or the acquisition of such stock has been approved before
the acquisition date by the corporation's board of directors. After such
three-year period, a business combination with the interested shareholder may be
consummated only with the approval of the holders of a majority of the voting
stock not beneficially owned by the interested shareholder, unless the
combination satisfied certain adequacy-of-price standards intended to provide a
fair price for shares held by disinterested shareholders. CBSC presently meets
the definition of a "resident domestic corporation."
PREFERRED STOCK
The AMCORE charter authorizes the AMCORE Board to issue up to 10 million
shares of AMCORE preferred stock from time to time or in series, without any
action on the part of Amcore's stockholders, and to determine the designation of
each series, the number of shares to be issued, dividend rates, redemption
provisions, sinking fund provisions, liquidation preferences and such other
provisions and rights as the Board of Directors may deem advisable. The
dividends fixed by the Board of Directors will be in preference to dividends on
any other class of stock of AMCORE. The preferred dividends may or may not be
cumulative. The preferred stock may also be entitled to a preference upon
dissolution or liquidation if AMCORE's Board of Directors so designates. The
preferred stock may not have any voting rights and cannot be convertible or
exchangeable for shares of AMCORE Common Stock. There is no preferred stock
issued or outstanding at the present time.
CBSC has no authorized shares of preferred stock and, accordingly, the
rights of holders of CBSC Common Stock to receive dividends or payment in the
event of voluntary or involuntary dissolution,
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liquidation or winding up of CBSC are not subject to the prior satisfaction of
the rights of any other stockholders.
DIRECTORS
The AMCORE Board is divided into three classes as nearly equal in number as
possible, with the directors in each class serving for staggered three-year
terms. At each annual meeting of AMCORE's stockholders, the successors to the
class of directors whose term expires at the time of such meeting are elected by
a majority of the votes cast, assuming a quorum is present.
All the directors of CBSC are elected at the annual meeting of stockholders
by a plurality of the votes entitled to vote in the election, at a meeting at
which a quorum is present. A director of CBSC may be removed, with or without
cause, by the affirmative vote of the holders of a majority of the then issued
and outstanding stock of CBSC cast at a special meeting of stockholders called
for that purpose.
Holders of CBSC Common Stock are not entitled to any preemptive rights,
except in certain circumstances required by Wisconsin law. CBSC Common Stock is
fully paid and not liable to any calls or assessments by CBSC, except in the
event of a capital impairment of CBSC, and under Section 180.0622(2)(b) of the
WBCL.
DIVIDENDS
Under Nevada law, a corporation may authorize and make a distribution to
its stockholders unless, after giving effect to such distribution, (i) the
corporation would be unable to pay its debts as they become due, or (ii) except
as specifically allowed by the corporation's charter, the corporation's total
assets would be less than the sum of its total liabilities plus the amount
necessary, if the corporation were dissolved at the time of distribution, to
satisfy the preferential rights of stockholders whose preferential rights are
superior to those receiving the distribution.
Subject to any restrictions contained in a corporation's charter, Wisconsin
law generally provides that a corporation may issue share dividends.
There are no provisions in the AMCORE Charter or Bylaws allowing
distributions in a manner other than that prescribed by Nevada law or in the
CBSC Charter or Bylaws restricting the declaration or payment of dividends. In
addition, the ability of both AMCORE and CBSC to pay dividends is dependent upon
their ability to receive dividends from their respective subsidiaries. The bank
subsidiaries of AMCORE and CBSC are subject to federal and state regulations
that impose restrictions on the payment of dividends.
AMENDMENTS TO THE CHARTER
Unless a higher vote is required by a corporation's charter or bylaws,
Nevada law requires that a proposed charter amendment be approved by a majority
of the voting power entitled to vote upon the amendment and, under certain
circumstances, a majority of the outstanding stock of each class entitled to
vote thereon. The AMCORE Charter provides that certain amendments require the
affirmative vote of 70% of the outstanding shares, including amendments that
affect the provisions related to the size and structure of the Board of
Directors, the provision governing the nomination of directors contained in
AMCORE's Bylaws, the prohibition of stockholder action by written consent, and
the Business Combination provisions discussed above.
Under Wisconsin law, unless a higher vote is required by a corporation's
charter, an amendment to the charter of a Wisconsin corporation may be approved
by a majority of the outstanding shares entitled to vote upon the proposed
amendment and a majority of the outstanding stock of each group entitled to vote
thereon as a group. The CBSC Charter does not require a higher vote for
amendment of the CBSC Charter, and thus the charter may be amended in the manner
specified by the Wisconsin statute.
AMENDMENTS TO THE BYLAWS
The AMCORE Bylaws may be altered or repealed and new bylaws adopted by the
AMCORE Board, but any bylaws adopted by the AMCORE Board may be altered or
repealed, and new bylaws adopted, by the stockholders entitled to vote thereon.
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The CBSC Bylaws may be altered, amended, repealed or adopted by either the
CBSC Board or the stockholders, and such action may be taken at either an annual
or special meeting.
CUMULATIVE VOTING
The AMCORE Charter specifically precludes cumulative voting for the
election of directors. The CBSC Charter does not provide for cumulative voting
rights.
STRUCTURE OF BOARD OF DIRECTORS
The AMCORE Charter provides for a Board of Directors divided into three
classes, with the term of one class expiring each year. The AMCORE Charter
further requires that the Board consist of between three and fourteen directors
with each class consisting of as near to one-third the total number of directors
as possible. The AMCORE Board currently consists of 12 members divided into
classes of three, four and five directors, respectively.
The AMCORE Bylaws require that to nominate a person for election to the
Board of Directors a stockholder must provide notice to AMCORE that is delivered
or mailed to and received at the principal executive offices of AMCORE not less
than 50 nor more than 75 days prior to the meeting. The stockholder's notice
must identify each person whom the stockholder proposes to nominate, provide
information regarding the nominee's principal occupation, the class and number
of shares of AMCORE capital stock beneficially owned by the nominee, and any
other information required to be disclosed in solicitations for proxies pursuant
to Regulation 14A of the Exchange Act. The notice must also set forth the
nominating stockholder's identity and the class and number of shares of AMCORE
capital stock that are beneficially owned by the stockholder. AMCORE may also
require the proposed nominee to furnish such reasonable additional information
as may be required to determine the eligibility of the proposed nominee to serve
as director.
The CBSC Charter provides for only one class of directors. The CBSC Charter
further requires that the CBSC Board consist of between five and eleven
directors. The CBSC Board is presently composed of eight members.
REMOVAL OF DIRECTORS
Under Nevada law, unless a higher vote is required by a corporation's
charter, a director may be removed from office, with or without cause, by the
affirmative vote of stockholders representing at least two-thirds of the issued
and outstanding voting stock. The AMCORE Charter does not require a higher
percentage for removal of directors.
Under Wisconsin law, any director or the entire board of directors may be
removed with or without cause by stockholders representing a majority of the
shares entitled to-vote at an election of directors, unless the corporation's
charter or bylaws provide that director's may be removed only for cause. Under
the CBSC Bylaws, a director may be removed from office with or without cause.
RIGHTS OF DISSENTING STOCKHOLDERS
If a stockholder dissents from a merger or consolidation in the manner
provided by Nevada law, the Nevada statute entitles such holder to appraisal
rights unless the shares received in connection with the transaction are
registered on a securities exchange on the record date fixed to determine the
stockholders entitled to vote on the agreement of merger or consolidation. The
AMCORE Charter and Bylaws do not confer any additional appraisal rights.
Under the provisions of Wisconsin law, any shareholders who assert
dissenters' rights will have a statutory right to demand payment of the "fair
value" of their stock in cash. To perfect this right, a shareholder must not
vote such shares in favor of the Merger Agreement at the Special Meeting (this
may be done by marking the proxy either to vote against the Merger Agreement or
to abstain from voting thereon or by not voting at all) and must take such other
action as is required by the provisions of Section 180.1301 to 180.1331 of the
WBCL, including delivering written notice of intent to demand the "fair value"
of CBSC Common Stock.
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SPECIAL MEETINGS OF STOCKHOLDERS
The AMCORE Bylaws permit a special meeting of stockholders to be called by
the Chairman of the Board, the President or a majority of the AMCORE Board. A
meeting is required to be held upon the written request of the holders of not
less than 10% of outstanding AMCORE Common Stock entitled to vote at the
meeting.
The CBSC Bylaws require a special meeting of the stockholders be called by
the CBSC Board or the President or by the person designated in the written
request of the stockholders owning at least 10% of all of the votes entitled to
be cast on any issue proposed to be considered at the meeting.
ACTION WITHOUT A MEETING
The AMCORE Charter prohibits stockholder action by written consent.
The CBSC Bylaws allow action to be taken without a meeting and without
action by the CBSC Board if a written consent, describing the action to be
taken, is signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
Wisconsin law permits any action which may be taken at an annual or special
stockholder meeting to be taken without a meeting and without a vote if written
consents are obtained from holders of the outstanding stock having the minimum
number of votes necessary to authorize the action at a meeting at which all
shares entitled to vote thereon were present and voted.
PREEMPTIVE RIGHTS
Although both Nevada and Wisconsin law permit the designation of preemptive
rights in a corporation's charter, neither the AMCORE Charter nor the CBSC
Charter provides holders of common stock preemptive rights to acquire any
securities of AMCORE or CBSC, respectively.
LIQUIDATION AND DISSOLUTION
Under both Nevada and Wisconsin law, voluntary dissolution of a corporation
requires the adoption of a resolution by a majority of the board of directors
and the affirmative vote of a majority of the outstanding shares entitled to
vote thereon. The AMCORE Charter requires the approval of 70% of the votes
entitled to be cast by the holders of all outstanding shares of voting stock for
the adoption of any plan or proposal for the liquidation or dissolution of the
company that is proposed by an Interested Stockholder. The CBSC Charter and
Bylaws do not contain any provision relating to dissolution procedures.
INDEMNIFICATION AND PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
AMCORE is required, pursuant to the AMCORE Charter, to indemnify all
persons who may be indemnified under Nevada law to the fullest extent permitted
by such law. Similarly, CBSC is required, pursuant to CBSC Bylaws to indemnify
all persons who may be indemnified under the Wisconsin indemnification statute
to the fullest extent permitted thereunder. Generally, under Nevada and
Wisconsin law, a corporation may indemnify officers, directors, employees and
agents of a corporation against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by them in connection with any threatened, pending or completed civil, criminal,
administrative or investigative proceeding (other than derivative actions) if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action, they had no reasonable cause to believe their conduct was
unlawful. With respect to derivative actions, officers, directors, employees and
agents of a corporation may be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by them in connection with the
defense or settlement of such action if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of the
corporation, except that no such indemnification may be made in respect of any
claim as to which such person shall have been adjudged to be liable to the
corporation, unless and only to the extent that the court in which the action
was brought determines that such person is entitled to
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indemnification despite the adjudication of liability. To the extent that an
officer, director, employee or agent is successful on the merits or otherwise in
defense of any action, suit or proceeding referred to above, the corporation
shall indemnify such officer, director, employee or agent against expenses
(including attorneys' fees) actually and reasonably incurred in connection
therewith.
The AMCORE Charter and the CBSC Charter also each permit each respective
corporation to purchase and maintain insurance or make other financial
arrangements to insure its directors, officers, employees and agents against
liabilities, whether or not AMCORE or CBSC, respectively, are themselves
permitted to indemnify against such liabilities.
As permitted by Nevada law, the AMCORE Charter eliminates, to the fullest
extent permitted by Nevada law, the personal liability of directors and officers
to AMCORE for breaches of fiduciary duty. Under the AMCORE Charter, directors
and officers are not indemnified for acts or omissions involving intentional
misconduct, fraud or a knowing violation of law or for violations of Section
78.300 of the Nevada General Corporation Law regarding unlawful payment of
dividends. The CBSC Charter also does not indemnify directors and officers for
negligence or misconduct in the performance of their fiduciary duties.
AMCORE has entered into indemnification contracts (the "Indemnification
Agreements") with its directors and officers. The Indemnification Agreements
provide for indemnification of directors and officers to the fullest extent
permitted by law. These agreements cover all expenses, judgments, fines and
penalties incurred and amounts paid in settlement in connection with
investigating, defending, being a witness or participating in or preparing to
defend, be a witness in or participate in any threatened, pending or completed
action, suit or proceeding or any inquiry or investigation, whether civil,
criminal, administrative or otherwise, related to the fact that such director or
officer was a director or officer, employee, agent or fiduciary of AMCORE or was
serving as such at the request of AMCORE. The Indemnification Agreements impose
upon AMCORE the burden of proving that the director or officer is not entitled
to indemnification.
CBSC is not a party to indemnification contracts with CBSC's directors and
officers.
Insofar as the foregoing provisions may permit indemnification of
directors, officers or persons controlling AMCORE for liabilities arising under
the Securities Act, AMCORE understands that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and therefore is unenforceable.
SHARE PURCHASE RIGHTS
The AMCORE Common Stock Purchase Rights Plan provides that each share of
AMCORE Common Stock issued in the Merger will have attached thereto one Right.
Each Right, when exercisable, entitles the registered holder to purchase from
AMCORE one share of AMCORE Common Stock at a purchase price of $70.00 per share
(the "Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in the Rights Agreement (the "Rights Agreement") dated as
of February 21, 1996, between AMCORE and Firstar Trust Company, as Rights Agent.
Initially, the Rights are attached to all Common Stock certificates
representing shares then outstanding, and no separate certificates representing
the Rights ("Rights Certificates") will be distributed. The Rights will separate
from the Common Stock and a Distribution Date (as hereinafter defined) will
occur upon the earlier of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding AMCORE Common Stock (the date of such announcement being the
"Stock Acquisition Date"), (ii) 10 business days (or such later date as the
AMCORE Board shall determine) following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 15% or
more of such outstanding AMCORE Common Stock or (iii) 10 business days after the
AMCORE Board shall declare any person to be an "Adverse Person." In order to
declare a person to be an Adverse Person the AMCORE Board must determine that
such person, alone or together with its affiliates and associates, has become
the beneficial owner of an amount of AMCORE Common Stock which the AMCORE Board
determines to be substantial (which amount shall in no event be less than 10% of
the
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AMCORE Common Stock then outstanding) and, after reasonable inquiry and
investigation, including consultation with such persons as such directors shall
deem appropriate, that (a) such beneficial ownership by such person is intended
to cause AMCORE to repurchase the AMCORE Common Stock beneficially owned by such
person or to cause pressure on AMCORE to take action or enter into a transaction
or series of transactions intended to provide such person with short-term
financial gains under circumstances where the AMCORE Board determines that the
best long-term interests of AMCORE would not be served by taking such action or
entering into such transaction or series of transactions at that time or (b)
such beneficial ownership is causing or reasonably likely to cause a material
adverse impact (including, but not limited to, impairment of relationships with
customers or impairment of AMCORE's ability to maintain its competitive
position) on the business or prospects of AMCORE, on AMCORE's employees,
customers or suppliers or on the communities in which AMCORE operates or is
located.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the AMCORE Common Stock as of the close
of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. All shares of AMCORE Common Stock
issued prior to the Distribution Date will be issued with Rights. Shares of
AMCORE Common Stock issued after the Distribution Date will be issued with
Rights if such shares are issued pursuant to the exercise of stock options or
under an employee benefit plan, or upon the conversion of securities issued
after adoption of the Rights Agreement. Except as otherwise determined by the
AMCORE Board, no other shares of AMCORE Common Stock issued after the
Distribution Date will be issued with Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on February 27, 2006, unless earlier redeemed by AMCORE
as described above.
In the event that (i) a person becomes the beneficial owner of more than
15% of the then-outstanding AMCORE Common Stock (except pursuant to an offer for
all outstanding shares of AMCORE Common Stock which the independent directors
determine to be fair to and otherwise in the best interests of AMCORE and its
shareholders) or (ii) the AMCORE Board declares a person to be an Adverse
Person, following the Distribution Date, each holder of a Right will thereafter
have the right to receive, upon exercise, AMCORE Common Stock (or, in certain
circumstances, cash, property or other securities of AMCORE) having a value
equal to two times the Exercise Price of the Right. The Exercise Price is the
Purchase Price multiplied by the number of shares of AMCORE Common Stock
issuable upon exercise of a Right prior to any of the events described in this
paragraph (initially, one). Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or Adverse Person will be null and
void. However, Rights are not exercisable following the occurrence of any of the
events set forth above until such time as the Rights are no longer redeemable by
AMCORE as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
AMCORE is acquired in a share exchange, merger or other business combination
transaction, (other than a merger which follows an offer described in the second
preceding paragraph), or (ii) 50% or more of AMCORE's assets or earning power is
sold or transferred, each holder of a Right (except Rights which previously have
been voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right. The events set forth in this paragraph
and in the second preceding paragraph are referred to as the "Triggering
Events."
The Purchase Price payable, and the number of shares of AMCORE Common Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
AMCORE Common Stock, (ii) if holders of the AMCORE Common Stock are granted
certain rights or warrants to subscribe for shares of AMCORE Common Stock or
convertible securities at less than the current market price of the AMCORE
Common Stock, or (iii) upon the distribution to holders of the AMCORE Common
Stock of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
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<PAGE> 49
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of AMCORE Common Stock will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
AMCORE Common Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier of (i) ten days following the Stock
Acquisition Date, and (ii) the Expiration Date, AMCORE may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, subject to adjustment.
Notwithstanding the foregoing, the AMCORE Board may not redeem the Rights
following a determination that any person is an Adverse Person. AMCORE may, at
its option, pay the redemption price in cash, shares of AMCORE Common Stock
(based on the current market price of the AMCORE Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the AMCORE
Board. Immediately upon the action of AMCORE's Board of Directors electing to
redeem the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights thereafter will be to receive the applicable
redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of AMCORE, including, without limitation, the right to
vote or to receive dividends.
The provisions of the Rights Agreement may be amended by the AMCORE Board
prior to the Distribution Date without the approval of the holders of the
Rights. After the Distribution Date, the provisions of the Rights Agreement may
be amended by the AMCORE Board in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person or Adverse
Person), or to shorten or lengthen any time period under the Rights Agreement;
provided, however, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not redeemable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire AMCORE
without conditioning the offer on a substantial number of Rights being acquired.
Accordingly, the existence of the Rights may deter certain acquirors from making
takeover proposals or tender offers. However, the Rights are not intended to
prevent a takeover, but rather are designed to enhance the ability of the AMCORE
Board to negotiate with an acquiror on behalf of all of the shareholders. In
addition, the Rights should not interfere with a proxy contest.
CBSC does not have a similar common stock purchase rights plan in place.
AMCORE FINANCIAL, INC.
GENERAL
AMCORE, a Nevada corporation, is a multi-bank holding company registered
under the federal BHCA. AMCORE is headquartered in Rockford, Illinois, and
operates five banks in 41 locations and eight financial services companies.
AMCORE is a primary supplier of financial services in the Rockford area and a
number of northern Illinois communities. The primary region includes the cities
of Rockford, Elgin, Woodstock, Carpentersville, Crystal Lake, Sterling, Dixon,
Princeton, Aledo, Rochelle, Ashton, Gridley, Mt. Morris, Mendota and Peru.
AMCORE owns all of the outstanding common stock of AMCORE Bank N.A., Rockford;
AMCORE Bank N.A., Northwest; AMCORE Bank N.A., Rock River Valley; AMCORE Bank
N.A., North Central; AMCORE Bank Aledo. AMCORE owns directly or indirectly, all
of the outstanding common stock of AMCORE Mortgage, Inc.; AMCORE Investment
Group, N.A.; AMCORE Consumer Finance Company, Inc.; AMCORE Financial Life
Insurance Company; Rockford Mercantile Agency, Inc.; AMCORE Investment Services,
Inc.; AMCORE Capital Management, Inc.; AMCORE Insurance Group, Inc. On December
31, 1996, AMCORE and its subsidiaries had total assets of $2.8 billion, total
deposits of $1.9 billion and stockholders' equity of $221 million. During the
past decade, AMCORE's total assets have grown from $950 million in 1985 to $2.8
billion in 1996 and the number of shares outstanding has risen from 2.2 million
to more than 14 million.
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<PAGE> 50
AMCORE provides various personal banking, commercial banking and related
financial services. AMCORE also conducts banking business through ten
supermarket branches which gives the customer convenient access to bank services
seven days a week and offers three electronic banking services to commercial and
retail customers and facilities access to commercial customers' accounts via
personal computers.
Through AMCORE Mortgage, Inc., AMCORE provides each bank affiliate and
correspondent lenders with a variety of mortgage lending products to meet their
customer needs. AMCORE Investment Group, N.A. includes the former trust
departments of AMCORE's subsidiary banks and provides personal trust services,
employee benefit plan and estate administration and various other services to
corporations and individuals. AMCORE Consumer Finance Company, Inc. provides
installment and real estate loans to a segment of the market not served by
AMCORE's banks. AMCORE Insurance Group, Inc. offers both consumer and commercial
insurance products. AMCORE Investment Services, Inc. is a full service brokerage
company that offers a full range of investment alternatives including annuities,
mutual funds, stocks and bonds.
AMCORE Financial Life Insurance Company ("AFLIC"), a wholly-owned
subsidiary, was incorporated under the laws of the State of Arizona in 1984.
Through AFLIC, AMCORE is engaged in reinsuring credit life and accident and
health insurance in conjunction with the lending activities of AMCORE's
affiliate banks.
AMCORE Capital Management, Inc. ("ACMI") was incorporated under the laws of
the State of Illinois as a wholly-owned subsidiary of AMCORE Bank N.A., Rockford
in December 1992. ACMI is comprised of the former AMCORE Bank N.A., Rockford
investment department staff, and manages the assets of AMCORE's Vintage Fund
family, which were introduced in December 1992. In addition to serving as
investment advisor to these funds, ACMI manages the investment portfolios for
AMCORE Investment Group, N.A. and other unaffiliated institutions.
Rockford Mercantile Agency, Inc. ("RMA"), a local collection agency, was
acquired in January 1993. RMA has been in business in the Rockford area since
1908 and works with many nationally-known clients. RMA was incorporated under
the laws of the State of Illinois in January 1993 as a wholly-owned subsidiary
of AMCORE.
RECENT DEVELOPMENTS
On April 18, 1997, FNB Acquisition, Inc. ("Merger Sub"), a wholly-owned
subsidiary of AMCORE, merged with and into First National Bancorp, Inc., a
one-bank holding company located in Monroe, Wisconsin ("FNB"), pursuant to an
Agreement and Plan of Merger dated as of October 30, 1996, among AMCORE, Merger
Sub and FNB. Upon the effective time of the merger transaction, FNB became a
wholly-owned subsidiary of AMCORE. As a result of the merger, the former
stockholders of FNB received, in total, 1,881,524 shares of Common Stock of
AMCORE. FNB had approximately $216 million of assets and five branch locations.
On March 25, 1997, AMCORE issued $40 million of capital securities through
AMCORE Capital Trust I (the "Trust"), a statutory business trust, of which all
common securities are owned by AMCORE. The capital securities pay cumulative
cash distributions semiannually at an annual rate of 9.35%. The securities are
redeemable from March 25, 2007 until March 25, 2017 at a declining rate of
104.6750% to 100.0% of the principal amount. After March 25, 1017, they are
redeemable at par until June 15, 2027 when redemption is mandatory. The capital
securities qualify as Tier I capital for regulatory capital purposes. The
proceeds of the issue will be used to repay in full the parent company term
debt, repay in full the long term borrowings of pending acquisitions, and
general corporate purposes.
In its first quarter earnings reported on April 22, 1997, AMCORE reported
an increase of 20 percent in earnings per share, from 40 cents to 48 cents and a
rise in net income of 21.8 percent to $6.9 million, up from $5.6 million for the
same period of 1996. Return on equity for the first quarter of 1997 was 12.54
percent, up from 10.77 percent during the same period in 1996. Return on assets
also improved to .98 percent compared to
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<PAGE> 51
.92 percent in 1996. Net interest income rose $1.8 million or 8.6 percent
compared to the same quarter of 1996. The increase is attributed primarily to a
12.6 percent, or $162.8 million, increase in average loans and an increase of
approximately $275 million on average in the investment leveraging program.
Trust and asset management revenues increased $492,000 or 15.2 percent. Revenues
from insurance increased $194,000 or 76.4 percent as a result of new business
and a change to recognize income on a gross rather than a net basis. Mortgage
revenues rose $254,000 or 34.6 percent. Provisions for loan losses increased
$957,000 or 107.6 percent to $1.8 million compared to the first quarter of 1996.
The allowance for loan losses to non-performing loans remained above 100 percent
at 101.25 percent, despite a $3.8 million or 30.8 percent increase in
non-performing assets. Total non-performing assets as of March 31, 1997 were
$16.2 million, or .57 percent of total assets. While non-interest expense
increased $1.2 million, or 5.8 percent, compared to the first quarter of 1996,
the increase in net revenues offset any increase in expenses. Net revenues grew
$3.9 million or 13.2 percent, resulting in a reduction in the efficiency ratio
to 62.8 percent compared to 67.2 percent for the first quarter of 1996.
The principal executive offices of AMCORE are located at 501 Seventh
Street, Rockford, Illinois 61104 and its telephone number is (815) 968-2241.
Additional information concerning AMCORE is included in the AMCORE documents
incorporated herein by reference. See "INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE."
COUNTRY BANK SHARES CORPORATION
GENERAL
CBSC, a Wisconsin corporation, is a bank holding company registered under
the BHCA. CBSC has its main offices located in Mount Horeb, Wisconsin. CBSC's
direct subsidiaries are the State Bank of Mt. Horeb, Montello State Bank, State
Bank of Argyle and Citizen's State Bank of Clinton. Each of the above-referenced
bank subsidiaries has organized a wholly-owned Nevada investment subsidiary
respectively, as follows, CBSC Mt. Horeb, Inc., CBSC-Montello, Inc., CBSC
Argyle, Inc., and CBSC-Clinton, Inc.
On February 7, 1997, CBSC acquired 100% of the outstanding stock of
Belleville Bancshares Corporation ("BBC"), a Wisconsin corporation and a bank
holding company registered under the BHCA. BBC owns 83.8% of the outstanding
common stock of Belleville State Bank ("Belleville"). Belleville has a
wholly-owned Nevada investment subsidiary, BBC-Belleville, Inc.
At December 31, 1996, CBSC and its subsidiaries (excluding BBC and its
subsidiaries) had total assets of $261.2 million, total deposits of $233.3
million and stockholders equity of $15.5 million. CBSC has increased its net
income by 21% from $1.9 million in 1992 to $2.3 million in 1996. Since 1992,
year-end assets have increased annually by an average of 7.8% from $199 million
in 1992 to $261 million in 1996. At December 31, 1996, BBC and its subsidiaries
had total assets of $40.4 million, total deposits of $36.0 million and
stockholders equity of $2.7 million.
The principal offices of CBSC are located at 100 South First Street, P.O.
Box 108, Mount Horeb, Wisconsin 53572, and its telephone number is (608)
437-5566.
CORPORATE STRUCTURE
State Bank of Mt. Horeb ("Mt. Horeb") was acquired by CBSC from Mt. Horeb's
former shareholders in 1990. Mt. Horeb is a state bank organized under Wisconsin
law in 1901. The main offices of the bank are located at 100 South First Street,
Mount Horeb, Wisconsin, with a second office located in Mount Horeb as well.
Montello State Bank ("Montello") was acquired by CBSC more than 25 years
ago. Montello is a state bank organized under Wisconsin law in 1900. The main
offices of Montello are located at 24 West Street, Montello, Wisconsin, with a
branch office located in Westfield, Wisconsin.
State Bank of Argyle ("Argyle") was acquired by CBSC from Argyle's previous
shareholders in 1990. Argyle is a state bank organized under Wisconsin law in
1895. The main offices of the bank are located at 321 Milwaukee Avenue, Argyle,
Wisconsin, with a branch office located in Darlington, Wisconsin.
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<PAGE> 52
CBSC acquired 98.7% of the outstanding stock of Citizens' State Bank of
Clinton ("Citizens") from Citizens' former shareholders in 1990. Citizens' is a
state bank organized under Wisconsin law in 1932. The main offices of the bank
are located at 214 Allen Street, Clinton, Wisconsin, with a second office in
Clinton and a branch office in Darien, Wisconsin.
Each of Mount Horeb, Montello, Argyle and Citizens maintains a wholly-owned
subsidiary corporation to hold the investments of the bank. These subsidiaries
were developed to enhance the yield and returns on the banks' investment
portfolios.
BBC/BELLEVILLE
Effective February 7, 1997 (and pursuant to an Agreement and Plan of Merger
dated July 9, 1996) CBSC acquired 100% of the outstanding common stock of BBC.
The two bank holding companies were merged under Wisconsin law with CBSC as the
surviving corporation (the "Merger"). Holders of BBC common stock received newly
issued shares of CBSC common stock in exchange for their shares of BBC common
stock. Prior to the merger, Neal Brunner, a shareholder and director and the
President of CBSC, and Thomas Heuerman, an executive officer of CBSC, were
shareholders of BBC.
BBC owned 83.8% of the outstanding common stock of Belleville State Bank
("Belleville"). Belleville is a state bank organized under Wisconsin law in
1903. The main offices of the bank are located at 24 West Main Street,
Belleville, Wisconsin, with a branch office located in Verona, Wisconsin.
BBC-Belleville, Inc. was organized as a Nevada corporation in 1991 and is a
wholly-owned investment subsidiary of the bank. BBC-Belleville was developed to
enhance the yield and returns on the bank's investment portfolio through tax
savings.
Approximately thirty-five shareholders own the remaining outstanding common
stock of Belleville. As of April 9, 1997, CBSC offered to purchase each share of
Belleville common stock held by such minority shareholders for a price of
$1,110.00 per share, which price is approximately twice the current book value
per share of Belleville common stock. This offer was contingent upon certain
circumstances, including the consummation of the Merger and the giving of
releases by such minority shareholders with respect to action previously
threatened by certain shareholders.
PRODUCTS
CBSC, through its subsidiary banks, is engaged in general commercial
banking business. Full service banking is offered to individuals and small to
medium size businesses, including checking accounts, savings accounts, time
deposits, non-deposit retail investment products, commercial loans, consumer
loans, agricultural loans, real estate loans, safe deposit facilities,
transmitting of funds, and such other banking services as are usual and
customary for commercial banks under the banking laws of the United States.
COMPETITION
Factors affecting competition for CBSC include office locations, customer
convenience, and the various types of banking and financial services provided by
CBSC and its competitors. The commercial banking business in central Wisconsin
is very competitive. Numerous financial institutions are located in these areas,
including several regional institutions and regional and national financial
institutions operating by mail, telephone and other electronic means. CBSC's
strategy has been to focus on meeting the financing needs of individuals and
small and medium size businesses in markets not served effectively by
competitors or larger institutions. The vast majority of the Banks' loans and
the majority of all deposits are from customers in Dane, Walworth, Rock,
Lafayette and Marquette Counties, Wisconsin.
EMPLOYEES
CBSC and its subsidiaries (excluding BBC and its subsidiaries) employ 117
full-time and 28 part-time employees. Each employee who meets eligibility
requirements is entitled to participate in CBSC's qualified employee benefit
plans, including CBSC's profit sharing/401(k) plan, group life insurance, health
and dental
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<PAGE> 53
insurance plans, long-term and short-term disability programs and vacation and
sick leave benefits. Under the profit sharing/401(k) plan, CBSC is not bound,
though, to make a discretionary contribution. An employee's interest in CBSC
contributions, if any, is not subject to any vesting schedule.
PROPERTIES
Except as noted below, CBSC or its subsidiaries are in sole possession of
and own all real property on which CBSC or any subsidiary (or branch office
thereof) is located.
CBSC's subsidiary, Darlington Community Bank, a branch of Argyle, leases
its real property from a realty corporation. Mt. Horeb leases portions of its
owned real property in Mount Horeb to the United States Postal Service and an
insurance agency. Also, the Verona branch of Belleville leases portions of its
owned real property to a travel agency and a real estate company.
LEGAL PROCEEDINGS
Neither CBSC nor any bank subsidiary is party to any material pending legal
proceeding. The management of CBSC believes that there is no threatened or
pending litigation in which CBSC or its subsidiaries face potential loss or
exposure which will materially affect shareholders equity.
STOCK OPTION AGREEMENTS
CBSC has stock option agreements with Thomas D. Heuerman, John M. Jones,
Wayne W Pivotto and Leon J. Holschbach entitling each such individual to acquire
shares of CBSC Common Stock upon certain terms and conditions in the respective
amounts of 2,000, 1,000, 1,500, and 1,500 shares.
SELECTED FINANCIAL DATA
The selected financial data presented below for CBSC and Belleville for
each of the years in the five year period ending December 31, 1996, is derived
from the supplemental combined financial statements of CBSC and should be read
in conjunction with other financial information presented elsewhere in this
Proxy Statement/Prospectus. The CBSC merger with Belleville was accounted for
using the pooling-of-interests method, and the supplemental combined financial
statements are presented to give effect to that transaction. The financial
statements of CBSC and Belleville have been audited by Arthur Andersen LLP to
the extent indicated in their report thereon. The information below should be
read in conjunction with the separate financial statements and notes thereto,
and CBSC's Management's Discussion and Analysis of Results of Operations and
Financial Condition, all included elsewhere in this Proxy Statement/Prospectus.
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<PAGE> 54
COUNTY BANK SHARES CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA (HISTORICAL)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME:
Interest Income.................. $ 23,488 $ 22,033 $ 19,547 $ 18,807 $ 18,651
Interest expense................. 12,216 11,265 9,349 9,012 9,831
Net interest income.............. 11,272 10,768 10,198 9,795 8,820
Provision for loan losses........ 221 412 1,123 638 340
Other income..................... 1,989 1,543 1,477 1,887 1,444
Other expenses................... 8,829 8,259 7,959 7,682 6,744
Income before income taxes....... 4,211 3,640 2,593 3,362 3,180
Net income....................... $ 2,676 $ 2,308 $ 1,710 $ 2,206 $ 2,116
PER COMMON SHARES:
Net income....................... $ 6.17 $ 5.32 $ 3.94 $ 5.09 $ 4.88
Cash dividends................... 0.69 0.00 0.00 0.00 0.00
Book value....................... 42.15 37.16 28.90 28.40 22.32
Dividend payout ratio............ 11.2% 0.0% 0.0% 0.0% 0.0%
Average Common Shares Outstanding
(in thousands)................ 434 434 434 434 434
SELECTED FINANCIAL RATIOS:
Return on average assets......... 0.93% 0.85% 0.67% 0.92% 0.98%
Return on average equity......... 15.58% 15.98% 13.71% 20.62% 24.37%
Net interest margin(1)........... 4.21% 4.27% 4.24% 4.35% 4.49%
Average equity to average
assets........................ 5.95% 5.32% 4.85% 4.46% 4.03%
BALANCE SHEET INFORMATION:
Total assets..................... $301,601 $278,247 $263,592 $255,517 $231,611
Loans............................ 205,622 192,236 190,966 172,939 152,243
Securities....................... 62,641 56,230 49,369 54,786 54,671
Deposits......................... 269,346 248,855 238,575 229,040 209,695
Long term borrowing(1)........... 6,376 7,409 2,070 929 548
Stockholders' equity............. 18,281 16,117 12,377 12,316 9,678
</TABLE>
- -------------------------
(1) On a fully tax equivalent basis.
CBSC MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
GENERAL
The following discussion and analysis provides information regarding the
historical results of operations and financial condition of CBSC for the years
ending December 31, 1996, 1995 and 1994. This discussion and analysis should be
read in conjunction with the related financial statements thereto and the other
financial information included herein.
On February 7, 1997, CBSC acquired BBC in a transaction being accounted for
using the pooling of interest method of accounting. Although the financial
statements of CBSC will be restated to reflect this acquisition, historical
financial statements of CBSC included herein, and the discussions in this
Management's Discussion and Analysis, have not been restated to reflect the
Belleville Acquisition unless specifically indicated otherwise. While CBSC does
not expect the Belleville Transactions to result in a material change of
character in its business and results of operations going forward, the
acquisition may have a material effect on financial conditions and results of
operations. See "Belleville Acquisition" below.
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<PAGE> 55
RESULTS OF OPERATIONS
For the period ended December 31, 1996, CBSC's net income was $2,311,000,
an increase of $349,000, or 17.8% from 1995. For the year ended December 31,
1995, CBSC's net income was $1,962,000, an increase of $508,000, or 34.9% from
1994 CBSC's net income of $1,454,000.
NET INTEREST REVENUE
CBSC's net interest revenue in 1996 was $9,703,000, an increase of
$545,000, or 6.0% over CBSC's 1995 net interest revenue of $9,158,000, which was
$361,000, or 4.1% over CBSC's 1994 net interest revenue of $8,797,000. The
increase in net interest revenue resulted primarily from internally generated
growth in net loans and securities held. Net interest margins remained
relatively stable.
PROVISION FOR LOAN LOSSES
The amount charged to provision for loan losses is based on management's
evaluation of CBSC's loan portfolio. Management determines the adequacy of the
allowance for loan losses based on past loan loss experience, current economic
conditions, composition of the loan portfolio and the potential for future loss.
CBSC's provision for loan losses was $148,000 in 1996, as compared to $313,000
in 1995 and $1,086,000 in 1994.
A substantial portion of the reduction in CBSC's provision for loan losses
in 1996, as compared to 1995 and 1994, results from reductions in loans charged
off and an increase in total recoveries (including a net recovery in 1996). At
year end 1996, the allowance for loan and lease losses was 1.28% of total loans,
which was relatively constant as compared to prior years. However, the
percentage of non-performing loans to gross loans increased in 1996 as compared
to prior years. See "Financial Condition -- Non-Performing Assets" below.
OTHER OPERATING REVENUE AND EXPENSES
Other operating revenue increased $432,000 to $1,756,000 in 1996, primarily
due to increased revenue from brokerage of investment products and sale of
loans. Other revenue increased $60,000 in 1995 from $1,264,000 in 1994,
reflecting lower revenues from sales of mortgage loans to the secondary market.
Other operating expenses increased $610,000, or 8.5% to $7,786,000 in 1996
from 1995. The majority of the increase was in personnel and occupancy expense,
reflecting growth through branch expansion. Other operating expenses increased
from $6,860,000 in 1994 to $7,176,000 in 1995.
INCOME TAXES
Income taxes were $1,214,000 in 1996 compared to $1,031,000 in 1995 and
$661,000 in 1994. Tax expense as a percentage of income before income taxes was
34.4% in 1996, 34.4% in 1995 and 31.3% in 1994.
FINANCIAL CONDITION
At December 31, 1996, CBSC's total assets of $261,153,000 represented an
increase of 9.1% or $21,723,000 from a year earlier. The increase resulted
primarily from an increase in deposits of $19,412,000 and an increase in
stockholder's equity of $1,824,000. Loans increased $14,132,000 and securities
increased $5,667,000.
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<PAGE> 56
LOAN PORTFOLIO
The following table sets forth the major categories of CBSC loans
outstanding.
ANALYSIS OF LOAN PORTFOLIO AND LOSS EXPERIENCE -- CBSC
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural........................ $ 58,547 $ 55,147 $ 56,667 $ 56,363 $ 49,179
Real estate -- mortgage............... 94,481 84,485 80,035 66,573 66,784
Real estate -- construction........... 6,837 7,087 7,618 4,474 4,202
Installment and consumer.............. 18,585 17,498 17,571 17,525 13,370
Lease financing....................... 205 306 399 496 0
-------- -------- -------- -------- --------
Gross Loans......................... 178,655 164,523 162,290 145,431 133,535
Allowance for loan and lease
losses........................... (2,286) (2,100) (2,054) (1,482) (1,361)
-------- -------- -------- -------- --------
NET LOANS............................. $176,369 $162,423 $160,236 $143,949 $132,174
======== ======== ======== ======== ========
Allowance to year-end loans........... 1.28% 1.28% 1.27% 1.02% 1.02%
Net charge-offs (recoveries) to
average loans....................... (0.02)% 0.16% 0.34% 0.22% 0.26%
Allowance to non-performing loans..... 117.71% 307.47% 444.59% 437.17% 443.32%
Recoveries to charge-offs............. 140.86% 30.65% 7.55% 7.42% 13.33%
Non-performing loans to loans, net of
unearned............................ 1.09% 0.42% 0.28% 0.23% 0.23%
</TABLE>
The following table sets forth the major categories of Belleville loans
outstanding.
ANALYSIS OF LOAN PORTFOLIO AND LOSS EXPERIENCE -- BELLEVILLE
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural........................ $ 10,626 $ 11,216 $ 12,377 $ 10,453 $ 5,217
Real estate -- mortgage............... 10,307 10,645 10,676 10,353 8,367
Real estate -- construction........... 2,540 1,722 1,082 1,458 1,084
Installment and consumer.............. 3,820 4,166 4,680 5,481 4,256
Lease financing....................... 0 0 0 0 0
-------- -------- -------- -------- --------
Gross Loans......................... 27,293 27,749 28,815 27,745 18,924
Unearned income..................... (6) (36) (139) (237) (216)
-------- -------- -------- -------- --------
Loans, net of unearned income....... 27,287 27,713 28,676 27,508 18,708
Allowance for loan and lease
losses........................... (302) (304) (281) (280) (188)
-------- -------- -------- -------- --------
NET LOANS............................. $ 26,985 $ 27,409 $ 28,395 $ 27,228 $ 18,520
======== ======== ======== ======== ========
Allowance to year-end loans........... 1.11% 1.10% 0.98% 1.02% 1.00%
Net charge-offs to average loans...... 0.28% 0.26% 0.13% 0.48% 0.26%
Allowance to non-performing loans..... 487.10% 1381.82% 155.25% 123.35% 55.46%
Recoveries to charge-offs............. 7.41% 17.39% 43.75% 1.74% 22.03%
Non-performing loans to loans, net of
unearned............................ 0.23% 0.08% 0.63% 0.83% 1.81%
</TABLE>
53
<PAGE> 57
NON-PERFORMING ASSETS
Non-performing assets are a broad measure of problem loans. The following
table sets forth the amount of CBSC's non-performing loans, other real estate
owned and non-performing assets.
NON-PERFORMING LOANS AT YEAR-END -- CBSC
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Non-accrual.......................................... $1,942 $683 $462 $339 $307
Restructured......................................... 0 0 0 0 0
------ ---- ---- ---- ----
Total Non-Performing Loans......................... $1,942 $683 $462 $339 $307
====== ==== ==== ==== ====
Past due 90 days or more not included above.......... 94 153 4 68 271
Interest income that would have been recorded if
loans had been current:............................ 190
Interest income included in net income:.............. 143
</TABLE>
As indicated in the above table, non-performing assets increased 184% at
year end 1996 as compared to 1995. The substantial increase in non-performing
assets in 1996 results primarily as a result of the status of one secured loan
in the amount of $1.2 million. However, in spite of the increase in
non-performing assets, the allowance for loans and losses is at 118% of
non-performing assets at December 1, 1996.
The following table sets forth the amount of Belleville's non-performing
loans.
NON-PERFORMING LOANS AT YEAR-END -- BELLEVILLE
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Non-accrual............................................. $62 $22 $181 $227 $339
Restructured............................................ 0 0 0 0 0
--- --- ---- ---- ----
Total Non-Performing Loans............................ $62 $22 $181 $227 $339
=== === ==== ==== ====
Past due 90 days or more not included above............. 0 0 0 0 0
Interest income that would have been recorded if loans
had been current:..................................... Not significant
Interest income included in net income.................. Not significant
</TABLE>
54
<PAGE> 58
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes CBSC's loan balances at the end of each
year, changes in the allowance for loan losses arising from loans charged off
and recoveries on loans previously charged off, by loan category and provisions
for loan losses that have been charged to expense.
SUMMARY OF LOAN LOSS EXPERIENCE -- CBSC
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance for loan and lease losses,
beginning.................................... $2,100 $2,054 $1,482 $1,361 $1,411
Amounts charged-off:
Commercial, financial and agricultural....... 23 307 354 235 334
Real estate.................................. 6 0 110 9 5
Installment and consumer..................... 64 78 92 93 51
Lease financing.............................. 0 0 0 0 0
------ ------ ------ ------ ------
Total Charge-offs......................... 93 385 556 337 390
Recoveries on amounts previously charged off:
Commercial, financial and agricultural....... 103 113 26 18 44
Real estate.................................. 8 0 6 0 0
Installment and consumer..................... 20 5 10 7 8
Lease financing.............................. 0 0 0 0 0
------ ------ ------ ------ ------
Total Recoveries.......................... 131 118 42 25 52
Net Charge-offs (Recoveries).............. (38) 267 514 312 338
Provision charged to expense................... 148 313 1,086 433 288
------ ------ ------ ------ ------
Allowance for Loan and Lease Losses, End of
Year......................................... $2,286 $2,100 $2,054 $1,482 $1,361
====== ====== ====== ====== ======
</TABLE>
The following table summarizes Belleville's loan balances at the end of
each year, changes in the allowance for loan losses arising from loans charged
off and recoveries on loans previously charged off, by loan category and
provisions for loan losses that have been charged to expense.
SUMMARY OF LOAN LOSS EXPERIENCE -- BELLEVILLE
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance for loan and lease losses, beginning......... $304 $281 $280 $188 $182
Amounts charged-off:
Commercial, financial and agricultural............... 48 48 23 89 49
Real estate.......................................... 0 6 0 0 0
Installment and consumer............................. 33 38 41 26 10
Lease financing...................................... 0 0 0 0 0
---- ---- ---- ---- ----
Total Charge-offs................................. 81 92 64 115 59
Recoveries on amounts previously charged off:
Commercial, financial and agricultural............... 2 2 17 2 11
Real estate.......................................... 0 0 0 0 0
Installment and consumer............................. 4 14 11 0 2
Lease financing...................................... 0 0 0 0 0
---- ---- ---- ---- ----
Total Recoveries.................................. 6 16 28 2 13
Net Charge-offs................................... 75 76 36 113 46
Provision charged to expense........................... 73 99 37 205 52
---- ---- ---- ---- ----
Allowance for Loan and Lease Losses, Ending............ $302 $304 $281 $280 $188
==== ==== ==== ==== ====
</TABLE>
55
<PAGE> 59
SECURITIES
Securities held by CBSC (including both securities available for sale and
held to maturity) increased $5.7 million to $55.1 million at year end 1996, as
compared to one year earlier. The increase in securities represents a use of net
funds available for investment resulting from the 1996 increase in deposits.
DEPOSITS
Deposits at year end 1996 increased $19.4 million as compared to one year
earlier to $233.3 million. The increase in deposits resulted primarily from
internally generated growth.
CAPITAL
CBSC's stockholders' equity increased $1,824,000 to $15,539,000 from 1995
to 1996, $3,227,000 from 1994 to 1995, and decreased $9,000 in 1994. The 1996
increase includes a negative impact of $187,000, the 1995 increase includes a
positive impact of $1,265,000, and the 1994 decrease includes a negative impact
of $1,463,000, due to the adjustment to fair value of investment securities
available for sale. In addition, the equity at year end 1996 reflects the
payment of $300,000 in dividends recognized in 1996 by CBSC; dividends had not
been paid by CBSC in prior years.
LIQUIDITY
Liquidity relates to the ability of CBSC to provide adequate funds to meet
its cash requirements, primarily for loans, deposit withdrawals, and maturing
liabilities. The liquidity to meet these demands is provided by maturing assets,
short-term liquid assets, and the ability to raise funds when required from
external sources. CBSC includes cash and due from banks, federal funds sold, and
marketable securities to calculate total liquidity. This policy is intended to
stabilize the long term earnings power of CBSC and to allow flexibility to take
advantage of changes in interest rates.
Year-end total liquidity (measured as cash, short term assets and
marketable securities) for 1996, 1995 and 1994 was $64.4 million, $58.5 million
and $44.9 million, respectively. Total liquidity as a percentage of deposits and
short term liabilities was 27.3%, 26.7% and 21.7% for the same period. Liquidity
exceeded the guidelines set by the CBSC Board for these periods, which was 20%.
BELLEVILLE ACQUISITION
On February 7, 1997, CBSC acquired BBC in an acquisition using the pooling
of interest method of accounting. In the acquisition, CBSC issued approximately
75,448 shares of its common stock to former BBC shareholders, representing 17.4%
of CBSC's outstanding shares after the acquisition on a pro forma combined
basis. Also on a pro forma combined basis, BBC, at December 31, 1996 represented
13.4%, 13.3%, 13.4% and 15.0% of the total assets, net loans, total deposits and
stockholders' equity, respectively, of the combined entity. The combination with
BBC did not materially change CBSC's allocation of assets among major
categories, and slightly enhanced capital of the combined entity because of the
relatively higher stockholder's equity.
On a pro forma combined basis, BBC would have contributed 13.6% of the
combined entity's net income in 1996. The acquisition did not effect in any
material respect the allocation of income of expense among major categories in
the combined entity. For 1996, the acquisition was slightly dilutive to CBSC
earnings on a per share basis, with pro forma combined net income per share of
$6.17.
RECENT ACCOUNTING DEVELOPMENTS
Beginning January 1, 1996 with the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 122, "Accounting for Mortgage Servicing
Rights," CBSC has recognized as separate assets rights to service mortgage loans
when purchased or originated and sold with servicing retained. Mortgage
servicing rights are amortized over the periods during which the corresponding
mortgage servicing revenues are anticipated to be generated. During 1996,
mortgage servicing rights of $51,000 were capitalized and related amortization
was $6,000.
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<PAGE> 60
Effective January 1, 1997, CBSC must adopt SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 125 provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities such as
accounting for transfers of partial interests, servicing of financial assets,
securitizations, transfers of certain lease receivables, repurchase agreements
and loan syndications and participations. CBSC does not anticipate that SFAS No.
125 will have a material impact on CBSC's consolidated financial statements.
The Financial Accounting Standards Board has issued SFAS No. 128, "Earnings
per Share" which is effective for fiscal years ending after December 15, 1997
and will require restatement of prior years' net income per share. CBSC has not
quantified the effect of applying this standard.
SUPERVISION AND REGULATION
GENERAL
As bank holding companies, AMCORE and CBSC are subject to regulation under
the BHCA and its examination and reporting requirements. Under the BHCA, a bank
holding company may not directly or indirectly acquire the ownership or control
of more than 5% of the voting shares or substantially all of the assets of any
company, without the prior approval of the Federal Reserve Board. In addition,
bank holding companies are generally prohibited under the BHCA from engaging in
nonbanking activities, subject to certain exceptions.
Under current regulations of the Federal Reserve Board, a holding company
and its non-bank subsidiaries are permitted, among other activities, to engage
in such banking-related businesses as sales and consumer finance, equipment
leasing, mortgage banking, computer service bureau and software operations and
financial advisory services. The BHCA does not place territorial restrictions on
the activities of non-bank subsidiaries of bank holding companies. In addition,
federal legislation prohibits acquisition of "control" of a bank or bank holding
company without prior notice to certain federal bank regulators. "Control" is
defined in certain cases as acquisition of ten percent or more of the
outstanding shares of a bank or bank holding company.
Federal and state laws and regulations of general application to banks
regulate, among other things, the scope of business, investments, reserves
against deposits, capital levels relative to assets and risk and the
establishment of branches, mergers, consolidations and the payment of dividends.
AMCORE and certain of AMCORE's subsidiary banks are supervised and examined
by the Federal Reserve Board. Nationally chartered affiliate banks are
supervised and regularly examined by the OCC and are subject to examination by
the Federal Reserve Board. In addition, all affiliate banks are subject to
periodic examinations by the Federal Deposit Insurance Corporation ("FDIC").
CERTAIN TRANSACTIONS WITH AFFILIATES
There are various legal restrictions on the extent to which a bank holding
company and certain of its nonbank subsidiaries can borrow or otherwise obtain
credit from its bank subsidiaries. In general, these restrictions require that
any such extensions of credit must be on non-preferential terms and secured by
designated amounts of specified collateral and be limited, as to any one of the
holding company or such nonbank subsidiaries, to 10% of the lending bank's
capital stock and surplus, and as to the holding company and all such nonbank
subsidiaries in the aggregate, to 20% of such capital stock and surplus.
PAYMENT OF DIVIDENDS
AMCORE and CBSC are legal entities separate and distinct from their banking
and other subsidiaries. The principal source of AMCORE's and CBSC's revenues are
dividends from their national and state banking subsidiaries. Various federal
and state statutory provisions limit the amount of dividends the affiliate banks
can pay to AMCORE or CBSC without regulatory approval. The approval of the
appropriate bank regulator is required for any dividend by a national bank or
state member bank if the total of all dividends declared by the bank in any
calendar year would exceed the total of its net profits, as defined by
regulatory agencies, for such
57
<PAGE> 61
year combined with its retained net profits for the preceding two years. In
addition, a national bank or a state member bank may not pay a dividend in an
amount greater than its net profits then on hand. The payment of dividends by
any affiliate bank may also be affected by other factors, such as the
maintenance of adequate capital for such affiliate bank.
CAPITAL ADEQUACY
The Federal Reserve Board has issued standards for measuring capital
adequacy for bank holding companies. These standards are designed to provide
risk-responsive capital guidelines and to incorporate a consistent framework for
use by financial institutions operating in major international financial
markets. The banking regulators have issued standards for banks that are similar
to, but not identical with, the standards for bank holding companies.
In general, the risk-related standards require banks and bank holding
companies to maintain capital based on "risk adjusted" assets so that categories
of assets with potentially higher credit risk will require more capital backing
than categories with lower credit risk. In addition, banks and bank holding
companies are required to maintain capital to support off-balance sheet
activities such as loan commitments.
The standards classify total capital for this risk-based measure into two
tiers referred to as Tier 1 and Tier 2. Tier 1 capital consists of common
shareholders' equity, certain non-cumulative and cumulative perpetual preferred
stock, and minority interests in equity accounts of consolidated subsidiaries;
Tier 2 capital consists of the allowance for loan and lease losses (within
certain limits), perpetual preferred stock not included in Tier 1, hybrid
capital instruments, term subordinated debt, and intermediate-term preferred
stock. Bank holding companies are required to meet a minimum ratio of 8% of
qualifying total capital to risk-adjusted assets, and a minimum ratio of 4% of
qualifying Tier 1 capital to risk-adjusted assets. Capital that qualifies as
Tier 2 capital is limited in amount to 100% of Tier 1 capital in testing
compliance with the total risk-based capital minimum standards.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio of Tier 1 capital to adjusted average total assets (the "leverage
ratio") of 3% for bank holding companies that meet certain specified criteria,
including having the highest regulatory rating. Other bank holding companies
generally are required to maintain a leverage ratio of at least 3% plus 100 to
200 basis points. The guidelines also provide that bank holding companies
experiencing internal growth or making acquisitions will be expected to maintain
strong capital positions substantially above minimum supervisory levels, without
significant reliance on intangible assets. Furthermore, the Federal Reserve
Board has indicated that it may consider other indicia of capital strength in
evaluating proposals for expansion or new activities.
The federal bank regulatory agencies have issued various proposals to amend
the risk-based capital guidelines for banks and bank holding companies. Under
one proposal, banks would be required to give explicit consideration to interest
rate risk as an element of capital adequacy by maintaining capital to compensate
for such risk in an amount measured by the bank's exposure to interest rate risk
in excess of a regulatory threshold. Another proposal would revise the treatment
given to (i) low-level recourse arrangements to reduce the amount of capital
required and (ii) certain direct credit substitutes provided by banking
organizations to require that capital be maintained against the value of the
assets enhanced or the loans protected. A proposal recently issued by the
Federal Reserve Board and expected to be joined in by the other bank regulatory
agencies increases the amount of capital required to be carried against certain
long-term derivative contracts; in addition, the proposal recognizes the effect
of certain bilateral netting arrangements in reducing potential future exposure
under these contracts. AMCORE and CBSC believe that these changes will not, if
adopted, have a material effect on their compliance with capital adequacy
requirements.
THE INTERSTATE BANKING AND COMMUNITY DEVELOPMENT LEGISLATION
In September 1994, legislation was enacted that may have a significant
effect in restructuring the banking industry in the United States. The
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 facilitates
the interstate expansion and consolidation of banking organizations by
permitting (i) bank holding
58
<PAGE> 62
companies that are adequately capitalized and managed to acquire banks located
in states outside their home states regardless of whether such acquisitions are
authorized under the law of the host state, (ii) the interstate merger of banks
after June 1, 1997, subject to the right of individual states to "opt in" or to
"opt out" of this authority before that date, (iii) banks to establish new
branches on an interstate basis provided that such action is specifically
authorized by the law of the host state, (iv) foreign banks to establish, with
approval of the regulators in the United States, branches outside their home
states to the same extent that national or state banks located in the home state
would be authorized to do so, and (v) banks to receive deposits, renew time
deposits, close loans, service loans and receive payments on loans and other
obligations as agent for any bank or thrift affiliate, whether the affiliate is
located in the same state or a different state. One effect of this legislation
is to permit AMCORE to acquire banks located in any state and to permit bank
holding companies located in any state to acquire banks and bank holding
companies in Wisconsin. Overall, this legislation is likely to have the effects
of increasing competition and promoting geographic diversification in the
banking industry.
The Riegle Community Development and Regulatory Improvement Act of 1994,
also enacted in September 1994, is intended to (i) increase the flow of loans to
businesses in distressed communities by providing incentives to lenders to
provide credit within those communities, (ii) remove impediments to the
securitization of small business loans, (iii) provide for a reduction in
paperwork and to streamline bank regulation through, for example, the
coordination of examinations in a bank holding company context, a reduction in
the number of currency transaction reports required and improvements to the
National Flood Insurance Program that include enabling lenders to force place
flood insurance and (iv) increase the level of consumer protection provided to
customers in banking transactions. AMCORE and CBSC believes that these
provisions of the new law will not have a material effect on their operations.
FDIC INSURANCE ASSESSMENTS
The subsidiary banks of AMCORE and CBSC are subject to FDIC deposit
insurance assessments based on a risk-based premium schedule. Under this
schedule, the annual premiums ranged from $.04 to $.31 for every $100 of
deposits with an average assessment rate of $.045. Beginning in 1996, the FDIC
announced it would reduce the deposit assessment premiums for 92% of its members
that are assessed in the highest capital and supervisory categories to $2,000
per year. Each financial institution is assigned to one of three capital groups
- -- well capitalized, adequately capitalized or undercapitalized -- and further
assigned to one of three subgroups within a capital group, on the basis of
supervisory evaluations by the institution's primary federal and, if applicable,
state supervisors and on the basis of other information relevant to the
institution's financial condition and the risk posed to the applicable insurance
fund. The actual assessment rate applicable to a particular institution will,
therefore, depend in part upon the risk assessment classification so assigned to
the institution by the FDIC. See "SUPERVISION AND REGULATION -- FIRREA and
FDICIA."
FIRREA AND FDICIA
In recent years Congress has enacted significant legislation which has
substantially changed the federal deposit insurance system and the regulatory
environment in which depository institutions and their holding companies
operate. The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"), the Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer
Recovery Act of 1990 and the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA") have significantly increased the enforcement powers of
the federal regulatory agencies having supervisory authority over AMCORE and its
subsidiaries. Certain parts of such legislation, most notably those which
increase deposit insurance assessments and authorize further increases to
recapitalize the bank deposit insurance fund, increase the cost of doing
business for depository institutions and their holding companies. FIRREA also
provides that all commonly controlled FDIC insured depository institutions may
be held liable for any loss incurred by the FDIC resulting from a failure of, or
any assistance given by the FDIC, to any of such commonly controlled
institutions. Federal regulatory agencies have implemented provisions of FDICIA
with respect to taking prompt corrective action when a depository institution's
capital falls to certain levels. Under the new rules, five capital categories
have been established which range from "critically undercapitalized" to "well
capitalized"
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<PAGE> 63
Failure of a depository institution to maintain a capital level within the top
two categories will result in specific actions from the federal regulatory
agencies. These actions could include the inability to pay dividends'
restricting new business activity, prohibiting bank acquisitions, asset growth
limitations and other restrictions on a case-by-case basis.
In addition to the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to influence the
economy. Changes to such monetary policies have had a significant effect on
operating results of financial institutions in the past and are expected to have
such an effect in the future; however, the effect of possible future changes in
such policies on the business and operations of the subsidiary banks cannot be
determined.
PRINCIPAL STOCKHOLDERS, DIRECTORS AND OFFICERS
The following table shows the ownership of shares of CBSC Common Stock as
of April 30, 1997 by (i) each person known to CBSC to own beneficially more than
5% of the outstanding shares of CBSC Common Stock, (ii) each director and
executive officer of CBSC and (iii) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE
BENEFICIAL OWNER SHARES(1) OF CLASS(2)
------------------- --------- -----------
<S> <C> <C>
Richard Bauch(3)............................................ 26,345 6.1%
William E. Brandt(4)........................................ 39,517 9.1%
Neal H. Brunner(5).......................................... 68,251.2 15.7%
Delmar E. DeLong............................................ 21,331 4.9%
Lawrence Endres(6).......................................... 41,164 9.5%
Thomas Heuerman(7).......................................... 18,923.4 4.3%
Richard E. Huffman(8)....................................... 32,932 7.6%
William H. Robichaux(9)..................................... 24,990 5.8%
Total of Directors and Officers as a Group (8 persons)...... 273,453.6 62.9%
Patricia Robichaux(10)...................................... 24,406 5.6%
Jeremy C. Shea(11).......................................... 33,480 7.7%
</TABLE>
- -------------------------
(1) The information contained in this column is based upon information
furnished by the persons named above or obtained from records of CBSC. The
nature of beneficial ownership for shares shown in this column is sole
voting and investment power unless otherwise indicated herein. The
foregoing information is not necessarily an admission of beneficial
ownership.
(2) Based on 433,699 shares of CBSC Common Stock issued and outstanding and
including shares of CBSC Common Stock beneficially owned. For purposes of
this table, a person or group of persons is deemed to have "beneficial
ownership" of any shares as of April 30, 1997 that such person or group of
persons has the right to acquire within 60 days after such date.
(3) Mr. Bauch's address is W318 N991 Huckleberry Way, Delafield, Wisconsin
53018.
(4) Mr. Brandt's address is 3006 Brynwood Drive, Madison, Wisconsin 53711.
(5) Mr. Brunner's business address is Brunner & Associates, Inc., 3207 West
Beltline Highway, Suite 210, Middleton, Wisconsin 53562.
(6) Mr. Endres' address is 802 Century Avenue, Waunakee, Wisconsin 53597.
(7) Includes 800 shares subject to currently exercisable options.
(8) Mr. Huffman's address is 1535 South State Street, Aberdeen, South Dakota
57401.
(9) Mr. Robichaux's address is N4117 Ladwig Road, Monroe, Wisconsin 53566.
(10) Ms. Robichaux's address is P.O. Box 51, Santa Clara, Utah 84765.
(11) Mr. Shea's address is Suite 600, One South Pinckney Avenue, Madison,
Wisconsin 53701.
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<PAGE> 64
OPINIONS
Certain legal matters in connection with the Merger will be passed upon for
AMCORE by Skadden, Arps, Slate, Meagher & Flom (Illinois), Chicago, Illinois,
relying as to all matters of Nevada law upon Marshall Hill Cassas & de Lipkau,
Reno, Nevada and for CBSC by Quarles & Brady, Milwaukee, Wisconsin. Jeremy C.
Shea, a partner practicing in the Madison, Wisconsin office of Quarles & Brady,
owns 33,480 shares of CBSC Common Stock.
EXPERTS
The consolidated financial statements of AMCORE and its subsidiaries as of
December 31, 1996 and for each of the years in the three-year period ended
December 31, 1996, incorporated by reference herein and elsewhere in the
Registration Statement have been incorporated by reference herein and in the
Registration Statement in reliance on the report of McGladrey and Pullen, LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of CBSC and its subsidiaries as of
December 31, 1996 and for each of the years in the three-year period ended
December 31, 1996, included herein and elsewhere in the Registration Statement,
have been included herein and in the Registration Statement in reliance upon the
report of Arthur Andersen LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
PRO FORMA COMBINING FINANCIAL STATEMENTS
The following unaudited pro forma combining balance sheet and statement of
income are based upon the historical results of AMCORE and CBSC giving effect to
the Merger accounted for as a "pooling of interests". The financials presented
below for CBSC are derived from the supplemental combined financial statements
of CBSC which give effect of the CBSC Merger with Belleville that was accounted
for using the pooling of interests method. Pro forma adjustments, and the
assumptions on which they are based, are described in the accompanying footnotes
to the pro forma combining financial statements. These financial statements
should be read in conjunction with the historical financial statements of AMCORE
incorporated by reference into this Proxy Statement/Prospectus and the
historical financial statements of CBSC included elsewhere herein. The pro forma
combining financial statements are not necessarily indicative of the results
that actually would have occurred had the companies constituted a single entity
during the respective periods, nor are they indicative of future results of
operations.
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<PAGE> 65
AMCORE FINANCIAL, INC. AND SUBSIDIARIES
COUNTRY BANK SHARES CORPORATION
PRO FORMA CONSOLIDATED COMBINING BALANCE SHEETS
AS OF DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
AMCORE PRO FORMA
AMCORE CAPITAL COMBINED PRO FORMA PRO FORMA
HISTORICAL FNB(1) TRUST I(2) AMCORE CBSC ADJUSTMENTS COMBINED
---------- ------ ---------- --------- ---- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents............ $ 87,740 $ 6,963 $ 94,703 $ 10,680 -- $ 105,383
Interest earning deposits in banks... 156 299 455 216 -- 671
Federal funds sold and other
short-term investments............. 12,706 1,365 14,071 11,891 -- 25,962
Mortgage loans held for sale......... 11,252 184 11,436 614 -- 12,050
Securities available for sale........ 1,138,351 23,081 25,800 1,187,232 52,976 (7,880)(3)(4) 1,232,328
Securities held to maturity.......... 10,368 34,512 44,880 9,665 -- 54,545
---------- -------- ------- ---------- -------- ------- ----------
Total securities................. $1,148,719 $ 57,593 $25,800 $1,232,112 $ 62,641 $(7,880) $1,286,873
Loans and leases, net of unearned
income............................. 1,456,217 144,989 1,601,206 205,622 -- 1,806,828
Allowance for loan and lease
losses............................. (14,996) (1,710) (16,706) (2,588) -- (19,294)
---------- -------- ------- ---------- -------- ------- ----------
Net loans and leases............. $1,441,221 $143,279 $1,584,500 $203,034 $1,787,534
Premises and equipment, net.......... 46,060 3,128 49,188 7,361 -- 56,549
Intangible assets, net............... 12,255 423 12,678 1,203 633(4) 14,514
Other real estate owned.............. 595 36 -- 631 289 -- 920
Other Assets......................... 53,846 2,561 (670) 55,737 3,672 65(5) 59,474
---------- -------- ------- ---------- -------- ------- ----------
TOTAL ASSETS..................... $2,814,550 $215,831 $25,130 $3,055,511 $301,601 $(7,182) $3,349,930
========== ======== ======= ========== ======== ======= ==========
LIABILITIES
Deposits:
Interest bearing................... $1,625,590 $172,265 $1,797,855 $240,475 $2,038,330
Non-Interest bearing............... 264,426 19,977 284,403 28,871 313,274
---------- -------- ------- ---------- -------- ------- ----------
Total deposits................... $1,890,016 $192,242 $2,082,258 $269,346 $2,351,604
Short-term borrowings.............. 544,508 -- 544,508 3,457 (2,927)(3) 545,038
Long-term borrowings............... 124,095 1,141 25,800 151,036 6,376 (3,653)(3) 153,759
Other liabilities.................. 35,294 3,981 39,275 3,474 42,749
Minority Interest.................. -- -- -- 667 (667)(4) 0
---------- -------- ------- ---------- -------- ------- ----------
TOTAL LIABILITIES................ $2,593,913 $197,364 $25,800 $2,817,077 $283,320 $(7,247) $3,093,150
STOCKHOLDERS' EQUITY
Preferred stock ($1 par value)....... $ -- $ -- $ -- $ -- $ --
Common stock ($.33 par value)........ 4,976 628 5,604 -- 586(5) 6,190
Additional paid-in capital........... 56,687 3,016 59,703 8,208 (586)(5) 67,325
Retained earnings.................... 166,602 14,776 (670) 180,708 10,071 65(6) 190,844
Net unrealized gain (loss) on
securities available for sale...... (2,005) 47 (1,958) 2 -- (1,956)
Treasury stock and other............. (5,623) -- (5,623) -- -- (5,623)
---------- -------- ------- ---------- -------- ------- ----------
TOTAL STOCKHOLDERS' EQUITY....... $ 220,637 $ 18,467 $ (670) $ 238,434 $ 18,281 $ 65 $ 256,780
---------- -------- ------- ---------- -------- ------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY........... $2,814,550 $215,831 $25,130 $3,055,511 $301,601 $(7,182) $3,349,930
========== ======== ======= ========== ======== ======= ==========
</TABLE>
- -------------------------
NOTES:
(1) On April 18, 1997, AMCORE completed the merger of FNB Acquisition, Inc., a
wholly owned subsidiary of AMCORE, with and into First National Bancorp,
Inc. in a transaction to be accounted for using the pooling-of-interest
method.
(2) On March 25, 1997, AMCORE issued $40 million of capital securities through
AMCORE Capital Trust I, a statutory business trust, of which all common
securities are owned by AMCORE. The proceeds of the issue will be used to
repay in full the parent company long term debt of $13.6 million, repay in
full the long term debt of First National Bancorp, Inc. in the amount of
$600,000 and for general corporate purposes.
(3) The proceeds of the issue described in Note (2) above will also be used to
repay in full the short term and long term debt, excluding Federal Home Loan
Bank borrowings, of CBSC in the amount of $6.58 million, and serve as
payment CBSC will pay to certain Belleville State Bank minority shareholders
pursuant to an agreement with such shareholders described elsewhere in this
Proxy Statement/Prospectus.
(4) It is a condition to the consummation of the Merger that CBSC acquire
certain Belleville State Bank shares held by minority shareholders pursuant
to an agreement with such shareholders described elsewhere in this Proxy
Statement/Prospectus.
(5) These statements assume an AMCORE Average Price of $26.50. This would result
in an Exchange Ratio of 4.0000 and the issuance of 1,758,861 shares of
AMCORE common stock. The merger will be accounted for under the
pooling-of-interest method. The aggregate par value of AMCORE shares being
issued is greater than the aggregate par value of CBSC shares being
acquired. Therefore, common stock will be increased by $586,000, and
additional paid-in capital will be reduced by the same amount.
An AMCORE Average Price of $24.50 would result in an Exchange Ratio of
4.3267 and the issuance of 1,902,441 shares of AMCORE common shares. Common
stock will be increased by $634,000 and additional paid-in capital will be
reduced by the same amount.
An AMCORE Average Price of $28.50 would result in an Exchange Ratio of
3.7193 and the issuance of 1,635,432 shares of AMCORE common shares. Common
stock will be increased by $545,000 and additional paid-in capital will be
reduced by the same amount. See "The Merger -- Conversion of Shares and
Exchange Ratio."
(6) Reflects the impact of pro forma statements of income adjustments.
62
<PAGE> 66
AMCORE FINANCIAL, INC. AND SUBSIDIARIES
COUNTRY BANK SHARES CORPORATION
PRO FORMA CONDENSED COMBINING STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
AMCORE PRO FORMA
AMCORE CAPITAL COMBINED PRO FORMA PRO FORMA
HISTORICAL FNB(1) TRUST I(2) AMCORE CBSC ADJUSTMENTS COMBINED
---------- ------ ---------- --------- ---- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and
leases............................... $120,497 $13,537 $134,034 $19,267 $153,301
Interest on securities:
Taxable.............................. 57,327 2,277 1,548(2) 61,152 3,168 (473)(3) 63,847
Tax-exempt........................... 13,697 912 14,609 449 15,058
-------- ------- ------- -------- ------- ----- --------
Total Income from Securities....... $71,024 $ 3,189 $ 1,548 $ 75,761 $ 3,617 $(473) $ 78,905
Interest on federal funds sold and
other short-term investments......... 768 110 878 563 1,441
Interest and fees on mortgage loans
held for sale........................ 2,611 51 2,662 29 2,691
Interest on deposits in banks.......... 34 25 59 12 71
-------- ------- ------- -------- ------- ----- --------
Total Interest Income.............. $194,934 $16,912 $ 1,548 $213,394 $23,488 $(473) $236,409
INTEREST EXPENSE
Interest on deposits................... $73,197 $ 8,572 $ 81,769 $11,453 $ 93,222
Interest on short-term borrowings...... 25,680 76 25,756 128 (118)(3) 25,766
Interest on long-term borrowings....... 9,023 146 2,578(2) 11,747 635 (478)(3) 11,904
Other.................................. 493 -- 493 -- 493
-------- ------- ------- -------- ------- ----- --------
Total Interest Expense............... $108,393 $ 8,794 $ 2,578 $119,765 $12,216 $(596) $131,385
-------- ------- ------- -------- ------- ----- --------
Net Interest Income.................... $86,541 $ 8,118 $(1,030) $ 93,629 $11,272 $ 123 $105,024
Provision for loan and lease losses.... 5,086 120 -- 5,206 221 5,427
-------- ------- ------- -------- ------- ----- --------
Net Interest Income After Provision for
Loan and Lease Losses................ $81,455 $ 7,998 $(1,030) $ 88,423 $11,051 $ 123 $ 99,597
OTHER INCOME
Trust income........................... $13,602 $ 493 $ 14,095 $ 8 $ 14,103
Service charges on deposits............ 6,755 467 7,222 360 7,582
Mortgage revenues...................... 3,667 204 3,871 -- 3,871
Insurance revenues..................... 2,038 28 2,066 161 2,227
Collection fee income.................. 2,145 -- 2,145 -- 2,145
Other.................................. 8,366 430 8,796 1,460 10,256
-------- ------- ------- -------- ------- ----- --------
Total Other Income, Excluding
Security Gains..................... $36,573 $ 1,622 $ 38,195 $ 1,989 $ 40,184
Net security gains..................... 1,870 -- 1,870 1,870
OPERATING EXPENSES
Compensation and employee benefits
expense.............................. $47,067 $ 3,339 $ 50,406 $ 5,141 $ 55,547
Net occupancy and equipment expense.... 12,800 762 13,562 1,404 14,966
Professional fees...................... 2,503 153 2,656 582 3,238
Advertising and business development... 2,274 128 2,402 162 2,564
Amortization of intangible assets...... 2,023 68 2,091 152 $ 42(4) 2,285
Other.................................. 17,330 1,161 18,491 1,472 (84)(4) 19,879
-------- ------- ------- -------- ------- ----- --------
Total Operating Expenses............. $83,997 $ 5,611 $ 89,608 $ 8,913 $ (42) $ 98,479
-------- ------- ------- -------- ------- ----- --------
Income Before Income Taxes............. $35,901 $ 4,009 $(1,030) $ 38,880 $ 4,127 $ 165 $ 43,172
Income taxes........................... 9,518 1,227 (360)(3) 10,385 1,451 100(5) 11,936
-------- ------- ------- -------- ------- ----- --------
NET INCOME............................. $26,383 $ 2,782 $ (670) $ 28,495 $ 2,676 $ 65 $ 31,236
======== ======= ======= ======== ======= ===== ========
EARNINGS PER COMMON SHARE.............. $1.86 $11.43 $1.77 $6.17 $1.75(6)
</TABLE>
- -------------------------
NOTES:
(1) On April 18, 1997, AMCORE completed the merger of FNB Acquisition, Inc., a
wholly owned subsidiary of AMCORE, with and into First National Bancorp,
Inc. in a transaction to be accounted for using the pooling-of-interest
method. This information reflects an increase in FNB's Federal marginal rate
from 34% to 35%.
(2) On March 25, 1997, AMCORE ISSUED $40 million of capital securities through
AMCORE Capital Trust I, a statutory business trust, of which all common
securities are owned by AMCORE. The proceeds of the issue will be used to
repay in full the parent company long term debt of $13.6 million, repay in
full the long term debt at First National Bancorp, Inc. of $600,000, repay
in full the short term and long term debt at CBSC of $6.58 million, and for
general corporate purposes. The above adjustments reflect the adjustments to
interest income and interest expense as if the transaction occurred at the
beginning of the year.
(3) The proceeds of the issue described in Note (2) above will also be used to
repay in full the short term and long term debt, excluding Federal Home Loan
Bank borrowings, at CBSC of $6.58 million.
(4) It is a condition to the consummation of the Merger that CBSC acquire
certain shares held by Belleville State Bank minority shareholders pursuant
to an agreement with such shareholders described elsewhere in this Proxy
Statement/Prospectus.
(5) Reflects tax expense for the adjustments in Note (3) and an increase in
CBSC's Federal marginal rate from 34% to 35%.
(6) These statements assume an AMCORE Average Price of $26.50 resulting in
earnings per common share of $1.75. Assuming an AMCORE Average Price of
$28.50, the resultant earnings per common share would be equal to $1.76.
Assuming an AMCORE Average Price of $24.50, the resultant earnings per
common share would be equal to $1.74. See "The MERGER -- Conversion of
Shares and Exchange Ratio."
63
<PAGE> 67
AMCORE FINANCIAL, INC. AND SUBSIDIARIES
COUNTRY BANK SHARES CORPORATION
PRO FORMA CONDENSED COMBINING STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
AMCORE COMBINED PRO FORMA PRO FORMA
HISTORICAL FNB(1) AMCORE CBSC ADJUSTMENTS COMBINED
---------- ------ --------- ---- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases..... $109,488 $12,730 $122,218 $18,592 $140,810
Interest on securities:
Taxable................................. 39,530 2,064 41,594 2,648 44,242
Tax-exempt.............................. 11,984 896 12,880 366 13,246
-------- ------- -------- ------- --------
Total Income from Securities.......... $51,514 $2,960 $ 54,474 $ 3,014 $ 57,488
Interest on federal funds sold and other
short-term investments.................. 490 30 520 401 921
Interest and fees on mortgage loans held
for sale................................ 2,971 29 3,000 17 3,017
Interest on deposits in banks............. 23 -- 23 9 32
-------- ------- -------- ------- --------
Total Interest Income................. $164,486 $15,749 $180,235 $22,033 $202,268
INTEREST EXPENSE
Interest on deposits...................... $68,062 $7,864 $ 75,926 $10,361 $ 86,287
Interest on short-term borrowings......... 14,574 174 14,748 649 15,397
Interest on long-term borrowings.......... 2,050 28 2,078 255 2,333
Other..................................... 394 -- 394 -- 394
-------- ------- -------- ------- --------
Total Interest Expense................ $85,080 $8,066 $ 93,146 $11,265 $104,411
-------- ------- -------- ------- --------
Net Interest Income....................... $79,406 $7,683 $ 87,089 $10,768 $ 97,857
Provision for loan and lease losses....... 2,692 61 2,753 412 3,165
-------- ------- -------- ------- --------
Net Interest Income After Provision for
Loan and Lease Losses................... $76,714 $7,622 $ 84,336 $10,356 $ 94,692
OTHER INCOME
Trust income.............................. $11,864 $ 460 $ 12,324 $ 7 $ 12,331
Service charges on deposits............... 6,986 425 7,411 345 7,756
Mortgage revenues......................... 3,584 -- 3,584 -- 3,584
Insurance revenues........................ 1,015.... 31 1,046 142 1,188
Collection fee income..................... 1,831 -- 1,831 -- 1,831
Other..................................... 6,435 402 6,837 1,049 7,886
-------- ------- -------- ------- --------
Total Other Income, Excluding Security
Gains............................... $31,715 $1,318 $ 33,033 $ 1,543 $ 34,576
Net security gains........................ 2,298 -- 2,298 -- 2,298
OPERATING EXPENSES
Compensation and employee benefits
expense................................. $45,662 $3,275 $ 48,937 $ 4,484 $ 53,421
Net occupancy and equipment expense....... 13,297 769 14,066 1,278 15,344
Professional fees......................... 2,733 160 2,893 515 3,408
Advertising and business development...... 2,437 132 2,569 149 2,718
Amortization of intangible assets......... 2,331 45 2,376 253 2,629
Insurance Expense......................... 2,765 246 3,011 47 3,058
Impairment of long-lived assets........... 3,269 -- 3,269 -- 3,269
Other..................................... 14,946 931 15,877 1,612 17,489
-------- ------- -------- ------- --------
Total Operating Expenses.............. $87,440 $5,558 $ 92,998 $ 8,338 $101,336
-------- ------- -------- ------- --------
Income Before Income Taxes................ $23,287 $3,382 $ 26,669 $ 3,561 $ 30,230
Income taxes.............................. 5,016 964 5,980 1,253 $ 37(2) 7,270
-------- ------- -------- ------- ---- --------
NET INCOME................................ $18,271 $2,418 $ 20,689 $ 2,308 $(37) $ 22,960
======== ======= ======== ======= ==== ========
EARNINGS PER COMMON SHARE................. $1.30 $10.07 $1.30 $5.32 $1.30(3)
</TABLE>
- -------------------------
NOTES:
(1) On April 18, 1997, AMCORE completed the merger of FNB Acquisition, Inc., a
wholly owned subsidiary of AMCORE, with and into First National Bancorp,
Inc. in a transaction to be accounted for using the pooling-of-interest
method. This information reflects an increase in FNB's Federal marginal rate
from 34% to 35%.
(2) Reflects an increase of CBSC's Federal marginal rate from 34% to 35%.
(3) These statements assume an AMCORE Average Price of $26.50 resulting in
earnings per share of $1.30. Assuming an AMCORE Average Price of $28.50, the
resultant earnings per common share would be equal to $1.30. Assuming an
AMCORE Average Price of $24.50, the resultant earnings per common share
would be equal to $1.29. See "THE MERGER -- Conversion of Shares and
Exchange Ratio."
64
<PAGE> 68
AMCORE FINANCIAL, INC. AND SUBSIDIARIES
COUNTRY BANK SHARES CORPORATION
PRO FORMA CONDENSED COMBINING STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
AMCORE COMBINED PRO FORMA PRO FORMA
HISTORICAL FNB(1) AMCORE CBSC ADJUSTMENTS COMBINED
---------- ------ --------- ---- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases... $90,719 $10,837 $101,556 $16,254 $117,810
Interest on securities:
Taxable............................... 32,030 2,030 34,060 2,610 36,670
Tax-exempt............................ 12,552 863 13,415 484 13,899
-------- ------- -------- ------- ---- --------
Total Income from Securities.......... $44,582 $ 2,893 $ 47,475 $ 3,094 $ 50,569
Interest on federal funds sold and other
short-term investments................ 585 20 605 143 748
Interest and fees on mortgage loans held
for sale.............................. 2,893 27 2,920 55 2,975
Interest on deposits in banks........... 176 176 1 177
-------- ------- -------- ------- ---- --------
Total Interest Income................. $138,955 $13,777 $152,732 $19,547 $172,279
INTEREST EXPENSE
Interest on deposits.................... $53,202 $ 6,044 $ 59,246 $ 8,584 $ 67,830
Interest on short-term borrowings....... 5,595 126 5,721 117 5,838
Interest on long-term borrowings........ 2,058.... 47 2,105 648 2,753
Other................................... 340 340 340
-------- ------- -------- ------- ---- --------
Total Interest Expense................ $61,195 $ 6,217 $ 67,412 $ 9,349 $ 76,761
-------- ------- -------- ------- ---- --------
Net Interest Income..................... $77,760 $ 7,560 $ 85,320 $10,198 $ 95,518
Provision for loan and lease losses..... 628 628 1,123 1,751
-------- ------- -------- ------- ---- --------
Net Interest Income After Provision for
Loan and Lease Losses................. $77,132 $ 7,560 $ 84,692 $ 9,075 $ 93,767
OTHER INCOME
Trust income............................ $11,535 $ 612 $ 12,147 $ 5 $ 12,152
Service charges on deposits............. 6,742 364 7,106 305 7,411
Mortgage revenues....................... 3,687 3,687 3,687
Insurance revenues...................... 845...... 26 871 142 1,013
Collection fee income................... 1,700 1,700 1,700
Other................................... 5,617 378 5,995 1,025 7,020
-------- ------- -------- ------- ---- --------
Total Other Income, Excluding Security
Gains............................... $30,126 $ 1,380 $ 31,506 $ 1,477 $ 32,983
Net security gains...................... 908 908 908
OPERATING EXPENSES
Compensation and employee benefits
expense............................... $41,385 $ 3,372 $ 44,757 $ 4,074 $ 48,831
Net occupancy and equipment expense..... 11,015 828 11,843 1,161 13,004
Professional fees....................... 3,370 161 3,531 581 4,112
Advertising and business development.... 2,377 128 2,505 156 2,661
Amortization of intangible assets....... 2,585 45 2,630 310 2,940
Insurance Expense....................... 4,528 393 4,921 54 4,975
Other................................... 13,430 966 14,396 1,685 16,081
-------- ------- -------- ------- ---- --------
Total Operating Expenses.............. $78,690 $ 5,893 $ 84,583 $ 8,021 $ 92,604
-------- ------- -------- ------- ---- --------
Income Before Income Taxes.............. $29,476 $ 3,047 $ 32,523 $ 2,531 $ 35,054
Income taxes............................ 7,675 849 8,524 821 $ 24(2) 9,369
-------- ------- -------- ------- ---- --------
NET INCOME.............................. $21,801 $ 2,198 $ 23,999 $ 1,710 $(24) $ 25,685
======== ======= ======== ======= ==== ========
EARNINGS PER COMMON SHARE............... $1.55 $9.04 $1.51 $3.94 $1.45(3)
</TABLE>
- -------------------------
NOTES:
(1) On April 18, 1997, AMCORE completed the merger of FNB Acquisition, Inc., a
wholly owned subsidiary of AMCORE with and into First National Bancorp,
Inc., in a transaction to be accounted for using the pooling-of-interest
method. This information reflects an increase in FNB's Federal marginal rate
from 34% to 35%.
(2) Reflects an increase of CBSC's Federal marginal rate from 34% to 35%.
(3) These statements assume an AMCORE Average Price of $26.50 resulting in
earnings per common share of $1.45. Assuming an AMCORE Average Price of
$28.50, the resultant earnings per common share would be equal to $1.46.
Assuming an AMCORE Average Price of $24.50, the resultant earnings per
common share would be equal to $1.44. See "THE MERGER -- Conversion of
Shares and Exchange Ratio."
65
<PAGE> 69
COUNTRY BANK SHARES CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
66
<PAGE> 70
INDEX TO COUNTRY BANK SHARES CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Public Accountants.................. F-1
Consolidated Balance Sheets as of December 31, 1996 and
1995................................................... F-2
Consolidated Statements of Income for the Years Ended
December 31, 1996, 1995 and 1994....................... F-3
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1996, 1995 and 1994........... F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994....................... F-5
Notes to Consolidated Financial Statements................ F-6
</TABLE>
67
<PAGE> 71
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Country Bank Shares Corporation:
We have audited the accompanying consolidated balance sheets of Country
Bank Shares Corporation (a Wisconsin corporation) and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated statements of income,
shareholders' equity and cash flows for the years ended December 31, 1996, 1995
and 1994. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Country Bank
Shares Corporation and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for the years ended December
31, 1996, 1995 and 1994 in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, effective
January 1, 1994, the Company changed its method of accounting for certain
investments in debt and equity securities.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
March 13, 1997.
F-1
<PAGE> 72
COUNTRY BANK SHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
CASH AND DUE FROM BANKS..................................... $ 8,720 $ 8,379
FEDERAL FUNDS SOLD.......................................... 9,548 7,967
-------- --------
Total cash and cash equivalents........................ 18,268 16,346
INVESTMENT SECURITIES AVAILABLE FOR SALE, at market......... 46,165 42,154
INVESTMENT SECURITIES HELD TO MATURITY, at amortized cost
(market value of $8,945 and $7,309 in 1996 and 1995,
respectively)............................................. 8,925 7,269
MORTGAGE LOANS HELD FOR SALE................................ 294 177
LOANS....................................................... 178,655 164,523
Less -- Reserve for loan losses........................... 2,286 2,100
-------- --------
Net loans.............................................. 176,369 162,423
BANK PREMISES AND EQUIPMENT, net............................ 6,496 6,864
GOODWILL (net of accumulated amortization of $603 and $451
in 1996 and 1995, respectively)........................... 1,203 1,355
OTHER REAL ESTATE OWNED..................................... 289 61
OTHER ASSETS................................................ 3,144 2,781
-------- --------
Total assets........................................... $261,153 $239,430
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Demand.................................................... $ 23,610 $ 21,971
Savings................................................... 59,494 52,188
Time...................................................... 128,414 118,014
NOW....................................................... 21,781 21,714
-------- --------
Total deposits......................................... 233,299 213,887
SHORT-TERM BORROWINGS....................................... 129 1,305
NOTES PAYABLE:
Short-term................................................ 2,725 1,825
Long-term................................................. 6,377 6,484
OTHER LIABILITIES........................................... 3,045 2,182
MINORITY INTEREST........................................... 39 32
-------- --------
Total liabilities...................................... 245,614 225,715
-------- --------
SHAREHOLDERS' EQUITY:
Common stock (no par value, 400,000 shares authorized;
358,250 shares issued and outstanding) and paid-in
surplus................................................ 6,394 6,394
Net unrealized appreciation on investment securities
available for sale, net of deferred taxes.............. 16 203
Retained earnings......................................... 9,129 7,118
-------- --------
Total shareholders' equity............................. 15,539 13,715
-------- --------
Total liabilities and shareholders' equity............. $261,153 $239,430
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE> 73
COUNTRY BANK SHARES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans................................ $16,695 $15,878 $13,922
Interest on investment securities --
Taxable................................................ 2,765 2,316 2,253
Nontaxable............................................. 430 358 471
Interest on Federal funds sold............................ 422 365 82
------- ------- -------
Total interest income................................ 20,312 18,917 16,728
------- ------- -------
INTEREST EXPENSE:
Interest on deposits...................................... 9,896 8,906 7,214
Interest on borrowed funds................................ 713 853 717
------- ------- -------
Total interest expense............................... 10,609 9,759 7,931
------- ------- -------
Net interest income.................................. 9,703 9,158 8,797
PROVISION FOR LOAN LOSSES 148 313 1,086
------- ------- -------
Net interest income after provision for loan
losses............................................ 9,555 8,845 7,711
------- ------- -------
NONINTEREST INCOME:
Service charges on deposit accounts....................... 248 245 234
Other service charges, commissions and fees............... 712 587 597
Trust income.............................................. 8 7 5
Insurance commissions..................................... 233 127 80
Gain on sale of mortgages................................. 207 147 156
Other..................................................... 348 211 192
------- ------- -------
Total noninterest income............................. 1,756 1,324 1,264
------- ------- -------
NONINTEREST EXPENSE:
Salaries.................................................. 4,105 3,626 3,278
Employee benefits......................................... 497 348 354
Equipment................................................. 672 593 551
Occupancy................................................. 536 491 454
Amortization of intangible assets......................... 152 253 310
Legal and professional fees............................... 497 389 328
Regulatory agency fees.................................... 71 308 465
Advertising expense....................................... 121 109 120
Other..................................................... 1,135 1,059 1,000
------- ------- -------
Total noninterest expense............................ 7,786 7,176 6,860
------- ------- -------
INCOME BEFORE INCOME TAXES.................................. 3,525 2,993 2,115
PROVISION FOR INCOME TAXES.................................. 1,214 1,031 661
------- ------- -------
Net income........................................... $ 2,311 $ 1,962 $ 1,454
======= ======= =======
NET INCOME PER SHARE........................................ $6.45 $5.48 $4.06
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 74
COUNTRY BANK SHARES CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
ON INVESTMENT
COMMON STOCK SECURITIES AVAILABLE TOTAL
AND FOR SALE, RETAINED SHAREHOLDERS'
PAID-IN SURPLUS NET OF TAXES EARNINGS EQUITY
--------------- -------------------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
BALANCE, December 31, 1993................ $5,213 $ 401 $4,883 $10,497
Net income.............................. -- -- 1,454 1,454
Transfers by subsidiaries from retained
earnings to surplus.................. 800 -- (800) --
Net unrealized depreciation on
investment securities carried at
market value......................... -- (1,463) -- (1,463)
------ ------- ------ -------
BALANCE, December 31, 1994................ 6,013 (1,062) 5,537 10,488
Net income.............................. -- -- 1,962 1,962
Transfers by subsidiaries from retained
earnings to surplus.................. 381 -- (381) --
Net unrealized appreciation on
investment securities carried at
market value......................... -- 1,265 -- 1,265
------ ------- ------ -------
BALANCE, December 31, 1995................ 6,394 203 7,118 13,715
Net income.............................. -- -- 2,311 2,311
Net unrealized depreciation on
investment securities carried at
market value......................... -- (187) -- (187)
Dividends -- $.6923 per share (record
date of March 10, 1997).............. -- -- (300) (300)
------ ------- ------ -------
BALANCE, December 31, 1996................ $6,394 $ 16 $9,129 $15,539
====== ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 75
COUNTRY BANK SHARES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 2,311 $ 1,962 $ 1,454
Adjustments to reconcile net income to net cash provided
by operating activities --
Depreciation and amortization.......................... 889 916 921
Provision for loan losses.............................. 148 313 1,086
Deferred income taxes.................................. (102) 13 (100)
Net loss (gain) on sale of equipment................... 5 -- (10)
Gain on sale of subsidiary............................. -- -- (28)
Increase (decrease) in other liabilities............... 771 273 (417)
(Increase) decrease in other assets.................... (591) 87 (349)
Net (increase) decrease in mortgage loans held for
sale................................................. (117) 251 656
-------- -------- --------
Total adjustments.................................... 1,003 1,853 1,759
-------- -------- --------
Net cash provided by operating activities............ 3,314 3,815 3,213
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities held to
maturity............................................... 244 400 193
Proceeds from sales and maturities of investment
securities available for sale.......................... 13,015 11,050 11,670
Purchases of investment securities........................ (19,213) (15,088) (9,440)
Net increase in loans..................................... (14,094) (2,500) (17,373)
Purchases of premises and equipment....................... (373) (463) (1,156)
Proceeds from sale of equipment........................... -- -- 55
Purchase of stock in subsidiary........................... -- -- (2)
Proceeds from sale of subsidiary.......................... -- -- 31
-------- -------- --------
Net cash used in investing activities.................. (20,421) (6,601) (16,022)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits........................... 1,639 2,356 2,715
Net increase (decrease) in savings........................ 7,306 229 (1,526)
Net increase in time deposits............................. 10,400 8,624 7,767
Net increase (decrease) in NOW accounts................... 67 (1,201) 2,430
Net decrease in Federal funds purchased................... -- (175) (1,640)
Net (decrease) increase in other borrowed funds........... (1,176) (537) 1,842
Proceeds from issuance of notes payable................... 7,518 2,276 1,825
Repayment of notes payable................................ (6,725) (1,400) (2,425)
-------- -------- --------
Net cash provided by financing activities.............. 19,029 10,172 10,988
-------- -------- --------
Net increase (decrease) in cash and cash equivalents... 1,922 7,386 (1,821)
CASH AND CASH EQUIVALENTS, at beginning of year............. 16,346 8,960 10,781
-------- -------- --------
CASH AND CASH EQUIVALENTS, at end of year................... $ 18,268 $ 16,346 $ 8,960
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for --
Interest............................................... $ 10,441 $ 9,682 $ 7,808
Income taxes........................................... $ 1,360 $ 940 $ 1,009
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 76
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Country Bank Shares Corporation (the "Company") is a bank holding company
that provides financial services to corporate, government and individual
customers. Such services, which include commercial, residential and consumer
banking and investment related products and services, are offered through its
four bank affiliates located in Wisconsin.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
Use of estimates --
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
periods. Actual results could differ from those estimates.
Consolidation principles --
The consolidated financial statements of the Company and its subsidiaries,
Montello State Bank, State Bank of Mount Horeb, State Bank of Argyle, and
Citizens State Bank of Clinton, have been prepared in conformity with generally
accepted accounting principles. As of December 31, 1996, the Company owned 100%
of the shares of Montello State Bank, State Bank of Mount Horeb and State Bank
of Argyle, and 98.7% of the shares of Citizens State Bank of Clinton. All
significant intercompany balances and transactions have been eliminated in
consolidation. Certain amounts in the 1995 and 1994 consolidated financial
statements have been reclassified to conform with the 1996 presentation.
Cash equivalents --
For purposes of the consolidated statements of cash flows, cash and cash
equivalents include cash on hand, amounts due from banks and Federal funds sold.
Investment securities --
The Company's accounting for investment securities is prescribed by
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Securities, when purchased, are
designated as Investment Securities Available for Sale or Investment Securities
Held to Maturity and remain in that category until they are sold or mature. The
specific identification method is used in determining the cost of securities
sold. Premiums and discounts are recognized in interest income using the
interest method over the period to maturity. The Company does not engage in the
trading of securities.
Investment Securities Available for Sale are carried at market value,
determined on an aggregate basis. Market value adjustments and the related
income tax effects are excluded from earnings and reported separately as a
component of shareholders' equity. While the Company has no current intention to
sell these securities, they may not be held to maturity.
Investment Securities Held to Maturity are carried at cost, adjusted for
amortization of premiums and accretion of discounts. The Company has the
positive intent and ability to hold these securities to maturity.
Mortgage loans held for sale --
Mortgage loans held for sale are carried at the lower of cost or market
value, determined on an aggregate basis, based on outstanding firm commitments
received for such loans, current market prices or guaranteed prices.
F-6
<PAGE> 77
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Loans --
Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or pay-off are stated at the principal
amount outstanding with interest accrued daily using the level-yield method
adjusted for any charge-offs, the reserve for loan losses, and any deferred fees
or costs. Loans are generally placed on nonaccrual status when they are past due
90 days or more. When a loan is placed on nonaccrual status, previously accrued
and uncollected interest is charged against interest income. Loan origination
fees and certain origination costs are deferred and amortized over the
contractual term of the note as an adjustment to yield.
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 Company provides additions to the reserve in
accordance with the maximum amounts allowed under Federal income tax law.
Other real estate owned --
Real estate properties acquired through, or in lieu of, loan foreclosure
are to be sold and are initially recorded at fair value at the date of
foreclosure, establishing a new cost basis. After foreclosure, valuations are
periodically performed by management and the real estate is carried at the lower
of carrying amount or fair value less cost to sell.
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 (30 years for bank buildings and five
to ten years for the remainder) using the straight-line method.
Long-lived assets which are considered impaired are carried at fair value,
and long-lived assets to be disposed of are carried at the lower of the carrying
amount or fair value less costs to sell. Maintenance and repairs are charged to
expense and betterments are capitalized.
Intangibles --
Goodwill arising from acquisitions is amortized on the straight-line basis
over a period of up to 15 years.
Beginning January 1, 1996 with the adoption of Statement of Financial
Accounting Standards No. 122, "Accounting for Mortgage Servicing Rights," the
Company recognizes as separate assets rights to service mortgage loans when
purchased or originated and sold with servicing retained. Mortgage servicing
rights are amortized over the periods during which the corresponding mortgage
servicing revenues are anticipated to be generated. During 1996, mortgage
servicing rights of $51 were capitalized and related amortization was $6.
The Company continually evaluates whether later events and circumstances
have occurred to indicate that intangibles should be evaluated for possible
impairment and recognizes impairment, if required, through a valuation
allowance.
F-7
<PAGE> 78
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Interest rate swap --
The net amount payable or receivable under an interest rate swap agreement
is recognized as a component of interest expense. The agreement expired in 1996.
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.
Net income per share --
Net income per share has been computed based on 358,250 weighted average
shares outstanding for 1996, 1995 and 1994. Per share results have been
retroactively restated for the 250 for one stock split which occurred in 1995.
The calculation, assuming conversion of the shares exercisable under the
Company's stock option plan, would not be materially affected.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share." It is effective for fiscal
years ending after December 15, 1997 and will require restatement of prior
years' net income per share. The Company has not quantified the effect of
applying this standard.
(2) BUSINESS COMBINATION --
In February 1997, the Company acquired Belleville Bancshares Corporation, a
one bank Wisconsin holding company with total assets of $40,448 at December 31,
1996, by issuing 75,448.4 shares of the Company's common stock. Belleville
Bancshares Corporation owns 83.806% of Belleville State Bank.
The pro forma impact on the Company's results of operations in 1996, 1995
and 1994 had the pooling transaction been consummated as of January 1, 1994,
would have been:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net interest income................................ $11,272 $10,768 $10,191
Provision for loan losses.......................... 221 412 1,123
Net income......................................... 2,676 2,308 1,710
Net income per share............................... 6.17 5.32 3.94
</TABLE>
Also, on January 30, 1997, the Company entered into an agreement and plan
of merger (the "Agreement") with AMCORE Financial, Inc. ("AMCORE"), a registered
multibank holding company headquartered in Rockford, Illinois. The Agreement
calls for the Company to exchange its common stock outstanding for the right to
receive AMCORE's common stock, the number of which is specified in the
Agreement. The transaction is expected to consummate in the second quarter of
1997.
(3) NEW ACCOUNTING PRONOUNCEMENTS --
Effective January 1, 1997, the Company must adopt Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" ("SFAS 125"). SFAS 125
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities such as accounting for
transfers of partial interests, servicing of financial assets, securitizations,
transfers of certain lease receivables, repurchase agreements and loan
syndications and participations. The Company does not anticipate that SFAS 125
will have a material impact on the consolidated financial statements.
F-8
<PAGE> 79
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) CASH AND INVESTMENT SECURITIES --
A summary of the amortized cost and estimated market values, as computed by
a correspondent bank, of investment securities at December 31, is as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Investment Securities Available for Sale:
U.S. Treasury securities............................. $18,305 $18,278 $20,219 $20,302
U.S. Agency securities............................... 24,273 24,319 18,999 19,222
Other securities..................................... 3,568 3,568 2,630 2,630
------- ------- ------- -------
Total............................................. $46,146 $46,165 $41,848 $42,154
======= ======= ======= =======
Investment Securities Held to Maturity:
State and Municipal securities....................... $ 8,925 $ 8,945 $ 7,269 $ 7,309
======= ======= ======= =======
</TABLE>
The unrealized gains and losses on investment securities at December 31,
were:
<TABLE>
<CAPTION>
1996 1995
------------------------ ------------------------
UNREALIZED UNREALIZED UNREALIZED UNREALIZED
GAINS LOSSES GAINS LOSSES
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investment Securities Available for Sale:
U.S. Treasury securities.......................... $ 63 $ 90 $167 $ 83
U.S. Agency securities............................ 192 146 262 40
---- ---- ---- ----
Total.......................................... $255 $236 $429 $123
==== ==== ==== ====
Investment Securities Held to Maturity:
State and Municipal securities.................... $ 56 $ 36 $ 61 $ 21
==== ==== ==== ====
</TABLE>
The book values and market values of investment securities at December 31,
1996, by contractual maturity are shown below:
<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
-------------------- -------------------
AMORTIZED MARKET AMORTIZED MARKET
COST VALUE COST VALUE
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Within one year......................................... $ 8,132 $ 8,122 $2,667 $2,681
From one through five years............................. 34,762 34,647 5,601 5,603
From five through ten years............................. 3,252 3,396 657 661
------- ------- ------ ------
Total.............................................. $46,146 $46,165 $8,925 $8,945
======= ======= ====== ======
</TABLE>
The gross realized gains and losses amounted to $1 and $0 in 1996, and $1
and $1 in 1995, respectively. There were no gross realized gains or losses in
1994.
Securities with a par value of approximately $4,114 and $4,780 at December
31, 1996 and 1995, respectively, were pledged primarily to secure public
deposits and short-term borrowings and for other purposes required by law.
At December 31, 1996 and 1995, $697 and $591, respectively, of cash and due
from banks was restricted due to Federal Reserve requirements to maintain
certain reserve balances.
F-9
<PAGE> 80
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) LOANS --
The composition of loans at December 31, is as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Commercial............................................... $ 58,752 $ 55,453
Real estate construction................................. 6,837 7,087
Commercial real estate................................... 35,073 30,925
Residential real estate.................................. 59,408 53,560
Consumer................................................. 18,585 17,498
-------- --------
Total loans......................................... $178,655 $164,523
======== ========
</TABLE>
96 percent of the Company's borrowers are located in Wisconsin. 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 large employers or on the agricultural
economy.
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, 1996 and 1995, the Company had approximately $1,942 and
$683, respectively, of nonperforming loans which were earning below a market
interest rate or were nonincome producing. The effect of interest foregone on
these loans was $82 and $58 in 1996 and 1995, respectively.
All loans to officers, directors or their companies were made on the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with others. An analysis of these loans for the year
ended December 31, 1996, is presented below:
<TABLE>
<S> <C>
Balance, beginning of year.................................. $3,726
New loans................................................... 1,070
Repayments.................................................. (1,237)
------
Balance, end of year........................................ $3,559
======
</TABLE>
(6) RESERVE FOR LOAN LOSSES --
Effective January 1, 1995, the Company adopted Statements of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan"
and No. 118, "Accounting by Creditors for Impairment of a Loan -- Income
Recognition and Disclosures" (collectively "SFAS 114"). SFAS 114 requires that
certain impaired loans be measured based on the present value of expected future
cash flows discounted at the loan's effective interest rate. As a practical
matter, impairment may be measured based on the loan's observable market price
or the fair value of the collateral for loans which are collateral dependent.
When the measure of the impaired loan is less than the recorded investment in
the loan, the impairment is recorded through a valuation allowance.
F-10
<PAGE> 81
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1996 and 1995, the Company's recorded investment in
impaired loans and the related valuation allowance are as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------- -------------------------
RECORDED VALUATION RECORDED VALUATION
INVESTMENT ALLOWANCE INVESTMENT ALLOWANCE
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Total impaired loans.............................. $2,015 $762
Loans excluded from evaluation under FAS 114...... 51 42
------ ----
Impaired loans evaluated.......................... $1,964 $720
====== ====
Valuation allowance required...................... $1,225 $279 $ 19 $19
No valuation allowance required................... 739 -- 701 --
------ ---- ---- ---
Impaired loans evaluated.......................... $1,964 $279 $720 $19
====== ==== ==== ===
</TABLE>
The recorded investment in impaired loans for which no allowance is
required is net of previous direct writedowns and applications of cash interest
payments against the loan balance outstanding. The required valuation allowances
are included in the reserve for loan losses in the consolidated balance sheets.
The average recorded investment in total impaired loans for the years ended
December 31, 1996 and 1995, amounted to $661 and $282, respectively.
Interest payments received on impaired loans are recorded as interest
income unless collection of the remaining recorded investment is doubtful at
which time payments received are recorded as reductions of principal. For the
years ended December 31, 1996 and 1995 interest income recognized on total
impaired loans amounted to $143 and $13, respectively. The gross income that
would have been recognized had such loans been performing in accordance with
their original terms would have been $190 and $52 for the same periods,
respectively.
An analysis of the reserve for loan losses for the years ended December 31,
is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance, beginning of year............................ $2,100 $2,054 $1,482
Loans charged off................................... (93) (385) (556)
Recoveries of charged off loans..................... 131 118 42
Provisions charged to operating expense............. 148 313 1,086
------ ------ ------
Balance, end of year.................................. $2,286 $2,100 $2,054
====== ====== ======
</TABLE>
F-11
<PAGE> 82
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(7) PREMISES AND EQUIPMENT --
Components of premises and equipment included in the consolidated balance
sheets at December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land....................................................... $ 376 $ 376
Bank buildings............................................. 6,623 6,626
Furniture and equipment.................................... 2,870 3,096
Leasehold improvements..................................... 63 63
Software................................................... 666 511
------- -------
Total cost............................................ 10,598 10,672
Less -- Accumulated depreciation........................... (4,102) (3,808)
------- -------
Total premises and equipment.......................... $ 6,496 $ 6,864
======= =======
</TABLE>
(8) INCOME TAXES --
Income taxes reflected in the consolidated statements of income include the
following components:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Current provision..................................... $1,316 $1,018 $ 761
Deferred (benefit) provision.......................... (102) 13 (100)
------ ------ -----
Total............................................ $1,214 $1,031 $ 661
====== ====== =====
</TABLE>
The tax effects of temporary differences that give rise to significant
elements of the deferred tax assets and deferred tax liabilities at December 31,
1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Reserve for loan losses................................... $ 556 $ 490
Other..................................................... 108 77
----- -----
Total deferred tax assets.............................. 664 567
----- -----
Deferred tax liabilities:
Purchase accounting adjustments........................... 267 286
Net unrealized appreciation on investment securities
available for sale..................................... 4 103
Bank premises and equipment, principally due to
depreciation........................................... 253 277
Other..................................................... 337 299
----- -----
Total deferred tax liabilities......................... 861 965
----- -----
Net deferred tax (liability)................................ $(197) $(398)
===== =====
</TABLE>
F-12
<PAGE> 83
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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:
<TABLE>
<CAPTION>
1996 1995 1994
------------------ ------------------ ------------------
PERCENT PERCENT PERCENT
OF PRETAX OF PRETAX OF PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Income tax computed at statutory rate..... $1,198 34.0% $1,018 34.0% $ 719 34.0%
State taxes, net of Federal benefit....... 138 3.9 83 2.8 56 2.7
Tax-exempt state and municipal interest... (173) (4.9) (174) (5.8) (213) (10.1)
Amortization of intangibles............... 72 2.0 101 3.4 107 5.1
Other, net................................ (21) (.6) 3 .1 (8) (.4)
------ ---- ------ ---- ----- -----
Total income tax expense............. $1,214 34.4% $1,031 34.5% $ 661 31.3%
====== ==== ====== ==== ===== =====
</TABLE>
(9) DEPOSITS --
At December 31, 1996, the scheduled maturities of time deposits over
$100,000 are as follows:
<TABLE>
<CAPTION>
TIME REMAINING TO MATURITY
-----------------------------------------------------
SIX TO AFTER
DUE WITHIN THREE TO TWELVE TWELVE
THREE MONTHS SIX MONTHS MONTHS MONTHS TOTAL
------------ ---------- ------ ------ -----
<S> <C> <C> <C> <C> <C>
Certificates of deposit..................... $5,221 $3,965 $4,665 $3,222 $17,073
</TABLE>
(10) NOTES PAYABLE --
Notes payable at December 31, were:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Secured notes payable....................................... $1,853 $4,453
Unsecured notes payable..................................... 4,125 2,650
Term notes payable.......................................... 3,124 1,206
------ ------
Total notes payable.................................... $9,102 $8,309
====== ======
</TABLE>
Secured notes payable consists of a note payable, due June 1998 under a
$7,333 revolving credit agreement. Interest is at the prime rate (8.25% at
December 31, 1996), and is payable quarterly. Collateral under the agreement is
the stock of the Company's subsidiary banks.
The Company also has a $250 line of credit, with interest at the prime rate
(8.25% at December 31, 1996). There were no borrowings under the agreement
during 1996.
The secured notes payable and line of credit are all with the same bank and
are covered by an agreement containing, among other things, restrictions on the
declaration of dividends and the incurrence of additional debt. During 1996, the
Company was in compliance with these covenants or had received the appropriate
waivers.
In addition, the Company has unsecured notes payable with shareholders of
the Company. Interest is at rates between 7.25% and 8.25%, and is payable
monthly or quarterly. Of the total, $1,550 is due on demand, $775 is due in
1997, $1,300 is due in 1998 and $500 is due in 1999.
F-13
<PAGE> 84
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's term notes payable are at interest rates between 5.51% and
7.40%, with interest payable monthly. Of the total, $400 is due in 1997, $1,600
is due in 1998, $450 is due in 2004 and the remainder is due in 2005. These
notes are secured by one to four family residential real estate loans under a
blanket lien.
(11) EMPLOYEE RETIREMENT AND HEALTH PLANS --
The Company has a defined contribution retirement plan and profit sharing
plan for substantially all full-time employees. The retirement plan is a 401(k)
plan which provides for a guaranteed contribution to employees equal to 50 cents
of each dollar contributed by the employee, up to a maximum of 4% of the
employee's eligible salary. The profit sharing plan is funded via an annual
contribution at the discretion of the Company's Board of Directors. Total
expense relating to the plans was $236, $128 and $127 in 1996, 1995 and 1994,
respectively.
(12) 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 $25,308 and
$21,856 at December 31, 1996 and 1995, respectively. Outstanding letters of
credit totaled approximately $1,240 and $2,242 at December 31, 1996 and 1995,
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.
In November, 1993, the Company entered into an interest rate swap agreement
to hedge the impact of changes in interest rates on its floating rate notes
payable. The agreement, with a notional amount of $5,000 expired in 1996, and
provided for the Company to pay interest at the U.S. Federal funds rate (4.73%
at December 31, 1995) and to receive interest at a fixed rate of 3.87%. The
notional amount of the agreement did not represent the amount exchanged by the
parties, and thus, was not a measure of the Company's exposure through its use
of the agreement. The amounts exchanged were determined by reference to the
notional amount and the other terms of the agreement.
(13) SHAREHOLDERS' EQUITY --
Banks are subject to statutory and regulatory restrictions on the amount
they may pay in dividends, and certain of their retained earnings are not
available for dividend payment. The ability of the Company to pay dividends to
its shareholders is dependent upon earnings and dividends paid by its subsidiary
banks. Retained earnings of the banks which are available without restrictions
for dividend payments to the Company total approximately $5,106 and $3,708, as
of December 31, 1996 and 1995, respectively. The regulatory minimum capital
standards, referred to in Note 14, which are applicable to the subsidiary banks,
effectively restrict, to a substantially lesser amount, the amount which could
be distributed by the subsidiary banks.
In 1995, shareholders approved the adoption of the 1995 Nonqualified Stock
Option Agreements ("Agreements"). The Agreements provide for the ability to
grant stock options to key employees. The total number of shares approved and
available for issuance under the Agreements is 10,000. At December 31, 1996 and
1995, the Company had 6,000 options outstanding, of which 2,400 and 1,200 were
exercisable, respectively. No options were exercised during 1996 or 1995. The
option price is $41.12 per share.
In accordance with APB Opinion No. 25, no compensation cost has been
recognized for stock options granted to employees pursuant to the Agreements.
Had compensation cost for these grants been determined based on the grant date
fair values of awards (the method described in Statements of Financial
Accounting
F-14
<PAGE> 85
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123")),
reported net income and earnings per common share would have been reduced by an
immaterial amount.
(14) REGULATORY CAPITAL REQUIREMENTS --
The Company is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company must meet specific capital guidelines that involve quantitative measures
of the Company's assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Company's capital amounts
and classifications are also subject to qualitative judgments by the regulators
about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require maintenance of minimum amounts and ratios (set forth in the table below)
of total and Tier I capital (as defined in the regulations) to risk-weighted
assets (as defined). Management believes, as of December 31, 1996 and 1995, that
the Company meets all capital adequacy requirements to which they are subject.
The table below presents capital amounts and ratios of the Company.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
--------------- ------------------ -----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total capital (to risk weighted
assets):
Consolidated....................... $16,806 9.78% $13,748 >8.00% $17,185 >10.00%
- -
Montello State Bank................ 5,098 13.50 3,021 >8.00 3,776 >10.00
- -
State Bank of Mount Horeb.......... 8,762 12.97 5,405 >8.00 6,756 >10.00
- -
State Bank of Argyle............... 3,680 13.14 2,240 >8.00 2,800 >10.00
- -
Citizens State Bank of Clinton..... 4,915 11.06 3,555 >8.00 4,444 >10.00
- -
Tier 1 capital (to risk weighted
assets):
Consolidated....................... 14,656 8.53 6,874 >4.00 10,311 >6.00
- -
Montello State Bank................ 4,650 12.31 1,510 >4.00 2,266 >6.00
- -
State Bank of Mount Horeb.......... 7,701 11.40 2,703 >4.00 4,054 >6.00
- -
State Bank of Argyle............... 3,383 12.08 1,120 >4.00 1,680 >6.00
- -
Citizens State Bank of Clinton..... 4,436 9.98 1,778 >4.00 2,666 >6.00
- -
Tier 1 capital (to average assets):
Consolidated....................... 14,656 5.75 10,201 >4.00 12,751 >5.00
- -
Montello State Bank................ 4,650 7.78 2,391 >4.00 2,988 >5.00
- -
State Bank of Mount Horeb.......... 7,701 8.27 3,726 >4.00 4,657 >5.00
- -
State Bank of Argyle............... 3,383 8.33 1,624 >4.00 2,029 >5.00
- -
Citizens State Bank of Clinton..... 4,436 6.91 2,569 >4.00 3,211 >5.00
- -
</TABLE>
F-15
<PAGE> 86
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
--------------- ------------------ -----------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1995:
Total capital (to risk weighted
assets):
Consolidated....................... $14,291 9.10% $12,565 >$8.00% $15,707 >$10.00%
- -
Montello State Bank................ 4,856 14.21 2,734 >$8.00 3,417 >$10.00
- -
State Bank of Mount Horeb.......... 8,362 13.23 5,055 >$8.00 6,319 >$10.00
- -
State Bank of Argyle............... 3,503 13.23 2,117 >$8.00 2,647 >$10.00
- -
Citizens State Bank of Clinton..... 3,869 11.79 2,884 >$8.00 3,605 >$10.00
- -
Tier 1 capital (to risk weighted
assets):
Consolidated....................... 12,191 7.76 6,283 >$4.00 9,424 >$6.00
- -
Montello State Bank................ 4,429 12.96 1,367 >$4.00 2,050 >$6.00
- -
State Bank of Mount Horeb.......... 7,582 12.00 2,528 >$4.00 3,791 >$6.00
- -
State Bank of Argyle............... 3,211 12.13 1,059 >$4.00 1,588 >$6.00
- -
Citizens State Bank of Clinton..... 4,251 10.73 1,442 >$4.00 2,163 >$6.00
- -
Tier 1 capital (to average assets):
Consolidated....................... 12,191 5.18 9,421 >$4.00 11,776 >$5.00
- -
Montello State Bank................ 4,429 7.85 2,258 >$4.00 2,823 >$5.00
- -
State Bank of Mount Horeb.......... 7,582 8.49 3,573 >$4.00 4,466 >$5.00
- -
State Bank of Argyle............... 3,211 8.53 1,505 >$4.00 1,881 >$5.00
- -
Citizens State Bank of Clinton..... 4,251 7.61 2,034 >$4.00 2,543 >$5.00
- -
</TABLE>
(15) FAIR VALUE OF FINANCIAL INSTRUMENTS --
The fair value of financial instruments for both assets and liabilities for
which it is practicable to estimate that value is based primarily on quoted
market prices. If quoted market prices were not available, fair values were
based on estimates using present value or other valuation techniques. These
techniques were significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. The calculated fair value
estimates, therefore, cannot be substantiated by comparison to independent
markets and, in many cases, could not be realized in immediate settlement of the
instrument. Certain financial instruments and all nonfinancial instruments are
excluded from the estimates below. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
The book values, estimated fair values and the methods and assumptions used
to estimate the fair value of the financial instruments of the Company are
reflected below as of December 31, 1996 and 1995, respectively.
Cash and cash equivalents --
The carrying amounts reported for cash and cash equivalents approximate the
fair values for those amounts.
Investment securities available for sale and held to maturity --
Fair value is based on quoted market prices received from a correspondent
bank. See Note 4 on investment securities for additional information.
F-16
<PAGE> 87
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Mortgage loans held for sale and loans --
See Note 1 for discussion of fair value of mortgage loans held for sale.
The loan balances were assigned fair values based on a discounted cash flow
analysis. The discount rate was based on the Company's current loan rates. The
estimated fair values of mortgage loans held for sale were $296 and $179 at
December 31, 1996 and 1995, respectively. The estimated fair values for loans
were $175,405 and $162,191 at December 31, 1996 and 1995, respectively:
Deposits --
The fair value for demand deposits and interest bearing deposits with no
fixed maturity date was considered to be equal to the carrying value. Time
deposits with defined maturity dates were assigned fair values based on a
discounted cash flow analysis using discount rates which approximate interest
rates currently being offered on time deposits with comparable maturities. The
estimated fair values were $233,405 and $214,093 at December 31, 1996 and 1995,
respectively.
Notes payable and other borrowed funds --
The book value of notes payable and other borrowed funds approximates the
fair value which was determined based on current market rates offered on
borrowings with similar terms and maturities.
Interest rate swap --
The fair value of the interest rate swap is determined based on pricing
models using current rate assumptions. The estimated fair value was $(7) at
December 31, 1995.
F-17
<PAGE> 88
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(16) PARENT COMPANY ONLY --
The condensed balance sheets of the Parent Company (parent company only) as
of December 31, 1996 and 1995, and the results of its operations and cash flows
for the three years ended December 31, 1996, 1995 and 1994, are summarized
below:
The condensed balance sheets as of December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Assets --
Cash...................................................... $ 227 $ 8
Investment in subsidiaries................................ 21,349 20,615
Other assets.............................................. 367 206
Equipment, net............................................ 129 123
------- -------
Total assets......................................... $22,072 $20,952
======= =======
Liabilities --
Notes payable............................................. $ 5,978 $ 7,103
Accrued interest.......................................... 32 33
Other liabilities......................................... 523 101
------- -------
Total liabilities.................................... 6,533 7,237
------- -------
Shareholders' equity --
Common stock and paid-in surplus.......................... 6,394 6,394
Net unrealized appreciation (depreciation) on investment
securities available for sale, net of deferred taxes... 16 203
Retained earnings......................................... 9,129 7,118
------- -------
Total shareholders' equity........................... 15,539 13,715
------- -------
Total liabilities and shareholders' equity........... $22,072 $20,952
======= =======
</TABLE>
F-18
<PAGE> 89
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The condensed statements of income for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Income --
Dividends from subsidiaries............................... $2,070 $ 998 $1,175
Service fees from subsidiaries............................ 301 288 216
Data processing fees ($200, $137 and $133 from
subsidiaries in 1996, 1995 and 1994, respectively)..... 259 180 140
Other income.............................................. 3 2 --
------ ------ ------
Total income......................................... 2,633 1,468 1,531
------ ------ ------
Expense --
Administrative and general................................ $1,053 $ 723 $ 629
Interest.................................................. 547 726 604
------ ------ ------
Total expense........................................ 1,600 1,449 1,233
------ ------ ------
Income before income taxes and equity in undistributed
earnings of subsidiaries.................................. 1,033 19 298
Income tax benefit.......................................... (349) (329) (283)
------ ------ ------
Net income (parent company only)..................... 1,382 348 581
Equity in undistributed earnings of subsidiaries............ 929 1,614 873
------ ------ ------
Net income........................................... $2,311 $1,962 $1,454
====== ====== ======
</TABLE>
F-19
<PAGE> 90
COUNTRY BANK SHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The condensed statements of cash flows for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (parent company only).......................... $ 1,382 $ 348 $ 581
Adjustments to reconcile net income to net cash provided
by operating activities --
Amortization and depreciation.......................... 111 71 65
Increase (decrease) in other liabilities............... 122 (22) 36
Increase in other assets............................... (161) (65) (58)
Net gain on sale of equipment.......................... -- -- 2
------- ------- -------
Net cash provided by operating activities............ 1,454 332 626
------- ------- -------
Cash flows from investment activities:
Purchase of stock in subsidiary........................... -- -- (2)
Purchase of equipment..................................... (110) (27) (41)
Proceeds from sale of equipment........................... -- -- 6
------- ------- -------
Net cash used by investing activities................ (110) (27) (37)
------- ------- -------
Cash flows from financing activities:
Proceeds from issuance of notes payable................... $ 5,600 $ 1,070 $ 1,825
Repayment of notes payable................................ (6,725) (1,400) (2,425)
------- ------- -------
Net cash used by financing activities................ (1,125) (330) (600)
------- ------- -------
Net increase (decrease) in cash...................... 219 (25) (11)
Cash, at beginning of year.................................. 8 33 44
------- ------- -------
Cash, at end of year........................................ $ 227 $ 8 $ 33
======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the year for --
Interest............................................... $ 549 $ 761 $ 761
Taxes.................................................. $ 1,163 $ 801 $ 801
</TABLE>
Federal regulations limit amounts of, and require collateral on, extensions
of credit by the Company's insured bank subsidiaries to the Parent Company.
There were no such extensions during 1996 or 1995.
F-20
<PAGE> 91
ANNEX I
[ABN AMRO CHICAGO CORP LETTERHEAD]
May 14, 1997
Board of Directors
Country Bank Shares Corporation
100 South First Street, Box 108
Mr. Horeb, Wisconsin 53572
Members of the Board:
Country Bank Shares Corporation, a Wisconsin corporation ("Country"), and
AMCORE Financial, Inc., an Illinois corporation ("AMCORE"), have entered into an
Agreement and Plan of Merger dated as of January 30, 1997 and are anticipating
entering into an amended Agreement to be dated as of May 1, 1997 (together, the
"Agreement"), pursuant to which Country will be merged with and into AMCORE,
which will be the surviving entity. As set forth in the Agreement, each issued
and outstanding share of Country common stock shall be exchanged for and
converted into a number of fully paid and nonassessable shares of AMCORE common
stock, as provided in the Agreement ("Merger Consideration"). You have requested
our opinion as to the fairness of the Merger Consideration to be paid to the
shareholders of Country, from a financial point of view.
During the course of our engagement, we have, among other things: (i)
reviewed the financial terms and conditions of the Agreement and certain related
documents; (ii) reviewed certain publicly-available financial and other data,
including the audited and unaudited financial statements of Country and AMCORE
for each of the three fiscal years ended December 31, 1996, 1995, and 1994, as
well as certain other relevant internally-generated Country and AMCORE reports
relating to asset/liability management, asset quality and so forth, as made
available to us; (iii) reviewed and analyzed other materials bearing upon the
financial and operating condition of Country and AMCORE and materials prepared
in connection with the proposed transaction; (iv) reviewed the operating
characteristics of certain other financial institutions deemed relevant to the
contemplated transaction; (v) reviewed the nature and terms of recent sale and
merger transactions involving banks, thrifts, bank and thrift holding companies
and other financial institutions that we considered relevant; (vi) reviewed
historical and current market data for AMCORE Common Stock; (vii) conducted
meetings with members of the senior managements of Country and AMCORE for the
purpose of reviewing the future prospects of Country and AMCORE, the strategic
objectives of each, and the possible financial benefits which might be realized
following the Merger; (viii) reviewed certain information, including forecasts
pertaining to prospective cost savings relative to the Merger; (ix) evaluated
the pro forma ownership of AMCORE Common Stock by Country shareholders, relative
to the pro forma contribution of Country's assets, liabilities, equity and
earnings to AMCORE; and (x) performed such other analyses and examinations as we
deemed appropriate.
In rendering this opinion, we have relied upon, without independent
verification, the accuracy and completeness of the financial and other
information and representations provided to us by Country and AMCORE. We have
relied upon the managements of Country and AMCORE as to the reasonableness and
achievability of the financial forecasts and projections (and the assumptions
and bases therefore) utilized in our analyses, and have assumed that such
forecasts and projections represent the best available estimates of management.
We are not experts in the evaluation of loan portfolios or the allowances for
loan losses with
I-1
<PAGE> 92
May 14, 1997
Board of Directors
Page 2
respect thereto and have assumed that such allowances by Country and AMCORE are
in the aggregate adequate to cover such losses. In addition, we have not
reviewed individual credit files nor have we made an independent appraisal of
the assets and liabilities of Country and AMCORE or any of their subsidiaries
and we have not been furnished with any such evaluation or appraisal. We have
also assumed that the Merger will be recorded as a pooling of interests in
accordance with generally accepted accounting principles as stipulated in the
Agreement. Finally, our opinion is necessarily based on economic, monetary,
market and other conditions as in effect on, and the information made available
to us as of the date hereof.
ABN AMRO Chicago Corporation ("AACC"), as part of its investment banking
business, is continually engaged in the valuation of banks and bank holding
companies and thrifts and thrift holding companies in connection with mergers
and acquisitions, as well as initial and secondary offerings of securities and
valuations for other purposes. AACC is a member of all principal U.S. securities
exchanges and may from time to time purchase securities from, or sell securities
to, Country or AMCORE and, either directly or through affiliates, buy or sell
the equity securities of Country or AMCORE as principal or for the accounts of
customers.
The Board of Directors has requested that AACC issue this opinion and AACC
will receive a fee from Country for delivering this opinion to be used in
evaluating the proposed Merger.
This opinion is limited to the fairness, from a financial point of view, to
the holders of Country Common Stock, of the Merger Consideration. Moreover, this
letter, and the opinion expressed herein, is directed to be the Board of
Directors of Country and does not constitute a recommendation to any shareholder
as to how such shareholder should vote on the Merger.
Based on the foregoing and our experience as investment bankers, we are of
the opinion that, as of the date hereof, the Merger Consideration to be paid to
the shareholders of Country, as described in the Agreement, is fair from a
financial point of view.
Sincerely,
ABN AMRO Chicago Corporation
I-2
<PAGE> 93
ANNEX II
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMCORE FINANCIAL, INC.,
CBS ACQUISITION CORP.
AND
COUNTRY BANK SHARES CORPORATION
DATED AS OF
MAY 1, 1997
<PAGE> 94
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I
THE MERGER
1.1 The Merger.................................................. II-1
1.2 Effective Time of the Merger................................ II-1
1.3 Articles of Incorporation................................... II-1
1.4 Bylaws of the Surviving Corporation......................... II-1
1.5 Board of Directors and Officers of the Surviving II-2
Corporation.................................................
1.6 Closing..................................................... II-2
ARTICLE II
EFFECT OF THE MERGER ON COMPANY COMMON STOCK
2.1 Effect on Common Stock...................................... II-2
2.2 Adjustments for Dilution and Other Matters.................. II-4
2.3 Dissenting Shares........................................... II-4
2.4 Stock Option Plans.......................................... II-4
2.5 Registration of Company Stock Option Plans.................. II-4
2.6 Exchange of Certificates.................................... II-4
2.7 No Fractional Shares........................................ II-5
2.8 Return of Exchange Fund..................................... II-6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AMCORE AND NEWCO
3.1 Corporate Organization...................................... II-6
3.2 Capitalization.............................................. II-6
3.3 Authorization............................................... II-6
3.4 No Violation................................................ II-7
3.5 AMCORE Reports and Financial Statements..................... II-7
3.6 Absence of Certain Changes.................................. II-7
3.7 Legal Proceedings........................................... II-7
3.8 Consents and Approvals...................................... II-8
3.9 Registration Statement...................................... II-8
3.10 Newco....................................................... II-8
3.11 Compliance with Laws and Orders............................. II-8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Corporate Organization...................................... II-9
4.2 Capitalization.............................................. II-9
4.3 Organization of Company Subsidiaries........................ II-9
4.4 Capitalization of Company Subsidiaries...................... II-10
4.5 Authorization............................................... II-10
4.6 No Violation; Consents and Approvals........................ II-10
4.7 Financial Statements........................................ II-11
4.8 Absence of Certain Changes.................................. II-12
4.9 Legal Proceedings........................................... II-12
4.10 Company Information......................................... II-12
</TABLE>
i
<PAGE> 95
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
4.11 Agreements with Regulatory Agencies......................... II-12
4.12 Intellectual Property....................................... II-13
4.13 Fairness Opinion............................................ II-13
4.14 Employee Benefit Matters.................................... II-13
4.15 Tax Matters................................................. II-14
4.16 Title and Condition......................................... II-15
4.17 Insurance................................................... II-16
4.18 Compliance with Laws and Orders............................. II-16
4.19 Governmental Regulation..................................... II-17
4.20 Contracts and Commitments................................... II-17
4.21 Affiliate's Undertakings and Stockholders Voting II-17
Agreement...................................................
4.22 Agreements with Directors, Officers, and Stockholders....... II-18
4.23 Accuracy of Information..................................... II-18
4.24 No Undisclosed Liabilities.................................. II-18
4.25 Continuity of Interest...................................... II-18
4.26 Investment and Loan Portfolios.............................. II-18
4.27 Certain Loans............................................... II-19
4.28 Administration of Trust Accounts............................ II-19
4.29 Accounting Matters.......................................... II-19
4.30 Interest Rate Risk Management Instruments................... II-19
ARTICLE V
COVENANTS OF AMCORE
5.1 Affirmative Covenants....................................... II-20
5.2 Negative Covenants.......................................... II-20
5.3 Full Disclosure............................................. II-21
5.4 Breaches.................................................... II-21
5.5 Supplement to AMCORE Letter................................. II-21
ARTICLE VI
COVENANTS OF THE COMPANY
6.1 Affirmative Covenants....................................... II-21
6.2 Current Information......................................... II-21
6.3 Certain Revaluations, Changes, and Adjustments.............. II-22
6.4 Negative Covenants.......................................... II-22
6.5 Full Disclosure............................................. II-25
6.6 Letter of the Company's Accountant.......................... II-25
6.7 Report to AMCORE............................................ II-25
6.8 Breaches.................................................... II-25
6.9 Stockholders Meeting........................................ II-25
6.10 Supplement to Company Letter................................ II-26
6.11 Dissent Process............................................. II-26
6.12 Delivery of Shareholder List................................ II-26
6.13 Affiliates; Accounting and Tax Treatment.................... II-26
6.14 Expenses and Fees........................................... II-26
6.15 Consummation of the Belleville Transactions................. II-28
</TABLE>
ii
<PAGE> 96
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Preparation of Registration Statement and the Proxy II-28
Statement...................................................
7.2 Legal Conditions to Merger.................................. II-28
7.3 Indemnification; Directors and Officers Insurance........... II-29
7.4 Brokers or Finders.......................................... II-29
7.5 Environmental Audits........................................ II-29
7.6 Additional Agreements: Reasonable Efforts................... II-30
7.7 Release of Information...................................... II-30
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF AMCORE AND NEWCO
8.1 No Material Adverse Change.................................. II-30
8.2 Representations and Warranties.............................. II-30
8.3 Performance and Compliance.................................. II-30
8.4 No Proceeding or Litigation................................. II-30
8.5 Pooling Letter.............................................. II-30
8.6 Letters from the Company Affiliates......................... II-31
8.7 Consents Under Agreements................................... II-31
8.8 Dissenters.................................................. II-31
8.9 1996 Audited Financial Statements........................... II-31
8.10 Certificate of the Company Officer.......................... II-31
8.11 Good Standing Certificates.................................. II-31
8.12 Accountant's Letter......................................... II-31
8.13 Belleville Transactions..................................... II-31
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
9.1 No Material Adverse Change.................................. II-32
9.2 Representations and Warranties.............................. II-32
9.3 Performance and Compliance.................................. II-32
9.4 No Proceeding or Litigation................................. II-32
9.5 Certificate of Financial Officer............................ II-32
9.6 Tax Opinion................................................. II-32
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
10.1 Governmental Approvals...................................... II-32
10.2 Securities Law Compliance................................... II-32
10.3 Stockholder Approval........................................ II-33
ARTICLE XI
TERMINATION
11.1 Reasons for Termination..................................... II-33
11.2 Effect of Termination....................................... II-34
</TABLE>
iii
<PAGE> 97
<TABLE>
<C> <S> <C>
ARTICLE XII
MISCELLANEOUS
12.1 Non-survival of Representations, Warranties and Agreements........................................ II-35
12.2 Expenses.......................................................................................... II-35
12.3 Waivers; Amendments............................................................................... II-35
12.4 Assignment; Parties in Interest................................................................... II-35
12.5 Entire Agreement.................................................................................. II-35
12.6 Captions and Counterparts......................................................................... II-35
12.7 Certain Definitions............................................................................... II-35
12.8 Governing Law..................................................................................... II-36
12.9 Notices........................................................................................... II-36
</TABLE>
iv
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
</TABLE>
v
<PAGE> 98
INDEX TO DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Affiliate................................................... 12.7(a)
Affiliate's Undertakings.................................... 4.21
Agreement................................................... Introduction
AMCORE...................................................... Introduction
AMCORE Average Price........................................ 11.1(d)
AMCORE Common Stock......................................... First Recital
AMCORE Letter............................................... 3.1
AMCORE Reports.............................................. 12.7(b)
Articles of Merger.......................................... 1.2
Audited Properties.......................................... 7.5
Banks....................................................... 4.3(a)
Belleville Bank............................................. 4.3(c)
Belleville Sub.............................................. 4.3(d)
Belleville Transactions..................................... 12.7(c)s
BHCA........................................................ 3.1
Board....................................................... 6.4(d)
CERCLA...................................................... 4.16(c)
Certificate................................................. 2.1(b)
Chicago Corp................................................ 4.13
Closing..................................................... 1.6
Closing Date................................................ 1.6
Code........................................................ Third Recital
Company..................................................... Introduction
Company Common Stock........................................ First Recital
Company Financial Statements................................ 4.7
Company Interested Property................................. 4.16(d)
Company Letter.............................................. 4.8
Company Reports............................................. 12.7(d)
Company Principal........................................... 4.22
Company Options............................................. 4.2
Company Subsidiaries........................................ 4.3(d)
Company Subsidiary Principal................................ 4.22
Confidentiality Agreement................................... 5.3
Current Company Subsidiaries................................ 4.3(b)
Current Real Properties..................................... 4.16(a)
Department of Financial Institutions........................ 1.2
Dissenting Shares........................................... 2.3
Effective Date.............................................. 1.2
Effective Time.............................................. 1.2
Environmental Audits........................................ 7.5
Environmental Laws.......................................... 4.16(c)
Environmental Reports....................................... 7.5
ERISA....................................................... 4.14(a)
ERISA Affiliate............................................. 4.14(a)
Exchange Act................................................ 3.9
Exchange Agent.............................................. 2.6(a)
Exchange Fund............................................... 2.6(a)
Exchange Ratio.............................................. 2.1(a)
Expenses.................................................... 6.14(c)(i)
FDIC........................................................ 4.7
</TABLE>
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<PAGE> 99
<TABLE>
TERM SECTION
- ---- -------
<S> <C>
FRA........................................................................................ 3.8
Federal Reserve Board...................................................................... 4.1
GAAP....................................................................................... 3.5
Governmental Entity........................................................................ 3.8
IRS........................................................................................ 4.14(b)
LLC........................................................................................ 4.1
Latest Company Financial Statements........................................................ 4.7
Latest Statement Date...................................................................... 4.7
Loan Property.............................................................................. 4.16(c)
Material Adverse Effect.................................................................... 12.7(e)
Meeting Date............................................................................... 6.9
Merger..................................................................................... First Recital
Nevada Subsidiaries........................................................................ 4.3(b)
New AMCORE Options......................................................................... 2.4
Newco...................................................................................... Introduction
Person..................................................................................... 6.14(c)(ii), 12.7(f)
Plans...................................................................................... 4.14(b)
Prohibited Transaction..................................................................... 4.14(b)
Proxy Statement/Prospectus................................................................. 7.1
Real Properties............................................................................ 4.16(c)
Registration Statement..................................................................... 7.1
Regulatory Agreement....................................................................... 4.11
Remediation Action......................................................................... 7.5
Remediation Costs.......................................................................... 7.5
Rights..................................................................................... 2.1(e)
Rights Agreement........................................................................... 2.1(e)
SEC........................................................................................ 3.5
SEC Filings................................................................................ 3.5
Securities Act............................................................................. 3.9
Share Exchange Agreement................................................................... 6.4(d)
Stockholders Voting Agreement.............................................................. Second Recital
Subsidiary................................................................................. 12.7(g)
Superior Proposal.......................................................................... 6.4(d)
Surviving Corporation...................................................................... 1.1
To the Company's knowledge................................................................. 12.7(h)
Termination Date........................................................................... 11.1(b)(i)
Termination Fee............................................................................ 6.14(b)
Transaction Proposal....................................................................... 6.14(c)(ii)
Trust Account Shares....................................................................... 2.1(c)
WBCL....................................................................................... 1.1
Wisconsin Division......................................................................... 4.3(a)
</TABLE>
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<PAGE> 100
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of May 1,
1997 (the "Agreement"), is entered into by and among AMCORE Financial, Inc., a
Nevada corporation ("AMCORE"), CBS Acquisition Corp., a Wisconsin corporation
and a wholly-owned subsidiary of AMCORE ("Newco") and Country Bank Shares
Corporation, a Wisconsin corporation (the "Company").
WITNESSETH:
WHEREAS, the respective Boards of Directors of AMCORE, Newco and the
Company have determined that the merger of Newco with and into the Company (the
"Merger") upon the terms and conditions set forth in this Agreement, would be
fair and in the best interests of their respective stockholders, and such Boards
of Directors have approved such Merger, pursuant to which each share of common
stock, no par value, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time (as defined in Section 1.2
hereof) of the Merger, will be converted into the right to receive the number of
shares of common stock, par value $0.33 per share, of AMCORE ("AMCORE Common
Stock") as provided in Section 2.1 hereof; and
WHEREAS, as a condition and inducement to AMCORE's and Newco's willingness
to enter into this Agreement, concurrently with the execution hereof, certain
beneficial and record stockholders of the Company are entering into agreements
(collectively, "Stockholders Voting Agreement") to vote in favor of or consent
to the Merger, substantially in the form attached hereto as Exhibit B; and
WHEREAS, the parties hereto desire and intend that the Merger qualify for
federal income tax purposes as a tax-free reorganization under Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code") and the regulations
thereunder, and be accounted for as a "pooling of interests" in accordance with
generally accepted accounting principles.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations, warranties, and agreements herein contained and in order to set
forth the conditions upon which the foregoing Merger will be carried out, the
parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, and
in accordance with the provisions of the Wisconsin Business Corporation Law (the
"WBCL"), at the Effective Time, Newco will merge with and into the Company, the
separate corporate existence of Newco shall thereupon cease, and the Company
will be the surviving corporation (the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Wisconsin, as a
wholly-owned subsidiary of AMCORE.
1.2 Effective Time of the Merger. Subject to the provisions of this
Agreement, articles of merger (the "Articles of Merger") shall be duly prepared
and executed by Newco and the Company and thereafter delivered to the Department
of Financial Institutions of the State of Wisconsin (the "Department of
Financial Institutions") for filing, as provided in the WBCL, as soon as
practicable on or after the Closing Date (as defined in Section 1.6 hereof). The
Merger shall become effective upon the filing of the Articles of Merger with the
Department of Financial Institutions or at such other time as may be specified
therein (the "Effective Time"). The date on which the Effective Time shall occur
is referred to herein as the "Effective Date." The Merger shall have the effects
set forth in Section 180.1106 of the WBCL.
1.3 Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of Newco shall be the Articles of Incorporation of the Surviving
Corporation.
1.4 Bylaws of the Surviving Corporation. At the Effective Time, the Bylaws
of Newco shall be the Bylaws of the Surviving Corporation until thereafter
amended in accordance with its terms, the Articles of Incorporation of the
Surviving Corporation and as provided by law.
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1.5 Board of Directors and Officers of the Surviving Corporation.At the
Effective Time, (i) the directors of Newco and (ii) the officers of the Company,
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation, each of such directors and officers to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
1.6 Closing. Subject to the terms and conditions herein set forth, the
closing of the transactions contemplated by this Agreement (the "Closing") will
be effected on a date specified by AMCORE and the Company that shall be not
later than the fifth business day of the satisfaction or waiver of the last of
the conditions set forth in Articles VIII, IX, and X hereof and the expiration
of any waiting periods in connection with necessary regulatory approvals or on
such other date as shall be mutually agreed upon by the parties (the "Closing
Date"). It is anticipated that the Closing will take place on the Closing Date
at the offices of Skadden, Arps, Slate, Meagher & Flom, 333 West Wacker Drive,
Chicago, Illinois 60606, or at such other place as shall be mutually agreeable
to AMCORE and the Company. Notwithstanding the foregoing, if the Closing does
not take place on the date referred to above because any condition under this
Agreement to the obligations of AMCORE and Newco, on the one hand, or the
Company, on the other hand, is not met on such date, the other party may
postpone the Closing from time to time to any designated subsequent business day
not more than ten (10) business days after the original or postponed date on
which the Closing was to occur by delivering prompt notice of such postponement
prior to the original or postponed date of Closing.
ARTICLE II
EFFECT OF THE MERGER ON COMPANY COMMON STOCK
2.1 Effect on Common Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock, but subject to the provisions of Section 180.1302 of the WBCL with
respect to the rights of dissenting stockholders of the Company:
(a) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock (other than shares of Company Common Stock
held (x) in the Company's treasury or (y) directly or indirectly held by
AMCORE or the Company or any of their respective subsidiaries) shall be
exchanged for and converted into the number (the "Exchange Ratio") of fully
paid and nonassessable shares of AMCORE Common Stock to be determined as
follows:
1. In the event the AMCORE Average Price (as hereinafter defined)
is less than $15.00, each share of Company Common Stock shall be
exchanged for and converted into 5.6247 shares of AMCORE Common Stock.
2. In the event the AMCORE Average Price is greater than $15.00 but
less than $19.50, each share of Company Common Stock shall be exchanged
for and converted into a number of shares of AMCORE Common Stock
determined by dividing (A) 84.37 by (B) the AMCORE Average Price.
3. In the event the AMCORE Average Price is greater than or equal
to $19.50 but less than or equal to $24.50, each share of Company Common
Stock shall be exchanged for and converted into 4.3267 shares of AMCORE
Common Stock.
4. In the event the AMCORE Average Price is greater than $24.50 but
less than or equal to $28.50, each share of Company Common Stock shall
be exchanged for and converted into a number of shares of AMCORE Common
Stock determined by dividing (A) 106.00 by (B) the AMCORE Average Price.
5. In the event the AMCORE Average Price is greater than $28.50,
each share of Company Common Stock shall be exchanged for and converted
into 3.7193 shares of AMCORE Common Stock.
6. Notwithstanding the foregoing, in the event that AMCORE enters
into an Approved Transaction any time on or prior to the fifteenth
(15th) day following the Meeting Date (as defined
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in Section 6.9 hereof), the Exchange Ratio shall be equal to 4.3267.
"Approved Transaction" as used in this Agreement means AMCORE shall have
directly or indirectly entered into a definitive agreement or letter of
intent providing for, or shall have announced the approval of AMCORE's
Board of Directors of, (A) a bona fide tender offer or exchange offer
for 51% or more of the then outstanding shares of AMCORE which shall
have been publicly proposed to be made or shall have been commenced or
made by any corporation, partnership, person, other entity, or group (as
defined in Section 13(d)(3) of the Exchange Act) (each, for purposes of
this Section 2.1(a), a "Person"); (B) a merger, consolidation, or other
business combination with AMCORE involving the acquisition of AMCORE by
another Person; or (C) any sale, lease, exchange, mortgage, pledge,
transfer, or other disposition (whether in one transaction or a series
of related transactions) involving all or substantially all of AMCORE's
consolidated assets, or all or substantially all of the assets of any of
its Subsidiaries, to any other Person.
For purposes hereof, the AMCORE Average Price shall mean the average
of the daily closing prices on an ex-dividend basis of a share of AMCORE
Common Stock as reported on the consolidated tape of the Nasdaq National
Market during the period of twenty (20) trading days ending at the end of
the third trading day immediately preceding the Meeting Date.
(b) Cancellation of Shares. All shares of Company Common Stock issued
and outstanding immediately prior to the Effective Time that are to be
converted into shares of AMCORE Common Stock pursuant to Section 2.1(a)
shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist. After the Effective Time, until
surrendered, each outstanding certificate (a "Certificate") which prior to
the Effective Time represented any such shares of Company Common Stock
shall be deemed to evidence ownership of the number of shares of AMCORE
Common Stock and cash in lieu of fractional shares of AMCORE Common Stock
as provided in Section 2.6 into which the same shall have been so
converted; provided, however, that each holder of a Certificate shall cease
at the Effective Time to have any rights with respect thereto, the right to
receive a Certificate representing the shares of AMCORE Common Stock and
cash in lieu of fractional shares to be issued in consideration therefor
and any dividends paid on such shares of AMCORE Common Stock with respect
to record dates set on or after the Effective Date, upon the surrender of
such Certificate in accordance with this Section 2.1, without interest; and
provided further, that no dividends declared with respect to shares of
AMCORE Common Stock shall be paid to the holder of any unsurrendered
Certificate until such holder shall surrender such Certificate, at which
time the holder shall be paid the amount of any dividends, without
interest, that theretofore became payable with respect to the shares
evidenced by such Certificate.
(c) Stock Held by the Company. At the Effective Time, all shares of
Company Common Stock that are owned by Company as treasury stock and all
shares of Company Common Stock that are owned directly or indirectly by
AMCORE or the Company or any of their respective subsidiaries (other than
shares of Company Common Stock held directly or indirectly in trust
accounts, managed accounts and the like or otherwise held in a fiduciary
capacity that are beneficially owned by third parties (any such shares, and
shares of AMCORE Common Stock which are similarly held, whether held
directly or indirectly by AMCORE or the Company, as the case may be, being
referred to herein as "Trust Account Shares")) shall be cancelled and shall
cease to exist and no stock of AMCORE or other consideration shall be
delivered in exchange therefor. All shares of AMCORE Common Stock that are
owned by the Company or its subsidiary (other than Trust Account Shares)
shall become treasury stock of AMCORE.
(d) Conversion of Newco Common Stock. At the Effective Time, all
shares of Newco capital stock owned by AMCORE shall be automatically
cancelled and converted into a like number of shares of Common Stock in the
Surviving Corporation.
(e) Rights. There shall be included with each share of AMCORE Common
Stock issued in the Merger an equal number of any share purchase rights
(the "Rights") issued pursuant to the Rights Agreement dated as of February
21, 1996 between AMCORE and Firstar Trust Company, as rights agent. All
references in this Agreement to AMCORE Common Stock to be received pursuant
to the Merger should be deemed to include the Rights.
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2.2 Adjustments for Dilution and Other Matters. If prior to the Effective
Time, AMCORE shall declare a stock dividend or distribution upon or subdivide,
split up, reclassify, combine its shares of AMCORE Common Stock or declare a
dividend or make a distribution on AMCORE Common Stock of any security
convertible into AMCORE Common Stock, then the Exchange Ratio shall be
appropriately adjusted to reflect such dividend, distribution, subdivision,
reclassification or combination.
2.3 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of the Company which immediately prior to the Effective Time
are held by stockholders who have properly exercised and perfected dissenters'
rights under Section 180.1301 et seq. of the WBCL (the "Dissenting Shares")
shall not be converted into the right to receive shares of AMCORE Common Stock
as provided in Section 2.1(a) hereof, but the holders of Dissenting Shares shall
be entitled to receive consideration as shall be determined pursuant Section
180.1328 of the WBCL; provided, however, that if any such holder shall have
failed to perfect or shall withdraw or lose his dissenter's rights, such
holder's shares shall thereupon be deemed to have been converted into shares of
AMCORE Common Stock as of the Effective Time, without any interest thereon, as
provided in Section 2.1(a), and such shares shall no longer be Dissenting
Shares.
2.4 Stock Option Plans. The Company and AMCORE shall take such action as
may be necessary to cause each unexpired and unexercised Company Option (as
defined in Section 4.2 hereof) issuable pursuant to the stock option plan and/or
agreements listed in Section 2.4 of the Company Letter, to be automatically
converted at the Effective Time into options ("New AMCORE Options") to purchase
a number of shares of AMCORE Common Stock equal to the number of shares of
Company Common Stock that could have been purchased under the Company Option
multiplied by the Exchange Ratio (with the resulting number of shares rounded
down to the nearest whole share), at a price per share of AMCORE Common Stock
equal to the option exercise price determined pursuant to such Company Options
divided by the Exchange Ratio (with the resulting exercise price rounded up to
the nearest whole cent). Such New AMCORE Options shall otherwise be subject to
substantially similar terms and conditions as such Company Options (with the
exception of those terms relating to restrictions on transfer of shares, rights
upon sale of the capital stock of the Company and the mandatory redemption of
shares upon termination of employment). AMCORE shall (i) as of the Effective
Time, assume all of the Company's obligations with respect to Company Options as
so converted, (ii) on or prior to the Effective Time, reserve for issuance the
number of shares of AMCORE Common Stock that will become subject to New AMCORE
Options pursuant to this Section 2.4, (iii) from and after the Effective Time,
upon exercise of the New AMCORE Options in accordance with the terms thereof,
make available for issuance all shares of AMCORE Common Stock covered thereby
and (iv) at the Effective Time, issue to each holder of an outstanding Company
Option a document evidencing the foregoing assumption by AMCORE.
2.5 Registration of Company Stock Option Plans. AMCORE will file on, or as
soon as practicable after, the Effective Date, but in no event later than 30
days after the Effective Date, a registration on Form S-8 under the Securities
Act covering the shares of AMCORE Common Stock issuable upon the exercise of New
AMCORE Options created upon the assumption by AMCORE of the Company Options
pursuant to Section 2.4.
2.6 Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time, AMCORE shall
deposit, or shall cause to be deposited, with a bank or trust company
selected by AMCORE (which may be a bank or trust company subsidiary of
AMCORE ) (the "Exchange Agent"), for the benefit of the holders of
Certificates, for exchange in accordance with this Section 2.6,
certificates representing the shares of AMCORE Common Stock and the cash in
lieu of fractional shares (such cash and certificates for shares of AMCORE
Common Stock, being hereinafter referred to as the "Exchange Fund") to be
issued pursuant to Section 2.1(a) and paid pursuant to Section 2.7 in
exchange for outstanding shares of Company Common Stock.
(b) Exchange Procedures. As soon as practicable after the Effective
Time, but in no event later than five (5) business days thereafter, the
Exchange Agent shall mail to each holder of record of a Certificate or
Certificates (i) a letter of transmittal (which shall specify that delivery
shall be effected,
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and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing the shares of AMCORE Common Stock. Upon surrender
of a Certificate for cancellation to the Exchange Agent, together with such
letter of transmittal, duly executed, the holder of such Certificate(s)
shall be entitled to receive in exchange therefor (x) an AMCORE certificate
representing that number of whole shares of AMCORE Common Stock into which
the shares of Company Common Stock have been converted pursuant to Section
2.1(a) hereof and (y) cash in lieu of fractional shares of AMCORE Common
Stock to which such holder is entitled pursuant to Section 2.7 hereof, and
the Certificate so surrendered shall be cancelled. No interest will be paid
or accrued on the cash in lieu of fractional shares and unpaid dividends
and distributions, if any, payable to holders of Certificates. If any
certificate representing shares of AMCORE Common Stock is to be issued in a
name other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in
proper form for transfer, and that the person requesting such exchange
shall pay to the Exchange Agent in advance any transfer or other taxes
required by reason of the issuance of a certificate representing shares of
AMCORE Common Stock in any name other than that of the registered holder of
the Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable. Until surrendered as contemplated by this Section
2.6, each Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the certificate
representing shares of AMCORE Common Stock and cash in lieu of any
fractional shares of AMCORE Common Stock as contemplated by Section 2.7
hereof.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared with respect to AMCORE Common Stock and
payable to the holders of record thereof after the Effective Time shall be
paid to the holder of any unsurrendered Certificate until the holder
thereof shall surrender such Certificate in accordance with this Article
II. After the surrender of a Certificate in accordance with this Article
II, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of AMCORE Common
Stock represented by such Certificate. No holder of an unsurrendered
Certificate shall be entitled, until the surrender of such Certificate, to
vote the shares of AMCORE Common Stock into which Company Common Stock
shall have been converted.
(d) Lost or Stolen Shares. In the event any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by AMCORE, in accordance with its normal and
customary procedures, the posting by such person of a bond in such amount
as AMCORE may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of
AMCORE Common Stock and cash in lieu of fractional shares deliverable in
respect thereof pursuant to this Agreement.
(e) No Further Ownership Rights in Company Common Stock. After the
Effective Time, there shall be no transfers on the stock transfer books of
the Company of the shares of Company Common Stock which were issued and
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for
certificates representing shares of AMCORE Common Stock as provided in this
Article II.
2.7 No Fractional Shares. Notwithstanding anything to the contrary
contained herein, no certificates or scrip representing fractional shares of
AMCORE Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to AMCORE Common Stock
shall be payable on or with respect to any fractional share, and such fractional
share interests shall not entitle the owner thereof to vote or to any other
rights of a shareholder of the Company. In lieu of the issuance of any such
fractional share, AMCORE shall pay to each former stockholder of the Company who
otherwise would be entitled to receive a fractional share of AMCORE Common Stock
an amount in cash determined by
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multiplying (i) the average of the closing-sale prices of AMCORE Common Stock on
the Nasdaq National Market reported by The Wall Street Journal for the five (5)
trading days immediately preceding the date of the Effective Time by (ii) the
fraction of a share of AMCORE Common Stock to which such holder would otherwise
be entitled to receive pursuant to Section 2.1(a) hereof.
2.8 Return of Exchange Fund. Any portion of the Exchange Fund that remains
unclaimed by the stockholders of the Company for twelve (12) months after the
Effective Time shall be paid to AMCORE. Any stockholders of the Company who have
not theretofore complied with this Article II shall thereafter look only to
AMCORE for payment of their shares of AMCORE Common Stock, cash in lieu of
fractional shares pursuant to Section 2.7 hereof and unpaid dividends and
distributions on the AMCORE Common Stock deliverable in respect of each share of
Company Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon. Notwithstanding the
foregoing, none of AMCORE, the Company, the Exchange Agent or any other person
shall be liable to any former holder of shares of Company Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AMCORE AND NEWCO
AMCORE and Newco represent and warrant to the Company as follows:
3.1 Corporate Organization. AMCORE is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada. Newco is a
corporation duly organized, validly existing, and in active status under the
laws of the State of Wisconsin. Both AMCORE and Newco have all requisite
corporate power and authority to own, operate, and lease their properties as
presently owned, operated, and leased and to engage in the activities and
business now being conducted. AMCORE and Newco are qualified to do business in
each jurisdiction in which the nature of business conducted or assets owned or
leased makes such qualification necessary and where failure to do so would have
a Material Adverse Effect (as defined in Section 12.7 hereof). AMCORE is duly
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended ("BHCA"). AMCORE has delivered to the Company as an exhibit to the
written statement signed by the Chief Financial Officer of AMCORE and delivered
by AMCORE to the Company at least three (3) business days prior to the date
hereof (the "AMCORE Letter") true, accurate and complete copies of the currently
effective Certificate of Incorporation of AMCORE, the Articles of Incorporation
of Newco and the Bylaws of AMCORE and Newco, including all amendments thereto.
3.2 Capitalization. As of the date hereof, the authorized capital stock of
AMCORE consists of 30,000,000 shares of AMCORE Common Stock, par value $0.33 per
share, and 10,000,000 shares of preferred stock, par value $1.00 per share. As
of September 30, 1996, there were issued and outstanding 14,224,578 shares of
AMCORE Common Stock (which includes the corresponding number of rights to
purchase shares of AMCORE Common Stock pursuant to the Rights Agreement dated as
of February 21, 1996 between AMCORE and Firstar Trust Company as Rights Agent)
and no shares of Preferred Stock. As of September 30, 1996, a total of 191,721
shares of AMCORE Common Stock were reserved for issuance in connection with the
agreements and plans described in Section 3.2 of the AMCORE Letter, and 702,117
shares of AMCORE Common Stock were held in AMCORE's treasury. All of such issued
and outstanding shares of capital stock are validly issued, fully paid, and
nonassessable and not issued in violation of any person's preemptive rights. The
shares of AMCORE Common Stock to be issued pursuant to Article II hereof will,
upon issuance, be duly authorized, validly issued, fully paid, nonassessable,
and free of preemptive rights.
3.3 Authorization. AMCORE and Newco have full corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The respective Boards of Directors of AMCORE and Newco, and AMCORE as
the sole stockholder of Newco, have unanimously approved the Agreement and the
transactions contemplated hereby and have, respectively, authorized the
execution, delivery, and performance by AMCORE and Newco of this Agreement. No
other corporate proceeding on the
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part of AMCORE and Newco is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by AMCORE and Newco and constitutes the valid
and binding obligations of AMCORE and Newco, enforceable against them in
accordance with their terms, subject to (a) all applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting the enforcement of
creditors' rights generally, and (b) the application of equitable principles if
equitable remedies are sought.
3.4 No Violation. Neither the execution and delivery of this Agreement by
AMCORE or Newco nor the consummation by AMCORE or Newco of the transactions
contemplated hereby, nor compliance by AMCORE or Newco with any of the terms or
provisions hereof, will (i) violate any provision of the Certificate of
Incorporation of AMCORE, the Articles of Incorporation of Newco or the Bylaws of
AMCORE or Newco, or (ii) assuming that the consents and approvals referred to in
Section 3.8 hereof are duly obtained, (x) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
AMCORE or any of its Subsidiaries or any of their respective properties or
assets, or (y) except as set forth in Section 3.8 of the AMCORE Letter, violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of AMCORE or any of
its Subsidiaries under the terms, conditions or provisions of, any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which AMCORE or any of its Subsidiaries is a party,
or by which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (ii) above) for such violations,
conflicts, breaches or defaults which either individually or in the aggregate
will not have a Material Adverse Effect on AMCORE.
3.5 AMCORE Reports and Financial Statements. AMCORE has heretofore
delivered to the Company true and complete copies of all reports, registration
statements and other filings made by AMCORE with the Securities and Exchange
Commission (the "SEC") since January 1, 1995 through the date hereof (such
reports, registration statements and other filings, together with any amendments
thereto, are sometimes collectively referred to as the "SEC Filings"). As of
their respective dates, the SEC Filings did not contain any untrue statements of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made not misleading. The audited financial statements and
unaudited interim financial statements included in the SEC Filings fairly
present, in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis except as disclosed in the footnotes thereto, the
consolidated financial position and results of operations of AMCORE and its
Subsidiaries as of the dates and for the periods then ended (subject to normal
year end adjustments).
3.6 Absence of Certain Changes. Except as may be set forth in Section 3.6
of the AMCORE Letter or as disclosed in the SEC Filings made after September 30,
1996, since September 30, 1996, (i) neither AMCORE nor any of its Subsidiaries
has incurred any material liability, except in the ordinary course of their
businesses consistent with their past practices, and (ii) no event has occurred
which has had, individually or in the aggregate, a Material Adverse Effect on
AMCORE.
3.7 Legal Proceedings. Except as set forth in Section 3.7 of the AMCORE
Letter or in AMCORE's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996, neither AMCORE nor any of its Subsidiaries is a party to any
and there are no pending or, to the best of AMCORE's knowledge, threatened,
material legal, administrative, arbitral or other proceedings, claims, actions
or governmental or regulatory investigations of any nature against AMCORE or any
of its Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement as to which there is a reasonable probability of
an adverse determination and which, if adversely determined, would have a
Material Adverse Effect on AMCORE. There is no injunction, order, judgment,
decree, or regulatory restriction imposed upon AMCORE, any of its Subsidiaries
or the assets of AMCORE or any of its Subsidiaries which has had a Material
Adverse Effect on AMCORE.
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3.8 Consents and Approvals. Except for the consents and approvals of or
filings or registrations with (i) the Federal Reserve Board under the BHCA, the
Bank Merger Act and the Federal Reserve Act (the "FRA"), (ii) applicable state
banking authorities, and (iii) the SEC, if any, and the filing of the Articles
of Merger with the Department of Financial Institutions pursuant to the WBCL and
the requirements of state securities or "Blue Sky" laws and otherwise in Section
3.8 of the AMCORE Letter, no consent or approval of or filing or registration
with any court, administrative agency, or commission, or other governmental
authority or instrumentality, domestic or foreign ("Governmental Entity") or
with any third party are necessary in connection with the execution and delivery
by AMCORE and Newco of this Agreement and the consummation by AMCORE and Newco
of the Merger and the other transactions contemplated hereby.
3.9 Registration Statement. The Registration Statement to be filed pursuant
to Section 7.1 hereof and the Proxy Statement/Prospectus (as defined in Section
7.1 hereof) included therein (a) will comply in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), and the
Securities Exchange Act of 1934 (the "Exchange Act"), and (b) will not, at the
date the Proxy Statement/Prospectus is first mailed or delivered to the Company
stockholders, and will not, at the date or dates of the meeting of the Company's
stockholders referred to in Section 6.9 hereof, as then amended or supplemented,
contain any untrue statement of any material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not false or misleading. Notwithstanding the
foregoing, AMCORE and Newco make no representation or warranty and shall have no
responsibility for the truth or accuracy of any information with respect to the
Company or its affiliates or associates contained in the Registration Statement
or the Proxy Statement/Prospectus that was provided by the Company, its
affiliates, or associates.
3.10 Newco. Newco was formed by AMCORE solely for the purpose of engaging
in the transactions contemplated hereby. As of the date hereof and at the
Effective Time, the capital stock of Newco is and will be 100% owned by AMCORE
directly. Further, there are not as of the date hereof and there will not be at
the Effective Time any outstanding or authorized options, warrants, calls,
rights, commitments or any other agreements of any character to which Newco is a
party, or by which it may be bound, requiring it to issue, transfer, sell,
purchase, redeem or acquire any shares of its capital stock or any securities or
rights convertible into, exchangeable for, or evidencing the right to subscribe
for or acquire any shares of its capital stock. As of the date hereof and at the
Effective Time, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated hereby,
Newco has not and will not have incurred, directly or indirectly through any
Affiliate, any obligations or liabilities or engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any Person. AMCORE will take all action necessary to ensure
that Newco at no time prior to the Effective Time owns any asset other than an
amount of cash necessary to incorporate Newco and to pay the expenses of the
Merger attributable to Newco if the Merger is consummated.
3.11 Compliance with Laws and Orders. AMCORE and its Subsidiaries have
complied in all material respects with all laws, regulations, and orders
(including zoning ordinances) applicable to it and to the conduct of its
respective businesses, including without limitation, all statutes, rules, and
regulations pertaining to the conduct of AMCORE's Subsidiaries' banking
activities, and neither AMCORE nor any AMCORE Subsidiary is in default under,
and no event has occurred that, with the lapse of time or action by a third
party or both, could result in the default under the terms of any judgment,
decree, order, writ, rule, or regulation of any governmental authority or court,
whether federal, state, or local and whether at law or in equity, where the
failure to be in full compliance or where to be in default would reasonably be
expected to result in damages, costs, or expenses which in the aggregate would
have a Material Adverse Effect.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to AMCORE and Newco as follows:
4.1 Corporate Organization. The Company is a corporation duly organized,
validly existing, and in active status under the laws of the State of Wisconsin
and has all requisite corporate power and authority to own, operate, and lease
its properties as presently owned, operated, or leased and to engage in the
activities and business now conducted by it. The Company is qualified to do
business in each jurisdiction in which the nature of business conducted or
assets owned or leased make such qualification necessary and where a failure to
do so would have a Material Adverse Effect on the Company. The Company is duly
registered as a bank holding company under the BHCA. The Company's acquisition
of the capital stock of the Banks (as hereinafter defined) was duly approved by
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") pursuant to applicable sections of the BHCA. The Company has heretofore
delivered to AMCORE, true, accurate, and complete copies of the currently
effective Articles of Incorporation and Bylaws of the Company, including all
amendments thereto. Except for shares of the Company Subsidiaries (as
hereinafter defined), the Company and its Subsidiaries do not own beneficially,
directly or indirectly, five percent (5%) or more of any class of equity
securities, partnership interests, limited liability company ("LLC") interests
or similar interests of any other corporation, bank, partnership, LLC, business
trust, association, or similar organization.
4.2 Capitalization. Except as set forth in Section 4.2 of the Company
Letter, the authorized capital stock of the Company consists of (a) 400,000
shares, no par value, of Company Common Stock, of which 358,250 shares were
issued and outstanding, 75,449 shares were subject to issuance in the Belleville
Transactions and 6,000 shares were reserved for or subject to issuance, as set
forth in Section 4.2 of the Company Letter, under various warrants, options, or
similar agreements ("Company Options") and no shares were held in the Company's
treasury; and (b) no shares of preferred stock. All such issued and outstanding
shares of the Company capital stock are validly issued, fully paid, and
non-assessable and not issued in violation of any person's preemptive rights
(except as provided in Section 180.0622(2)(b) of the WBCL including judicial
interpretations thereof and of predecessor statutes thereto). Except for the
Belleville Transactions, the Company Options and as set forth in Section 4.2 of
the Company Letter, the Company does not have any arrangements or commitments
obligating the Company to issue or sell or otherwise dispose of, or to purchase
or redeem shares of its capital stock or any securities convertible into or
having the right to purchase shares of its capital stock.
4.3 Organization of Company Subsidiaries. (a) Section 4.3 of the Company
Letter sets forth a true and correct list of all of the banking subsidiaries of
the Company (the "Banks"). Each of the Banks is state-chartered, duly organized,
validly existing, and in good standing under the laws of the State of Wisconsin.
The Company has delivered to AMCORE, as Section 4.3 to the Company Letter, true,
accurate, and complete copies of the currently effective Charter and Bylaws of
each Company Subsidiary, including all amendments thereto. Each Bank (a) is duly
authorized to conduct a general banking business, subject to the supervision of
the Division of Banking of the Wisconsin Department of Financial Institutions
(the "Wisconsin Division"), at its office identified in Section 4.3 to the
Company Letter; (b) is an insured bank as defined in the Federal Deposit
Insurance Act; (c) has full power and authority to engage in the business and
activities now conducted by it; and (d) possesses and is in full compliance with
all material licenses, franchises, permits, and other governmental
authorizations that are legally required.
(b) Section 4.3 of the Company Letter sets forth a true and complete list
of all of the subsidiaries of the Banks (the "Nevada Subsidiaries" and together
with the Banks, the "Current Company Subsidiaries"). Each of the Nevada
Subsidiaries is a corporation duly organized and validly existing and in good
standing under the laws of Nevada with full power and authority to engage in the
activities and business now conducted by it. The Company has delivered to AMCORE
true, accurate and complete copies of the currently effective Articles of
Incorporation and Bylaws of the Nevada Subsidiaries. The Nevada Subsidiaries
possess and are in full compliance with all licenses, franchises, permits and
other governmental authorizations that are legally
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required except to the extent that non-possession and noncompliance would not
have a Material Adverse Effect.
(c) Belleville State Bank ("Belleville Bank") is state chartered, duly
organized, validly existing and in active status under the laws of the State of
Wisconsin. The Company has delivered to AMCORE true, accurate and complete
copies of the currently effective articles and Bylaws of Belleville Bank,
including all amendments thereto. Belleville Bank (a) is duly authorized to
conduct a general banking business, subject to the supervision of the Department
of Financial Institutions, at its office identified in Section 4.3 to the
Company Letter; (b) is an insured bank as defined in the Federal Deposit
Insurance Act; (c) has full power and authority to engage in the business and
activities now conducted by it; and (d) possesses and is in full compliance with
all licenses, franchises, permits, and other governmental authorizations that
are legally required.
(d) BBC-Belleville, Inc. ("Belleville Sub" and after consummation of the
Belleville Transactions and together with Belleville Bank and Current Company
Subsidiaries, the "Company Subsidiaries") is a corporation duly organized and
validly existing and in good standing under the laws of Nevada with full power
and authority to engage in the activities and business now conducted by it. The
Company has delivered to AMCORE true, accurate and complete copies of the
currently effective Articles of Incorporation and Bylaws of Belleville Sub.
Belleville Sub possesses and is in full compliance with all licenses,
franchises, permits and other governmental authorizations that are legally
required.
(e) As used herein: "Current Company Subsidiaries" shall mean the Banks and
the Nevada Subsidiaries; and "Company Subsidiaries" shall mean the Current
Company Subsidiaries and, after consummation of the Belleville Transactions,
Belleville Bank and Belleville Sub.
4.4 Capitalization of Company Subsidiaries. Except as set forth in Section
4.4 of the Company Letter, the Company owns 100% of the issued and outstanding
shares of capital stock of each of the Current Company Subsidiaries, and at
Closing will own 100% of the issued and outstanding shares of capital stock of
each of the Company Subsidiaries (except for any shares of Belleville Bank which
are not acquired pursuant to the Belleville Transactions), and Belleville Bank
owns 100% of the issued and outstanding shares of capital stock of Belleville
Sub, in each case free and clear of all liens, charges, pledges, claims,
encumbrances and security interests whatsoever, and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable (except pursuant
to Wisconsin Statutes Sections 180.0622(2)(b) and 220.07 and free of preemptive
rights, with no personal liability attaching to the ownership thereof. The
Company is not a party to or bound by any commitment or obligation to issue or
sell or otherwise dispose of, or to purchase or redeem, any capital stock or any
other security convertible into or having the right to purchase such shares of
capital stock of the Company Subsidiaries.
4.5 Authorization. The Board of Directors of the Company has approved this
Agreement and the transactions contemplated hereby and has authorized the
execution, delivery and performance by the Company of this Agreement and will
recommend approval of this Agreement by the Company's stockholders at the
special meeting described in Section 6.9 hereof. No other corporate proceeding
on the part of the Company is necessary to authorize this Agreement or to
consummate the transactions contemplated hereby other than the approval and
adoption of this Agreement by stockholders holding a majority of the outstanding
Company Common Stock entitled to vote thereon. The Company has full corporate
power and authority to enter into this Agreement and, upon approval of its
stockholders in accordance with the law and subject to the conditions set forth
in Article IX of this Agreement, to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and constitutes the valid and binding obligations of the Company,
enforceable in accordance with its terms, subject to (a) all applicable
bankruptcy, insolvency, moratorium, or other similar laws affecting the
enforcement of creditors' rights generally, and (b) the application of equitable
principles if equitable remedies are sought.
4.6 No Violation; Consents and Approvals. (a) Neither the execution and
delivery of this Agreement by the Company nor the consummation by the Company of
the transactions contemplated hereby, nor compliance by the Company with any of
the terms or provisions hereof, will (i) violate any provision of the Articles
of Incorporation or Bylaws of the Company or its Subsidiaries, or (ii) assuming
that the consents and
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approvals referred to in this Section 4.6 are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company or any of the Company Subsidiaries or any
of their respective properties or assets, or (y) except as set forth in Section
4.6(a) of the Company Letter, violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of the Company or any Company Subsidiary under
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
the Company or any of the Company Subsidiaries is a party, or by which they or
any of their respective properties or assets may be bound or affected, except
(in the case of clause (ii) above) for such violations, conflicts, breaches or
defaults which either individually or in the aggregate will not have a Material
Adverse Effect on the Company or the Company Subsidiaries.
(b) Except for the consents and approvals of or filings or registrations
with (i) the Federal Reserve Board under the BHCA, the Bank Merger Act and the
FRA, (ii) applicable requirements of the Wisconsin Division, and (iii) the SEC,
if any, and the filing of the Articles of Merger with the Department of
Financial Institutions pursuant to the WBCL and the requirements of state
securities or "Blue Sky" laws and otherwise set forth in Section 4.6(b) of the
Company Letter, no consent or approval of or filing or registration with any
Governmental Entity or with any third party are necessary in connection with the
execution and delivery by the Company of this Agreement and the consummation by
the Company of the Merger and the other transactions contemplated hereby.
4.7 Financial Statements. The Company has heretofore furnished to AMCORE
copies of the following financial statements: (a) the audited Consolidated
Balance Sheet of the Company as of December 31, 1994 and 1995, and the
Consolidated Statements of Earnings, Stockholders' Equity, and Cash Flows for
each of the years in the three-year period ended December 31, 1995 (the "Latest
Statement Date"), together with the notes thereto, and the unqualified opinion
of Arthur Andersen LLP, the Company's independent auditors (the "Latest Company
Financial Statements"); (b) the Consolidated Balance Sheet of the Company and
the Consolidated Statement of Earnings for each quarter ended between the Latest
Statement Date and the date hereof; and (c) Report of Condition of each Bank and
Belleville Bank as of June 30, 1996, together with the related Reports of Income
for the period then ended, as included in the call report of each Bank as of
said date as filed with the Federal Deposit Insurance Corporation (the "FDIC")
(collectively, the "Company Financial Statements"). The Company Financial
Statements are true and correct in all material respects and fairly present the
financial position and results of operation of the Company and its Subsidiaries
as of the dates and for the periods then ended. Each of the financial statements
referred to in clauses (a) and (b) of this Section 4.7 has been prepared in
accordance with GAAP (applied on a consistent basis except as disclosed in the
footnotes thereto) and, with respect to the financial statements referred to in
clause (b), subject to normal year end adjustments. The financial statements
referred to in clause (c) of this Section 4.7 have been prepared in accordance
with the applicable regulations and standards of the FDIC. The Company Financial
Statements do not, as of the date 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, misleading in any material
respect. Since the Latest Statement Date, there has been no change in the
financial condition, results of operation, assets, or business of the Company or
Company Subsidiaries (other than changes in the ordinary course of business,
none of which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect), nor has there been any other event or condition
of any character that has had a Material Adverse Effect, and to the knowledge of
the Company, no fact or condition exists that would reasonably be expected to
have such a Material Adverse Effect in the future. The Company Financial
Statements pursuant to GAAP, reflect adequate provision for, or reserves
against, the possible credit losses of the Company and the Company Subsidiaries
as of such dates. There are no facts, circumstances, trends, or expectations
known to the Company that could cause the Company to restate the level of such
allowance for loan losses. The books and records of the Company and the Company
Subsidiaries have been, and are being, maintained in all material
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respects in accordance with applicable legal and accounting requirements and
reflect only actual transactions, except to the extent required by applicable
legal or accounting requirements.
4.8 Absence of Certain Changes. Since the Latest Statement Date, neither
the Company nor any of the Company Subsidiaries has, except as set forth in
Section 4.8 of the written statement signed by the Chief Executive Officer of
the Company and delivered by the Company to AMCORE at least three (3) business
days prior to the date hereof (the "Company Letter") and except for the
Belleville Transactions, (a) issued or sold any corporate debt securities
(except documents and instruments issued in the ordinary course of the banking
business of the Banks); (b) granted any option for the purchase of its capital
stock; (c) declared or set aside or paid any dividend or other distribution in
respect of its capital stock; (d) incurred any material obligation or liability
(absolute or contingent) except obligations or liabilities incurred in the
ordinary course of business, (e) mortgaged, pledged, or subjected to lien or
encumbrance (other than statutory liens for taxes not yet delinquent) any of its
assets or properties, except pledges to secure government deposits and in
connection with repurchase or reverse repurchase agreements; (f) discharged or
satisfied any lien or encumbrance or paid any obligation or liability (absolute
or contingent), other than current liabilities included in the Company's and the
Company Subsidiaries' consolidated balance sheet as of the Latest Statement
Date, and current liabilities incurred since the date thereof in the ordinary
course of business; (g) sold, exchanged, or otherwise disposed of any of its
capital assets other than in the ordinary course of business; (h) made or
modified any general wage or salary increase, entered into or modified any
employment contract with any officer or salaried employee, or instituted any
employee welfare, fringe benefit, bonus, stock option, profit sharing,
retirement, or similar plan or arrangement and has not contributed any amounts,
funds or property to any trust in respect of any obligations under such plans or
arrangements; (i) suffered any damage, destruction, or loss, whether or not
covered by insurance, having a Material Adverse Effect, or waived any rights of
value that are material in the aggregate, considering its business taken as a
whole; (j) except in the ordinary course of business, entered, or agreed to
enter, into any agreement or arrangement granting any preferential right 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; (k) entered into any transaction outside the ordinary course of its
business, except as expressly contemplated by this Agreement; (l) except in the
ordinary course of business or as reflected in the Company Financial Statements,
sold or otherwise disposed of any of its loans and investment securities; or (m)
changed accounting principles utilized by the Company or the Company
Subsidiaries.
4.9 Legal Proceedings. (a) Except as set forth in Section 4.9 of the
Company Letter, neither the Company nor any Company Subsidiary is a party to
any, and there are no pending or, to the best of the Company's and the Company
Subsidiaries' knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against the Company or any Company Subsidiary or challenging the validity
or propriety of the transactions contemplated by this Agreement.
(b) Except as otherwise disclosed in Section 4.9(b) of the Company Letter,
there is no injunction, order, judgment, decree or regulatory restriction
imposed upon the Company, the Company Subsidiaries or the assets of the Company
or the Company Subsidiaries which has had, or might reasonably be expected to
have, a Material Adverse Effect on the Company.
(c) Section 4.9(c) of the Company Letter sets forth all pending litigation
involving any claim against the Company, whether directly or by counterclaim,
involving a "lender liability" cause of action.
4.10 Company Information. The information relating to the Company and the
Company Subsidiaries to be contained in a proxy statement of the Company or
furnished to AMCORE for the Registration Statement (as defined in Section 7.1
hereof) which such proxy statement will be included as a prospectus, or in any
other document filed with any other regulatory agency in connection herewith by
the Company, 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 in which they are made, not misleading.
4.11 Agreements with Regulatory Agencies. Except as disclosed in the
Company Reports or as set forth in Section 4.11 of the Company Letter, neither
the Company nor any Company Subsidiary is subject to any
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cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory letter from,
or has adopted any board resolutions at the request of (each, whether or not set
forth in Section 4.11 of the Company Letter, a "Regulatory Agreement"), any
Regulatory Agency or other Governmental Entity that restricts the conduct of its
business or that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has the Company or any Company
Subsidiary been advised by any Regulatory Agency or other Governmental Entity
that it is considering issuing or requesting any Regulatory Agreement.
4.12 Intellectual Property. The Company and the Company Subsidiaries own or
possess valid and binding licenses or other rights to use without payment all
material patents, copyrights, trade secrets, tradenames, servicemarks and
trademarks used in its businesses and neither the Company nor any Company
Subsidiary has received any notices of conflict with respect thereto that
asserts the right of others. The Company and the Company Subsidiaries have in
all material respects performed all the obligations required to be performed by
them and are not in default in any material respect under any contract,
agreement, arrangement or commitment relating to any of the foregoing, except
where such nonperformance or default would not, individually, or in the
aggregate, have a Material Adverse Effect on the Company.
4.13 Fairness Opinion. The Company has received an opinion, dated the date
of this Agreement, from The Chicago Corporation ("Chicago Corp.") to the effect
that, subject to the terms, conditions and qualifications set forth therein, as
of the date hereof the consideration to be received by the stockholders of the
Company pursuant to the Merger is fair to such stockholders from a financial
point of view, a copy of which opinion will be delivered to the Company, dated
the Closing Date on or about the date that is three (3) business days prior to
the date that the Proxy Statement/Prospectus is mailed to stockholders of the
Company, and a copy of which such updated opinion may be included in the Proxy
Statement/Prospectus.
4.14 Employee Benefit Matters. (a) The Company Letter sets forth in Section
4.14(a) a true and complete list of each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, restricted stock, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, savings or
retirement plan, program, agreement or arrangement, and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to by the Company or by any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with the Company would be deemed a "single employer" within the meaning of
section 4001(b) of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder ("ERISA"), for the
benefit of any current or former employee, officer, director, consultant or
agent of the Company or any of its ERISA Affiliates.
(b) All of the plans, programs, and arrangements described in this Section
4.14 or listed in the Company Letter (hereinafter referred to as the "Plans")
have been operated and administered in accordance with their respective
provisions and are in material compliance with all applicable requirements of
ERISA, the Code and all other applicable federal and state laws, including the
reporting and disclosure requirements of Part I of Title I of ERISA and the
continuation coverage requirements of Sections 601 through 608 of ERISA. Each of
the Plans that is intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service (the "IRS") to qualify under
Section 401(a) of the Code and there exist no circumstances that may adversely
affect the qualified status of any such Plan. Except as set forth in the Company
Letter, there is no pending or, to Company's Knowledge, threatened litigation,
governmental proceeding, or investigation against or relating to any Plan, and
there is no reasonable basis for any material proceedings, claims, actions, or
proceedings against any Plan. Except as set forth in Section 4.14(b) of the
Company Letter, no Plan (or Plan fiduciary) has engaged in a "Prohibited
Transaction" (as defined in Section 406 of ERISA or Section 4975(c) of the Code)
or breach of fiduciary standards (as described in Section 404 of ERISA or other
applicable law). All payments due from any Plan (or from the Company or any
ERISA Affiliate with respect to any Plan) have been made, and all amounts
properly accrued to date as liabilities of the Company or any ERISA Affiliate
that have not yet been paid have been properly recorded on the books of the
Company or any ERISA Affiliate.
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(c) Neither the Company nor any ERISA Affiliate maintains or contributes to
(or is required to contribute to) or previously maintained or contributed to (or
was required to contribute to) a plan, fund, or program that is subject to Title
IV of ERISA.
(d) Except as set forth in Section 4.14(d) of the Company Letter, neither
the Company nor any ERISA Affiliate nor any Plan maintained or contributed to by
the Company or any ERISA Affiliate provides or has any obligation to provide (or
contribute toward the cost of) post-retirement welfare benefits with respect to
current or former employees, officers, directors, agents, or consultants of the
Company or any ERISA Affiliate or any other entity, including, without
limitation, post-retirement medical, dental, life insurance, severance, or any
other similar benefit, whether provided on an insured or self-insured basis.
(e) The Company has delivered to AMCORE as Sections 4.14(e)(i)-(viii) of
the Company Letter (i) a true and correct copy of each Plan (or, in the case of
any Plan that is not in written form, a complete and accurate description of the
material provisions of the Plan); (ii) complete and current copies of summary
plan descriptions of each Plan that is subject to ERISA; (iii) each trust
agreement, insurance policy, or other instrument relating to the funding of any
Plan; (iv) the two most recent Annual Reports (Form 5500 series) and
accompanying schedules filed with the IRS or United States Department of Labor
with respect to each Plan that is subject to ERISA, if applicable; (v) the most
recent determination letter issued by the IRS with respect to each Plan that is
intended to qualify under Section 401(a) of the Code; (vi) the most recent
available financial statements for each Plan that has assets; (vii) the most
recent audited financial statements for each Plan for which audited financial
statements are required by ERISA; and (viii) the most recent actuarial report
for each Plan that is a defined benefit pension plan.
(f) Neither the Company nor any ERISA Affiliate maintains or has maintained
any employee stock ownership plan within the meaning of Code Section 4975(e)(7)
or similar retirement plan.
(g) Except as set forth in Section 4.14(g) of the Company Letter, the
consummation of the transactions contemplated by this Agreement will not entitle
any current or former employee, officer, director, consultant, or agent of the
Company or any ERISA Affiliate to severance pay, unemployment compensation, or
any other payment, or accelerate the time of payment or vesting, or increase the
amount of compensation due to any such current or former employee, officer,
director, consultant, or agent. Further, except as set forth in Section 4.14(g)
of the Company Letter, neither the Company nor any ERISA Affiliate has announced
any type of plan or binding commitment to create any additional Plan or to amend
or modify any existing Plan, except as required by applicable law.
(h) No amounts payable under the Plans or any other agreement or
arrangement to which the Company or any ERISA Affiliate is a party will, as a
result of the transaction contemplated hereby, fail to be deductible for federal
income tax purposes by virtue of section 280G of the Code.
(i) No Plan is nor does the Company or any ERISA Affiliate have any
liability under a "multi-employer plan," as such term is defined in section
4001(a)(3) of ERISA.
(j) There are no pending, threatened or anticipated claims by or on behalf
of any Plan, by any employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan (other than routine claims for benefits).
4.15 Tax Matters. Except as set forth in Section 4.15 of the Company
Letter, the Company and the Company Subsidiaries have duly and timely filed with
the appropriate governmental agencies all federal, state, local, and foreign tax
returns and reports (including information returns and reports) that are
required to be filed, and have paid all taxes owed by them, including those
relating to income, withholding, social security, unemployment, workers
compensation, franchise and valorem, premium, excise, use, and sales taxes.
There are included in the Company Financial Statements adequate reserves for the
payment of all federal, state, and local taxes of the Company and the Company
Subsidiaries, including interest, additions and penalties, whether or not
disputed for such fiscal year and all fiscal years prior thereto. Neither the
Company nor any of the Company Subsidiaries has executed or filed with the IRS,
the Wisconsin Department of Revenue, or any other taxing authority any agreement
extending the period for assessment and collection of any federal, state or
local tax, nor is the Company nor any of the Company Subsidiaries a party to any
action or proceeding by
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any taxing authority for assessment or collection of taxes, except tax liens or
levies against customers of the Company Subsidiaries.
Neither the Company nor any of the Company Subsidiaries has, during the
past five (5) years, except as disclosed in Section 4.15 of the Company Letter,
received any notice of deficiency or proposed deficiency from the IRS or any
other taxing authority with respect to any federal, state or local taxes, and to
the Company's knowledge, no circumstances exist that reasonably could be
expected to result in assessments. No federal, state or local tax return of the
Company or any of the Company Subsidiaries is currently the subject of any audit
by the IRS or any other taxing authority. Except as disclosed in Section 4.15 of
the Company Letter, neither the Company nor any of the Company Subsidiaries is a
party to any agreement providing for allocation or sharing of taxes. Neither the
Company nor any of the Company Subsidiaries has ever been a member of an
affiliated group of corporations (within the meaning of Section 1504(a) of the
Code) filing federal consolidated income tax returns or state unitary combined,
consolidated or similar income tax returns, other than the affiliated group of
which the Company is the common parent.
4.16 Title and Condition. (a) Each of the Company and the Company
Subsidiaries has good, valid, and marketable title to all assets and properties,
whether real or personal, tangible or intangible, that it purports to own,
including without limitation all assets and properties reflected in the Company
Financial Statements or acquired subsequent thereto (except to the extent that
such assets and properties have been disposed of for fair value in the ordinary
course of business since the Latest Statement Date), 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
for taxes not yet delinquent; (iii) securing interests granted to secure
deposits of funds by federal, state, or other governmental agencies granted in
connection with repurchase or reverse repurchase agreements or otherwise
incurred in the ordinary course of business; and (iv) minor defects and
irregularities title and encumbrances that do not materially impair the use
thereof for the purposes for which they are held, and such liens, mortgage,
security interests,encumbrances, and charges as are not in the aggregate
material to the assets and properties of the Company or any Company Subsidiary.
The Company or any of the Company Subsidiaries, as lessee, has the right under
valid and subsisting leases to occupy, use, possess, and control all property
leased by the Company or any Company Subsidiary, qualified only by the written
terms of such leases, as set forth in Section 4.16(a) of the Company Letter. A
legal description of all real property currently owned or leased by the Company
and the Company Subsidiaries, including properties held by the Company
Subsidiaries as a result of foreclosure or repossession or carried on the
Company Subsidiaries' books as "other real estate owned" (the "Current Real
Properties"), has been provided as Section 4.16(a) of the Company Letter. The
Current Real Properties and all tangible properties therein are in generally
good condition and have been well maintained in accordance with reasonable and
prudent business practices applicable to like facilities.
(b) There are no proceedings, claims, disputes, or conditions affecting any
of the Current Real Properties of the Company or the Company Subsidiaries that
could reasonably be expected to curtail or interfere with use of such property.
(c) Except as described in Section 4.16(c)(i) of the Company Letter or as
described in environmental reports disclosed therein, the Current Real
Properties and the Loan Property (as defined below) are in material compliance
with all Environmental Laws, as hereinafter defined, and there are not
conditions existing currently or likely to exist at the Current Real Properties,
the Loan Property, and all other real properties owned, leased, held or
administered in any capacity by the Company or the Company Subsidiaries at any
time in the past ("Former Real Properties") (together with Current Real
Properties and the Loan Property, the "Real Properties") that would subject the
Company or any Company Subsidiary to damages, penalties, injunctive relief, or
cleanup costs under any Environmental Laws or assertions thereof, or which
require or are likely to require, in any material respect, cleanup, removal,
remedial action, or other response pursuant to Environmental Laws by the Company
or any Company Subsidiary; neither the Company nor any Company Subsidiary
(either in its own capacity or as trustee or fiduciary) has violated in any
material respects Environmental Laws, nor is the Company or any of the Company
Subsidiaries (either in its own capacity or as trustee or fiduciary) required to
clean up, remove, or take remedial or other responsive action at any property
due to the disposal, for disposal, treating, depositing, discharge, leaking, or
other release of any hazardous
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substances or materials. No material permits, licenses or approvals are required
under Environmental Laws relative to the Current Real Properties; and, except as
disclosed in Section 4.16(c)(ii) of the Company Letter or as described in
environmental reports disclosed therein, there are not now nor, to the Company's
knowledge, have there ever been materials (including, without limitation,
asbestos) stored, deposited, treated, recycled, used, or disposed of on, under,
or at the Real Properties (or tanks or other facilities thereon containing such
materials), in a manner or condition which materials, if known to be present on
the Real Properties or present in soils or ground water, would require material
cleanup, removal, or some other remedial action under Environmental Laws. The
term "Environmental Laws" shall mean all applicable federal, state, and local
environmental laws relating to pollution, protection of the environment, or
protection of human health and safety, as now or at any time hereinafter in
effect, including, without limitation, the Solid Waste Disposal Act, the
Hazardous Materials Transportation Act, the Clean Water Act, the Clean Air Act,
the Resource Conservation and Recovery Act, the Toxic Substances Control Act,
the Occupational Safety and Health Act and the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), any
so-called "Superfund" or "Superlien" laws, their state and local laws, their
state and local law counterparts, all rules and regulations promulgated
thereunder, relevant common law standards and any order, judgment, or injunction
issued, entered promulgated, or approved thereunder. For purposes of this
Section 4.16(c), "Loan Property" means any property in which the Company or any
Company Subsidiary holds a security interest, and where required by the context,
said term meaning the owner or operator of such property.
(d) With respect to each facility in which the Company and/or the Company
Subsidiaries has held or currently holds indicia of ownership to protect a
security interest in the facility ("Company Interested Property"), the Company
and/or the Company Subsidiaries has at all times conducted its operations such
that it did not "participate in the management of the facility" or otherwise
become liable under any Environmental Laws with respect to such facilities.
(e) No claim, action, suit, demand, investigation, or proceeding is pending
or known to be threatened against the Company or any Company Subsidiary relating
to any Real Property or otherwise involving any Real Property, before any court
or other governmental authority or arbitration tribunal relating to pollution,
Environmental Laws, or the environment; there is no outstanding judgment, order,
writ, injunction, decree, or award against or affecting the Company or any
Company Subsidiary with respect to Real Property or, to the knowledge of the
Company, with respect to Company Interested Property, other than liens on such
Company Interested Property in the ordinary course; and neither the Company nor
its Subsidiaries have been identified, to their knowledge, as a potentially
responsible party any Governmental Entity in a matter arising under any
Environmental Laws. Section 4.16(e) of the Company Letter includes a list of all
environmental reports, investigations, or audits relating to any Real Property
or Company Interested Property of which the Company has knowledge, whether
conducted by or on behalf of the Company or any Company Subsidiary or a third
party, and whether done at the initiative of the Company or any Company
Subsidiary or directed by a Governmental Entity or other third party. The
Company has delivered to AMCORE complete and accurate copies of each such
report, or the results of each such investigation or audit, in each case to the
extent reasonably available to the Company.
4.17 Insurance. The Company has delivered to AMCORE as Section 4.17 of the
Company Letter, true, accurate and complete copies of all insurance policies and
fidelity bonds of the Company and the Company Subsidiaries. Since December 31,
1993, there have been no claims with respect to the Company or any of the
Company Subsidiaries under such bonds and insurance policies, and neither the
Company nor any of the Company Subsidiaries is aware of any acts of dishonesty
or losses that would form the basis of a material claim under such bonds or
insurance coverage. Each such policy is in full force and effect, with all
premiums due thereon on or prior to the Closing Date having been paid as and
when due. Neither the Company nor any Company Subsidiary has been notified that
its fidelity or insurance coverage will not be renewed by its carrier on
substantially the same terms as its existing coverage.
4.18 Compliance with Laws and Orders. The Company and the Company
Subsidiaries have complied in all material respects with all laws, regulations,
and orders (including zoning ordinances) applicable to it and to the conduct of
its respective businesses, including without limitation, all statutes, rules,
and regulations
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pertaining to the conduct of the Company Subsidiaries' banking activities, and
neither the Company nor any Company Subsidiary is in default under, and no event
has occurred that, with the lapse of time or action by a third party or both,
could result in the default under the terms of any judgment, decree, order,
writ, rule, or regulation of any governmental authority or court, whether
federal, state, or local and whether at law or in equity, where the failure to
be in full compliance would reasonably be expected to result in damages, costs,
or expenses of more than $50,000 in the aggregate or to otherwise have a
Material Adverse Effect.
4.19 Governmental Regulation. Each of the Company and the Company
Subsidiaries holds all licenses, certificates, permits, franchises, and rights
from all appropriate federal, state, and other public authorities necessary for
the conduct of their respective businesses, and, between the date hereof and the
Closing Date, the Company will, and will cause each Company Subsidiary to use
its best efforts to, maintain all such licenses, certificates, permits,
franchises and rights in effect. Each Bank is a member of the Bank Insurance
Fund administered by the FDIC; and has never been party to a "conversion
transaction" within the meaning of 12 U.S.C. Section 1815(d)(2)(B). Since
January 1, 1993, each of the Company and its Subsidiaries have timely filed all
Company Reports and amendments thereto that it was required to file and as of
their respective dates, and such Reports were correct in all material respects.
Neither the Company nor any of its Subsidiaries is a party or subject to any
agreement with, or directive or order issued by, the Federal Reserve Board or
any other bank regulatory authority, which imposes any restrictions or
requirements not applicable generally to bank holding companies (in the case of
the Company), or national banking association (in the case of the Banks or
Belleville Bank), with respect to the conduct of its business.
4.20 Contracts and Commitments. Except as set forth in Section 4.20 of the
Company Letter or the Belleville Transactions, neither the Company nor any of
its Subsidiaries is a party to or bound by any written or oral (a) lease or
license with respect to any property, real or personal, involving payments in
excess of $25,000 per annum, whether as lessor, lessee, licensor, or licensee;
(b) contract or commitment for capital expenditures in excess of $25,000 for any
one project or $100,000 in the aggregate; (c) contract or option for the
purchase or sale of any real or personal property other than in the ordinary
course of business; (d) contract, commitment, or agreement made outside the
ordinary course of business; (e) employment or consulting contract, not
terminable without penalty in excess of $25,000 by the Company or any of the
Company Subsidiaries on sixty (60) days notice or less; (f) agreement, option,
or contract relating to or involving the merger, consolidation, or sale of
assets or stock of the Company or any of the Company Subsidiaries; (g) union
contract or collective bargaining agreement; or (h) other executory material
agreement as defined by the instructions to Exhibit 10 under Item 601 of SEC
Regulation S-K. Each of the Company and its Subsidiaries has performed in all
material respects all obligations required to be performed by it to date and is
not in default under, and no event has occurred that, with the lapse of time or
action by a third party or both, could result in a default resulting in damages,
costs, or expenses of more than $50,000 in the aggregate or other material
default under any outstanding mortgage, lease, contract, commitment, or
agreement to which the Company or any of the Company Subsidiaries is a party or
by which the Company or any of the Company Subsidiaries is bound or under any
provision of their respective charter documents or Bylaws. Each such outstanding
mortgage, lease, contract, commitment, or agreement is a valid and legally
binding obligation of the Company or any of the Company Subsidiaries and, to the
knowledge of the Company, constitutes a valid and legally binding obligation of
the other party or parties thereto, subject to all applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and the application of equitable principles if
equitable remedies are sought.
4.21 Affiliate's Undertakings and Stockholders Voting Agreement. The
Company has furnished to AMCORE, (a) as Section 4.21 of the Company Letter,
current stockholder lists that (i) set forth the record name and the address and
number of shares held by each holder of Company Common Stock, and (ii) identify
each stockholder who is an executive officer (as defined under applicable SEC
rules and regulations) or director of the Company or any of the Company
Subsidiaries or a holder of five percent (5%) or more of the outstanding Company
Common Stock; (b) written undertakings, in the form attached hereto as Exhibit A
("Affiliate's Undertakings"), of all of the stockholders of the Company referred
to in clause (a)(ii) above; and (c) a Stockholders Voting Agreement, in the form
attached as Exhibit B, executed by each stockholder of the Company identified in
Section 4.21 of the Company Letter.
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4.22 Agreements with Directors, Officers, and Stockholders. Except as set
forth in Section 4.22 of the Company Letter, no director, executive officer, or
holder of five percent (5%) or more of the outstanding capital stock of the
Company, nor any director or executive officer of any of its Subsidiaries, nor
any associate of any such person (a "Company Principal or Company Subsidiary
Principal") is or has during the period subsequent to December 31, 1994, been a
party (other than as a depositor) to any transaction with the Company or any of
the Company Subsidiaries. Except as disclosed in Section 4.22 of the Company
Letter, no Company Principal or Company Subsidiary Principal holds any position
with or owns more than five percent (5%) of the outstanding shares of any class
of voting stock of any depository organization other than the Company.
4.23 Accuracy of Information. The statements contained in this Agreement,
in the Company Letter, and in any other written documents executed and/or
delivered by or on behalf of the Company pursuant to the terms of this Agreement
are true and correct in all material respects, and such Company Letter and any
such other documents do not omit any material fact necessary to make the
statements contained therein not materially misleading. The statements contained
in such Company Letter and such other documents contained therein or
specifically referred to in this Agreement or in the sections of the Company
Letter or made available pursuant to Section 6.5 hereof or in the exhibits or
schedules attached thereto will be deemed to constitute representations and
warranties of the Company under this Agreement to the same extent as if set
forth herein in full.
4.24 No Undisclosed Liabilities. Neither the Company, nor any of its
Subsidiaries, nor any of their respective properties is subject to any liability
or obligation (absolute, accrued, contingent, or otherwise), including without
limitation, any lease, contract, commitment, or purchase or sale agreement,
except: (a) as specifically disclosed and adequately reserved against in the
Company Financial Statements; (b) as disclosed in Section 4.24 of the Company
Letter; (c) liabilities or obligations arising or incurred in the ordinary
course of business of the Company or any of the Company Subsidiaries since the
Latest Statement Date, and consistent with past practices, none of which would
reasonably be expected to have individually or in the aggregate a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole; or (d)
liabilities or obligations that are not material to the business, operations,
prospects, properties, or assets of the Company and its Subsidiaries taken as a
whole.
4.25 Continuity of Interest. There is no plan or intention on the part of
the holders of Company Common Stock to sell, exchange, or otherwise dispose of a
number of shares of AMCORE Common Stock received in the Merger that would reduce
the ownership of AMCORE Common Stock by all such former holders of Company
Common Stock to a number of shares having a value, as of the Closing Date, of
less than 50% of the value of all of the formerly outstanding stock of the
Company as of the same date. For purposes of this representation, shares of
Company Common Stock surrendered by dissenters or exchanged for cash in lieu of
fractional shares of AMCORE Common Stock will be treated as outstanding Company
Common Stock on the date of the Merger. In addition, shares of Company Common
Stock and shares of AMCORE Common Stock held by Company stockholders and
otherwise sold, redeemed, or disposed of prior or subsequent to the Merger as
part of an overall plan pursuant to which the Merger is also being consummated
shall be considered in making the foregoing representation.
4.26 Investment and Loan Portfolios. All United States Treasury securities,
obligations of other United States Government agencies and corporations,
obligations of states and political subdivisions of the United States, and other
investment securities held by the Company and its Subsidiaries, as reflected in
the latest consolidated balance sheet of the Company included in the Company
Financial Statements, are accounted for in accordance with generally accepted
accounting principles. All loans and discounts shown on the Company Financial
Statements at the Latest Statement Date, or that were entered into after the
Latest Statement Date, but before the date hereof, were made in all material
respects for good, valuable, and adequate consideration in the ordinary course
of the business of the Company and its Subsidiaries, in accordance in all
material respects with sound banking practices, and the notes or other evidences
of indebtedness evidencing them are and will be, in all material respects,
enforceable (subject to all applicable bankruptcy, insolvency, moratorium, or
other similar laws affecting the enforcement of creditors' rights generally and
the applicability of equitable principles) valid, true, and genuine. The Company
and its Subsidiaries have complied and will prior to the
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Closing Date comply with all laws and regulations relating to such loans, or to
the extent there has not been such compliance, such failure to comply would not
reasonably be expected to materially interfere with the collection of any such
loan.
4.27 Certain Loans. Except as set forth in Sections 4.27(a) and (b),
respectively, of the Company Letter, (a) as of September 30, 1996, the Company
Subsidiaries were not a party to any written or oral loan agreement, note, or
borrowing arrangement under the terms of which the obligor is sixty (60) days
past due in payment of principal or interest or, to the knowledge of the
Company, in default of any other provision as of the dates shown thereon other
than credit card loans and other loans the unpaid balance of which does not
exceed $25,000 per loan; and (b) as of September 30, 1996, the Company
Subsidiaries were not a party to any written or oral loan agreement, note, or
borrowing arrangement which has been classified as "substandard," "doubtful,"
"loss," or any comparable classifications by the Company, its subsidiary, or any
banking regulator. The aggregate amount of all loans made by the Company and its
Subsidiaries which, as of the date hereof were ninety (90) days or more past due
in payment of principal or interest, including any nonaccrued loans, did not
exceed 1.0% of the gross amount of all such loans. For the purposes of this
Section 4.27, a loan shall be deemed to be past due if it is in fact past due
more than sixty (60) or ninety (90) days, as the case may be, or if it would
have been past due more than sixty (60) or ninety (90) days, as the case may be,
under the terms of the agreement under which it was originally created but for a
refinancing of such loan or a waiver, modification, or amendment of such
original agreement if such refinancing, waiver, modification, or amendment was
effectuated principally because of the borrower's actual or anticipated failure
or inability to comply with the terms of such agreement.
4.28 Administration of Trust Accounts. Each of the Company and its
Subsidiaries have properly administered, in all material respects, all accounts
for which it acts as fiduciary, including but not limited to accounts for which
it serves as a trustee, agent, custodian, personal representative, guardian, or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulations and common law. None of the
Company, its Subsidiaries, and any director, officer, or employee of the Company
and its Subsidiaries have committed any breach of trust with respect to any such
fiduciary account, and the accounting for each such fiduciary account is true
and correct in all respects and accurately reflects the assets of such fiduciary
account.
4.29 Accounting Matters. Neither the Company nor any of its Subsidiaries
has through the date hereof taken or agreed to take any action or actions that
would either alone or in conjunction with actions by others prevent AMCORE from
accounting for the business combination to be effected by the Merger as a
pooling of interests.
4.30 Interest Rate Risk Management Instruments. (a) Section 4.30 of the
Company Letter sets forth a true, correct, and complete list of all interest
rate swaps, caps, floors, and option agreements and other interest rate risk
management arrangements (including the names of all parties and counterparties
thereto) to which the Company or any of the Company Subsidiaries is a party or
by which any of their properties or assets may be bound. The Company has
delivered or made available to AMCORE true, correct, and complete copies of all
such interest rate risk management agreements and arrangements.
(b) All interest rate swaps, caps, floors, and option agreements to which
the Company is subject and other interest rate risk management arrangements to
which the Company or any of the Company Subsidiaries is a party or by which any
of their properties or assets may be bound were entered into in the ordinary
course of business and, in accordance with prudent banking practice and
applicable rules, regulations, and policies of the regulators to which the
Company is subject and with counterparties believed to be financially
responsible at the time; are legal, valid, and binding obligations enforceable
in accordance with their terms, subject to (i) all applicable bankruptcy,
insolvency, moratorium, or other similar laws affecting the enforcement of
creditors' rights generally, and (ii) the application of equitable principles if
equitable remedies are sought; and are in full force and effect. The Company and
its Subsidiaries have duly performed in all material respects all of their
obligations thereunder to the extent that such obligations to perform have
accrued; and there are no breaches, violations, or defaults or allegations or
assertions of such by any party thereunder.
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ARTICLE V
COVENANTS OF AMCORE
AMCORE agrees that from the date of this Agreement until the Effective
Time:
5.1 Affirmative Covenants. (a) AMCORE will, except insofar as deviations
from the following covenants would not reasonably be expected to have a Material
Adverse Effect on AMCORE: (a) conduct its business and operate only in
accordance with sound banking and business practices; (b) maintain its corporate
existence in good standing and file all material AMCORE Reports; and (c) as soon
as reasonably practicable, furnish the Company copies of all AMCORE's periodic
reports on Forms 10-K, 10-Q, and 8-K and any other documents filed with the SEC
and all press releases made public, subsequent to the date hereof and (d) use
its reasonable best efforts to cause the Merger to qualify (x) for "pooling of
interests" accounting treatment and (y) as a reorganization within the meaning
of Section 368(a) of the Code.
(b) Employee Benefits. AMCORE agrees to cause the Company and its
Subsidiaries to honor and assume, and the Company agrees to honor and assume,
the Company's employee benefit plans and employee programs, arrangements and
agreements available to AMCORE. Nothing in this Agreement shall prohibit AMCORE,
the Company or its Subsidiaries from amending or terminating any such plan,
program, arrangement or agreement at any time after the Closing Date in
accordance with applicable law (except as to benefits already vested thereunder)
and subject to the terms of such plans, programs or arrangements or other
agreements between the Company and its current and former employees described in
Section 5.1(b) of the Company Letter; provided, however, that any such amendment
or termination prior to the first anniversary of the Closing Date shall not
result in employee benefit plans and employee programs, arrangements and
agreements for the benefit of its current and former employees of the Company
which are less favorable, in the aggregate, than the Company's employee benefit
plans and employee programs, arrangements and agreements listed in Section
5.1(b) of the Company Letter. AMCORE shall take all actions required so that
each current and former employee will receive credit for purposes of
participation rights for is periods of service with the Company prior to the
Effective Time under any employee benefit plans, programs or arrangements
established, maintained, continued or made available by AMCORE to the Company in
which any such current and former employee is eligible to participate.
5.2 Negative Covenants. Except as specifically contemplated by this
Agreement or Section 5.2 of the AMCORE Letter, from the date hereof to the
Effective Time, AMCORE will not do, or agree or commit to do, or permit any of
its Subsidiaries to do, without the prior written consent of the Company (which
shall not be unreasonably withheld) any of the following:
(a) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of
the conditions to the Merger set forth in Article X hereof not being
satisfied or in a violation of any provision of this Agreement except, in
every case, as may be required by applicable law;
(b) take action which, or fail to take action which failure, would or
is reasonably likely to (i) adversely affect the ability of either of
AMCORE or the Company to obtain any necessary approvals of governmental
authorities required for the transactions contemplated hereby; (ii)
adversely affect the Company's ability to perform its covenants and
agreements under this Agreement; or (iii) result in any of its
representation and warranties set forth in this Agreement being or becoming
untrue in any material respect; (iv) result in any of the conditions to the
Merger set forth in Article IX and Article X hereof not being satisfied; or
(v) result in a violation of any provisions of this Agreement except, in
every case, as may be required by applicable law;
(c) take or cause to be taken any actions that would, or would be
reasonably likely to (i) prevent AMCORE from accounting for the Merger as a
"pooling of interests" for accounting purposes or (ii) adversely affect the
status of the Merger as a tax free reorganization under Section 368(a) of
the Code; or
(d) agree to do any of the foregoing.
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5.3 Full Disclosure. (a) AMCORE will afford the Company, its executive
officers, accountants, counsel, and other authorized representatives, such
reasonable access to all books, records, and documents of AMCORE and its
Subsidiaries, for purposes of inspecting their condition, and will furnish to
the Company such information with respect to the assets and business of AMCORE
and its Subsidiaries as the Company may from time to time reasonably request in
connection with this Agreement as permitted by law, provided that such access or
investigation shall not interfere unnecessarily with the normal operations of
AMCORE and its Subsidiaries. The Company will hold all such information in
confidence to the extent required by, and in accordance with, the provisions of
the confidentiality agreement, dated May 15, 1996, between the Company and
AMCORE (the "Confidentiality Agreement").
(b) In the event of termination of this Agreement for any reason, the
Company shall promptly return all non-public documents obtained from AMCORE, and
any copies made of such documents, to AMCORE. In addition, in the event of such
termination, all documents, memoranda, notes and other writing whatsoever
prepared by the Company based on the information in such material shall be
destroyed (and the Company shall use its best efforts to cause its advisors and
their representatives to similarly destroy their respective documents, memoranda
and notes), and such destruction (and best efforts) shall be certified in
writing to AMCORE by an authorized officer supervising such destruction. All
non-public information obtained pursuant to this Section 5.3 shall be governed
by the Confidentiality Agreement.
5.4 Breaches. AMCORE shall, in the event it becomes aware of the impending
or threatened occurrence of any event or condition which would cause or
constitute a material breach (or would have caused or constituted a breach had
such event occurred or been known prior to the date hereof) of any of its
representations or agreements contained or referred to herein, give prompt
written notice thereof to the Company and use its best efforts to prevent or
promptly remedy the same.
5.5 Supplement to AMCORE Letter. AMCORE will promptly supplement or amend
the AMCORE Letter with respect to any matter hereafter arising that, if existing
or occurring at the date of this Agreement, would have been required to be set
forth or described in the AMCORE Letter. No supplement or amendment to the
AMCORE Letter will have any effect for the purpose of determining satisfaction
of the conditions set forth in Article VIII hereof.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that from the date of this Agreement until the Effective
Time:
6.1 Affirmative Covenants. Unless the prior written consent of AMCORE shall
have been obtained, the Company will and will cause its Subsidiaries to:
(a) operate its business only in accordance with sound banking and
business practices and in the usual, regular and ordinary course consistent
with past practices; and
(b) preserve intact its business organization and assets, maintain its
rights, licenses, permits and franchises, use its best efforts to retain
the services of its officers and key employees (except that it shall have
the right to terminate the employment of any officer or key employee in
accordance with established employment procedures), and use its best
efforts to maintain its relationships with customers.
6.2 Current Information. During the period from the date of this Agreement
to the Effective Time, the Company will cause one or more of its designated
representatives to confer on a regular and frequent basis (not less than
monthly) with representatives of AMCORE and to report (i) the general status of
the ongoing operations of the Company and its Subsidiaries and (ii) the status
of, and the action proposed to be taken with respect to, those Loans held by the
Company or any of the Company Subsidiaries which, individually or in combination
with one or more other Loans to the same borrower thereunder, have an original
principal amount of $800,000 or more and are non-performing assets. The Company
will promptly notify AMCORE of any material change in the normal course of
business or in the operation of the properties of the Company or any of the
Company Subsidiaries and of any governmental complaints, investigations or
hearings (or
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communications indicating that the same may be contemplated), or the institution
or the threat of significant litigation involving the Company or any of the
Company Subsidiaries, and will keep AMCORE fully informed of such events.
6.3 Certain Revaluations, Changes, and Adjustments. On or before the
Effective Time, upon the request of AMCORE, the Company shall, consistent with
GAAP, modify and change its loan, litigation and real estate valuation policies
and practices (including loan classifications and levels of reserves) so as to
be applied consistently on a mutually satisfactory basis with those of AMCORE
and establish such accruals and reserves as shall be necessary to reflect
Merger-related expenses and costs incurred by the Company, provided, however,
that the Company shall not be required to take such action (A) more than five
(5) days prior to the Effective Time; (B) unless AMCORE agrees in writing that
all conditions to closing set forth in Article IX have been satisfied or waived;
and (C) unless the Company shall have received a written waiver by AMCORE of its
right to terminate this Agreement, and no accrual or reserve made by the Company
or any of the Company Subsidiaries pursuant to this Section 6.3, or any
litigation or regulatory proceeding arising out of any such accrual or reserve,
shall constitute or be deemed to be a breach, violation of or failure to satisfy
any representation, warranty, covenant, condition or other provision of this
Agreement or otherwise be considered in determining whether any such breach,
violation or failure to satisfy shall have occurred.
6.4 Negative Covenants. Except as specifically contemplated by this
Agreement or set forth in Section 6.4 of the Company Letter, from the date
hereof until the Effective Time, the Company shall not do, or permit its
Subsidiaries to do, without the prior written consent of AMCORE any of the
following:
(a) (i) subject to clause (ii) below, declare or pay any dividend on,
or make any other distribution in respect of, its outstanding shares of
capital stock, except for (A) cash dividends on the Company Common Stock
for the quarter ending December 31, 1996, and each quarter thereafter
ending prior to the Effective Time, each of which dividends shall be
declared for a record date on or after the record date for payment of
dividends by AMCORE on AMCORE Common Stock for such quarter, shall be paid
prior to the Effective Time, and shall not exceed for any quarter $0.6923
per share; and (B) dividends by a Company Subsidiary to the Company.
Notwithstanding the foregoing, if in the reasonable opinion of McGladrey &
Pullen, LLP, AMCORE's independent public accountant, the payment of
dividends as provided in this Section 6.4(a) shall be adverse to the
treatment of the Merger as a "pooling-of-interests," such dividends shall
not be payable. AMCORE and the Company agree to cooperate in good faith to
secure, if necessary, confirmation from the SEC that such dividends would
not be adverse to the treatment of the Merger as a "pooling-of-interests.
(ii) except as herein provided, declare or pay any dividends or make
any distributions in any amount on Company Common Stock in any calendar
quarter in which the Effective Time is expected to occur and in which the
shareholders of Company Common Stock will be entitled to receive dividends
on the shares of AMCORE Common Stock into which the shares of Company
Common Stock have been converted; it is the intent of this clause (ii) to
provide that the holders of Company Common Stock will receive either the
payment of cash dividends on their shares of Company Common Stock permitted
pursuant to clause (i) above or the payment of cash dividends as the
holders of shares of AMCORE Common Stock received in the Merger for the
calendar quarter during which the Effective Time shall occur, but will not
receive and will not become entitled to receive for the same calendar
quarter both the payment of a cash dividend as shareholders of Company
Common Stock and the payment of a cash dividend as the holders of the
shares of AMCORE Common Stock received in the Merger; and if the Company
does not declare and pay cash dividends in a particular calendar quarter
because of the Company's reasonable expectation that the Effective Time was
to have occurred in such calendar quarter, and the Effective Time does not
in fact occur in such calendar quarter then, as a result thereof, the
Company shall be entitled to declare and pay a cash dividend (within the
limitations of this Section 6.4,) on such shares of Company Common Stock)
for such calendar quarter by the declaration and payment of such cash
dividends as soon as reasonably practicable;
(b) (i) 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,
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conversion or other rights to acquire any shares of its capital stock or
any such 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
of the assets, or any class of stock, of any corporation, bank, or other
business (other than purchases of passive investments in the ordinary
course of business consistent with past business practices); (iv)
liquidate, sell, dispose of, or encumber any assets or acquire any assets,
other than in the ordinary course of its business consistent with past
practice; (v) sell any intangible rights, including but not limited to
mortgage servicing rights; (vi) split, combine, or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of, or in substitution for shares of its
capital stock; or (vii) release or relinquish any material contract rights
not in the ordinary course of business;
(c) issue, deliver, award, grant, or sell, or authorize or propose the
issuance, delivery, award, grant, or sale of, any shares of its capital
stock of any class (including shares held in treasury), any debt instrument
having a right to vote or any securities convertible into, or any rights,
warrants, or options to acquire, any such shares, voting debt, or
convertible securities;
(d) initiate, solicit, or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Transaction Proposal (as such term is defined
in Section 6.14 hereof), or discuss or negotiate with any person in
furtherance of such inquiries or to obtain a Transaction Proposal, or agree
to or endorse any Transaction Proposal, or authorize or permit any of its
officers, directors, or employees or any investment banker, financial
advisor, attorney, accountant, or other representative retained by it or
any of its Subsidiaries to take any such action, provided, however, that
the Board of Directors of the Company (the "Board") may, in response to an
unsolicited written proposal from a third party regarding a Superior
Proposal, furnish or cause to be furnished information to and engage in
discussions with such third party, but only if (A) the Board determines in
good faith, after consultation with its independent financial advisors and
based upon the written opinion of Quarles & Brady that failure to take such
action could be reasonably expected to result in a breach of the fiduciary
duties of such Board under applicable law and (B) prior to furnishing such
non-public information to, or entering into discussions or negotiations
with such third party, the Company receives from such third party an
executed confidentiality agreement with terms no less favorable than those
contained in the Confidentiality Agreement. As used herein, "Superior
Proposal" means a bona fide, written and unsolicited proposal or offer made
by any person (or group) (other than AMCORE or any of its Subsidiaries)
with respect to a Transaction Proposal (i) on terms which the Board
determines in good faith, and in the exercise of reasonable judgment (based
on the advice of independent financial advisors and legal counsel), to be
more favorable to the Company and its stockholders than the transactions
contemplated hereby (including taking into account the financing thereof).
The Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any third
parties other than AMCORE with respect to any of the foregoing. The Company
will take all actions necessary or advisable to inform the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 6.4(d). In the event that the Board
furnishes information to or engages in such discussions with any person,
the Company shall promptly notify AMCORE orally and in writing of all of
the relevant details relating to all inquiries and proposals that it may
receive relating to any of such matters (including the identity of the
person making such inquiry or proposal) and provide AMCORE with copies of
all materials delivered to such person;
(e) propose or adopt any amendments to its corporate charter or
by-laws except to increase the number of authorized shares of Company
Common Stock to 500,000;
(f) except in its fiduciary capacity, purchase any shares of AMCORE
Common Stock;
(g) take action which, or fail to take action which failure, would or
is reasonably likely to (i) adversely affect the ability of either of
AMCORE or the Company to obtain any necessary approvals
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of governmental authorities required for the transactions contemplated
hereby; (ii) adversely affect the Company's ability to perform its
covenants and agreements under this Agreement; or (iii) result in any of
its representation and warranties set forth in this Agreement being or
becoming untrue in any material respect; (iv) result in any of the
conditions to the Merger set forth in Article VIII and Article X hereof not
being satisfied; or (v) result in a violation of any provisions of this
Agreement except, in every case, as may be required by applicable law;
(h) change the lending, investment, liability management, and other
material policies concerning the banking business of the Company or any of
the Company Subsidiaries, unless required by law or regulation and such
change does not cause a Material Adverse Effect;
(i) enter into any new line of business;
(j) change its methods of accounting in effect at December 31, 1995,
except as required by changes in GAAP or regulatory accounting principles
as concurred to by the Company's independent auditors;
(k) (i) except as required by applicable law or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any
Plan or any agreement, arrangement, plan or policy between the Company or
any of the Company Subsidiaries and one or more of its current or former
directors, officers or employees or (ii) except for normal increases in the
ordinary course of business consistent with past practice or except as
required by applicable law, increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or
performance units or shares) or (iii) enter into, modify or renew any
contract, agreement, commitment or arrangement providing for the payment to
any director, officer or employee of such party of compensation or benefits
contingent, or the terms of which are materially altered, upon the
occurrence of any of the transactions contemplated by this Agreement;
(l) take or cause to be taken any actions that would, or would be
reasonably likely to (i) prevent AMCORE from accounting for the Merger as a
"pooling-of-interests" for accounting purposes (ii) adversely affect the
status of the Merger as a tax-free reorganization under Section 368(a) of
the Code;
(m) other than activities in the ordinary course of business
consistent with prior practice, sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise dispose
of, any of its material assets, properties or other rights or agreements;
(n) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation, or other entity;
(o) file any application to relocate or terminate the operations of
any banking office of it or any of its Subsidiaries;
(p) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other
than in connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructuring in the ordinary course of business
consistent with prudent banking practices;
(q) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract, agreement or
lease for goods, services or office space to which the Company or any of
the Company Subsidiaries is a party or by which the Company or any of the
Company Subsidiaries or their respective properties is bound except that
the Company may renew contracts, agreements or leases in the ordinary
course of business after consultation with AMCORE; or
(r) agree in writing or otherwise to do any of the foregoing.
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6.5 Full Disclosure.(a) The Company will afford AMCORE, its officers,
accountants, counsel, and other authorized representatives, such access to all
books, records, tax returns, leases, contracts, and documents of the Company and
its Subsidiaries, to any work papers of the Company's independent auditors, and
to the buildings, structures, fixtures, and appurtenances of the Company and its
Subsidiaries for purposes of inspecting their condition, and will furnish to
AMCORE such information with respect to the assets and business of the Company
and its Subsidiaries as AMCORE may from time to time reasonably request in
connection with this Agreement as permitted by law; and will instruct and
request the Company's directors, officers, employees, counsel and financial
advisors to cooperate with AMCORE in its investigation of the business of the
Company and its Subsidiaries and in the planning for the combination of the
businesses of the Company and AMCORE following the consummation of the Merger,
provided that such access or investigation shall not interfere unnecessarily
with the normal operations of the Company and its Subsidiaries. AMCORE will hold
all such information in confidence to the extent required by, and in accordance
with, the provisions of the Confidentiality Agreement.
(b) In the event of termination of this Agreement for any reason, AMCORE
shall promptly return all non-public documents obtained from the Company, and
any copies made of such documents, to the Company. In addition, in the event of
such termination, all documents, memoranda, notes and other writing whatsoever
prepared by AMCORE based on the information in such material shall be destroyed
(and AMCORE shall use its best efforts to cause its advisors and their
representatives to similarly destroy their respective documents, memoranda and
notes), and such destruction (and best efforts) shall be certified in writing to
the Company by an authorized officer supervising such destruction. All
non-public information obtained pursuant to this Section 6.5 shall be governed
by the Confidentiality Agreement.
6.6 Letter of the Company's Accountant. At the request of AMCORE, the
Company shall use its best efforts to cause to be delivered to AMCORE "cold
comfort" letters of Arthur Andersen, LLP, the Company's independent public
accountant, dated the date on which the Registration Statement shall become
effective and the Effective Time, respectively, and addressed to AMCORE,
reasonably customary in form, scope, and substance for letters delivered by
independent public accountants in connection with the procedures undertaken by
them with respect to the financial statements and other financial information of
the Company contained in registration statements similar to the Registration
Statement and the other matters contemplated by AICPA Statement No. 72 and
customarily included in comfort letters relating to transactions similar to
transactions such as those contemplated by the Agreement.
6.7 Report to AMCORE. The Company will promptly advise AMCORE in writing of
all actions taken by the directors and stockholders of the Company at meetings
or in connection with written consents filed with the Company and will furnish
AMCORE with copies of all monthly and other interim financial statements of the
Company and its Subsidiaries as they become available. The Company will use its
best efforts to keep AMCORE fully informed concerning all trends and
developments of which it becomes aware that may have a material effect upon the
business, any properties, or condition (either financial or otherwise) of the
Company or the Company Subsidiaries.
6.8 Breaches. The Company shall, in the event it becomes aware of the
impending or threatened occurrence of any event or condition which would cause
or constitute a material breach (or would have caused or constituted a breach
had such event occurred or been known prior to the date hereof) of any of its
representations or agreements contained or referred to herein, give prompt
written notice thereof to AMCORE and use its best efforts to prevent or promptly
remedy the same.
6.9 Stockholders Meeting. The Company shall call a meeting of its
stockholders to be held as promptly as practicable for the purpose of voting
upon this Agreement and related matters. The Company will, through its Board of
Directors, recommend to the Company stockholders approval of such matters, will
not withdraw, modify, or amend such recommendations, and will use its best
efforts to obtain such stockholder approval. The Company shall coordinate and
cooperate with AMCORE with respect to the timing of such meeting and shall use
its best efforts to hold such meeting as soon as practicable after the date
hereof. The Company shall not, at its stockholder meeting, submit any other
matter for approval of its stockholders (except with the prior written
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consent of AMCORE, which consent shall not be unreasonably withheld). The date
on which the Company stockholders vote upon the Agreement and related matters
shall be referred to as the "Meeting Date".
6.10 Supplement to Company Letter. The Company will promptly supplement or
amend the Company Letter with respect to any matter hereafter arising that, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in the Company Letter. No supplement or amendment to
the Company Letter will have any effect for the purpose of determining
satisfaction of the conditions set forth in Article IX hereof.
6.11 Dissent Process. The Company will give to AMCORE prompt notice of any
written notice relating to the exercise of dissenters' rights granted under the
WBCL, including the name of the dissenting stockholder and the number of shares
of Company Common Stock to which the dissent relates. AMCORE will have the right
to participate in all negotiations and proceedings relating thereto, and
exceptions required by law. The Company will not make any payment with respect
to, or settle or offer to settle, any appraisal demands without AMCORE's prior
written consent.
6.12 Delivery of Shareholder List. The Company shall arrange to have its
transfer agent deliver to AMCORE or its designee, immediately prior to the
Closing Date, a true and complete list setting forth the names and addresses of
the Company stockholders. From time to time prior to the Closing Date, the
Company shall deliver to AMCORE such information as AMCORE may request regarding
the holdings of stock of persons who may be affiliates of the Company and such
other stockholder information as AMCORE may reasonably request.
6.13 Affiliates; Accounting and Tax Treatment. As soon as practicable after
the meeting of the Company stockholders held pursuant to Section 6.9 hereof, (a)
the Company shall deliver to AMCORE a letter identifying all persons who are
then "affiliates" of the Company for purposes of Rule 145 under the Securities
Act, and (b) the Company shall cause each person identified in such letter who
is not also identified as an affiliate in the Company Letter to deliver to
AMCORE an Affiliate's Undertaking. The Company shall cause any person who
becomes an affiliate of the Company after the Company's delivery of the letter
referred to above, and on or prior to the Closing Date, to deliver to AMCORE an
Affiliate Undertaking as soon as practicable after attaining such status. The
Company will use its best efforts to cause the Merger to qualify (x) for
"pooling-of-interests" accounting treatment and (y)as a reorganization within
the meaning of Section 368(a) of the Code.
6.14 Expenses and Fees.
(a) Expenses. If this Agreement or the transactions contemplated
hereby are terminated:
(i) (A) By AMCORE (1) because any condition set forth in Article
VIII hereof (other than the failure to satisfy the condition set forth
in Section 8.4(b) hereof or Section 8.5 if such failure is a result of
any action or inaction taken by AMCORE) or the condition set forth in
Section 10.3 hereof has not been satisfied or waived in accordance with
Section 11.1 (b)(i) hereof, or (2) pursuant to Section 11.1 (b)(ii),
11.1(b)(iii), 11.1(f), 11.1(g) or 11.1(h) or (B) by the Company pursuant
to Section 11.1(i), then the Company shall promptly (and in any event
within five (5) days after such termination, except as provided in
Section 11.1(i)) pay AMCORE all Expenses (as defined in clause (c) of
this Section 6.14) of AMCORE, not to exceed a total of $400,000,
provided, however, that in the event that AMCORE shall terminate this
Agreement pursuant to Section 11.1(f) hereof, AMCORE is not entitled to
payment of Expenses pursuant to this Section 6.14(a)(i) unless the
Remediation Costs referred to in Section 11.1(f) hereof exceed $700,000,
without regard to Remediation Costs of up to $600,000 which relate to
the Excluded Company Real Properties set forth in Exhibit C, attached
hereto;
(ii) By the Company (A) because any condition set forth in Article
IX hereof (other than the failure to satisfy the condition set forth in
Section 9.4 hereof) has not been satisfied or waived in accordance with
Section 11.1(c)(i) hereof, or (B) pursuant to Section 11.1(c)(ii) or
(iii) hereof, then AMCORE shall promptly (and in any event within five
(5) days after such termination) pay the Company all Expenses of the
Company, not to exceed a total of $400,000.
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(b) Fees. If this Agreement or the transactions contemplated hereby
are terminated and if any one of the following conditions has been met,
then the Company shall promptly (and in any event within five (5) business
days after the later to occur of such termination and the date on which one
of the following conditions is met, except as provided in 11.1(i)) pay
AMCORE a fee equal to $1,000,000 (the "Termination Fee"):
(i) this Agreement is terminated by the Company pursuant to Section
11.1(i) hereof; or
(ii) this Agreement is terminated by AMCORE pursuant to Section
11.1(g) or 11.1(h) hereof; or
(iii) this Agreement is terminated (A) by AMCORE for any reason
pursuant to Section 11.1(b) (other than the failure to satisfy the
conditions set forth in Section 8.2, 8.5 or 10.2 hereof) and (B) without
the prior approval of AMCORE (1) prior to or contemporaneously with such
termination there is a Transaction Proposal (other than the Merger) and
(2) prior to or within twelve (12) months after the termination of this
Agreement, the Company shall have directly or indirectly entered into a
definitive agreement for, or shall have consummated, a Transaction
Proposal which is or is reasonably expected to be more favorable to the
Company's stockholders than the transaction contemplated hereby.
(c) (i) "Expenses" of either party as used in this Section 6.14 shall
include all reasonable out-of-pocket expenses (including all fees and
expenses of counsel, accountants, investment bankers, environmental
consultants, experts, and consultants to the party and its affiliates)
incurred by it or on its behalf in connection with the transactions
contemplated by this Agreement and, as to either party, the internal cost
of any due diligence performed by that party with respect to the other in
connection with such transactions, calculated at that party's standard
audit rates.
(ii) "Transaction Proposal" as used in this Agreement means (in
each case other than the transactions contemplated hereby) (A) a bona
fide tender offer or exchange offer for 25% or more of the then
outstanding shares of the Company which shall have been publicly
proposed to be made or shall have been commenced or made by any
corporation (excluding AMCORE or any of its Subsidiaries or Affiliates),
partnership, person, other entity, or group (as defined in Section
13(d)(3) of the Exchange Act) (each, for purposes of this Section
6.14(c)(ii), a "Person"); (B) a merger, consolidation, or other business
combination with the Company, or with any of its Subsidiaries, shall
have been effected by any Person, or an agreement relating to any such
transaction shall have been entered into; (C) any sale, lease, exchange,
mortgage, pledge, transfer, or other disposition (whether in one
transaction or a series of related transactions) involving a substantial
part of the Company's consolidated assets (including stock of the
Banks), or all or a substantial part of the assets of any of its
Subsidiaries, to any Person shall have been effected, or any agreement
relating to such transaction shall have been entered into; (D) the
acquisition by any Person (other than AMCORE or any Company Subsidiary
in a fiduciary capacity for third parties, none of whom beneficially
owns 10% or more of the outstanding Company Common Stock) of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act,
which will be deemed for purposes hereof to provide that a Person
beneficially owns any shares of Company Common Stock that may be
acquired by such person pursuant to any right, option, warrant, or other
agreement, regardless of when such acquisition would be permitted by the
terms thereof) of 25% or more of the outstanding shares of Company
Common Stock (including Company Common Stock currently beneficially
owned by such Person); (E) any reclassification of securities or
recapitalization of the Company or other transaction that has the
effect, directly or indirectly, of increasing the proportionate share of
any class of equity security (including securities convertible into
equity securities) of the Company that is owned by any Person shall have
been effected, or any agreement relating to such transaction shall have
been entered into or plan with respect thereto adopted; (F) any
transaction having an effect similar to those described in (A) through
(E) above; or (G) a public announcement with respect to a proposal,
plan, or intention by the Company or another
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Person to effect any of the foregoing transactions (which may include
publication of notice of filing or any similar notice under applicable
law).
6.15 Consummation of the Belleville Transactions. The Company agrees that
it shall use all reasonable efforts to purchase all of the outstanding shares of
Belleville State Bank in connection with completing the Belleville Transactions,
as defined in Section 12.7 hereof.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Preparation of Registration Statement and the Proxy Statement.
(a) AMCORE shall prepare and file with the SEC under the Securities Act a
registration statement on Form S-4 with respect to the shares of AMCORE Common
Stock to be issued in the Merger (the "Registration Statement"). The
Registration Statement shall include, in a form reasonably acceptable to AMCORE
and the Company, the Proxy Statement of the Company for use in connection with
the stockholders' meeting referenced in Section 6.9 hereof (the "Proxy
Statement/Prospectus"). AMCORE shall use all reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and shall use all reasonable efforts to cause
the shares of AMCORE Common Stock issuable in the Merger to be approved for
listing on the Nasdaq National Market. AMCORE shall also take any action (other
than qualifying to do business in any jurisdiction in which it is now not so
qualified) required to be taken under any applicable state securities laws or
"Blue Sky" permits and approvals in connection with the issuance of AMCORE
Common Stock in the Merger and the Company shall furnish all information
concerning the Company and the holders of Company Common Stock as may be
reasonably requested in connection with any such action and shall cooperate
fully with AMCORE in the preparation of the Proxy Statement/Prospectus and the
obtaining of all necessary approvals and consents required by this Agreement.
7.2 Legal Conditions to Merger. (a) Each of the Company, AMCORE, and Newco
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the transactions
contemplated hereby (including furnishing all information required by the
Federal Reserve Board, the Wisconsin Division, or in connection with approvals
of or filings with the Federal Reserve Board and any other governmental entity)
and to obtain all necessary consents and approvals from governmental entities or
public or private third parties, and will promptly cooperate with and furnish
information to each other in connection with any such requirements, consents,
and approvals. The obligation to take all reasonable actions shall not be
construed as including an obligation to accept any terms of or conditions to a
consent, authorization, order, or approval of, or any exemption by, any party
that are not acceptable to AMCORE, in its sole discretion, or to change the
business practices of AMCORE or any AMCORE Subsidiary. In the event of a
restraining order or injunction that prevents the Closing by reason of the
operation of Section 8.4(a) or 9.4 hereof, the Company, AMCORE, and Newco shall
use their respective best reasonable efforts to cause such order or injunction
to be lifted and the Closing consummated as soon as reasonably practicable.
(b) The parties hereto shall cooperate with each other and use all
reasonable efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (it being understood
that any amendments to the Registration Statement or a resolicitation of proxies
as consequence of an acquisition agreement by AMCORE or any of its Subsidiaries
shall not violate this covenant). The Company and AMCORE shall have the right to
review in advance, and to the extent practicable each will consult the other on,
in each case subject to applicable laws relating to the exchange of information,
all the information relating to the Company or AMCORE, as the case may be, and
any of their respective Subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement;
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provided, however, that nothing contained herein shall be deemed to provide
either party with a right to review any information provided to any Governmental
Entity on a confidential basis in connection with the transactions contemplated
hereby. In exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that they
will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) AMCORE and the Company shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement/Prospectus, the Registration Statement or
any other statement, filing, notice or application made by or on behalf of
AMCORE, the Company or any of their respective Subsidiaries to any Governmental
Entity in connection with the Merger and the other transactions contemplated by
this Agreement.
(d) AMCORE and the Company shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
the necessary regulatory approval will not be obtained or that the receipt of
any such approval will be materially delayed.
7.3 Indemnification; Directors and Officers Insurance. From and after the
Effective Time, AMCORE agrees for a period of six (6) years to indemnify and
hold harmless all past and present officers and directors of the Company and its
Subsidiaries to the same extent such persons are currently indemnified by the
Company and its Subsidiaries pursuant to the WBCL and the Company's Articles of
Incorporation and Bylaws for acts or omissions occurring prior to the Effective
Time.
7.4 Brokers or Finders. Each of AMCORE and the Company represents, as to
itself, its Subsidiaries, and its affiliates, that no agent, broker, investment
banker, financial advisor, or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Chicago
Corp., whose fees and expenses will be paid by the Company in accordance with
the letter agreement, dated March 19, 1996, between Chicago Corp. and the
Company.
7.5 Environmental Audits. AMCORE shall have the right to engage an
environmental consulting engineering firm, reasonably acceptable to the Company,
to perform environmental site assessments of the Real Properties of the Company
or its Subsidiaries (collectively, the "Audited Properties") which shall satisfy
the American Society of Testing and Materials "Standard Practice for
Environmental Site Assessments: Phase I Environmental Site Assessment Process"
(ASTM Designation: E-1527-93), except that such assessment shall also include a
review of compliance with Environmental Laws (the "Environmental Audits"), and
render reports of the Environmental Audits (the "Environmental Reports") to
determine, to AMCORE's reasonable satisfaction, whether there are any
indications or evidence that (i) any toxic substance has been stored, deposited,
treated, recycled, used or accidentally or intentionally disposed of,
discharged, spilled, released, dumped, emitted or otherwise placed on, under or
at, or used in any construction on, any such Audited Property, (ii) any such
Audited Property is contaminated by or contains any toxic substance or (iii) any
violations of Environmental Laws have occurred or are likely to occur on any
Audited Property. The scope of the Environmental Audits may also include any
testing or sampling of materials to determine, to AMCORE's reasonable
satisfaction, whether any clean up, removal, remedial action or other response
("Remediation Action") is required to bring the Audited Properties into material
compliance with Environmental Laws or to eliminate any condition that could
result in a material liability as a result of the ownership, lease, operation or
use of any Audited Property, and the estimated cost of such Remediation Action
to the Company or any of the Company Subsidiaries, net of costs which are
properly reimbursable pursuant to the Wisconsin Agricultural Chemical Clean-up
Program, the PECFA program, or similar governmental programs (the "Remediation
Costs"). AMCORE shall require that the environmental
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consulting firm not disclose (except as required by law) any information in the
Environmental Audits to anyone other than AMCORE. AMCORE will use reasonable
efforts to engage an environmental consulting engineering firm within ten (10)
days of the date hereof and AMCORE and the Company will use reasonable efforts
to cause the Environmental Audits to be completed within forty-five (45) days of
the date hereof.
7.6 Additional Agreements: Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of the stockholders of the
Company described in Section 10.3 hereof, including cooperating fully with the
other party. 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 to this Agreement shall take all such
necessary action.
7.7 Release of Information. The Company, the Banks or any Company
Subsidiary and AMCORE will consult with each other before issuing any press
release or otherwise making any public statements with respect to the Merger or
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 law.
If no agreement on such release is reached despite such efforts the party
determining to release such information shall provide the other party with
twenty-four (24) hours notice before releasing such information.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF AMCORE AND NEWCO
The obligations of AMCORE and Newco under this Agreement to cause the
transactions contemplated therein to be consummated shall be subject to the
satisfaction of the following conditions:
8.1 No Material Adverse Change. There shall not have been any material
adverse change, or discovery of a condition or the occurrence of any event
that has resulted or is likely to result in such a change, in the condition
(financial or otherwise), assets, liabilities, reserves, results of
operation, or business of the Company and its Subsidiaries taken as a whole
from the Latest Statement Date, to the Closing Date.
8.2 Representations and Warranties. Each of the representations and
warranties by the Company contained in this Agreement shall be true and
correct in all material respects (or where any statement in a
representation or warranty expressly contains a standard of materiality,
such statement shall be true and correct in all respects) at, or as of, the
date of this Agreement and (except to the extent such representation speaks
as of an earlier date) as of the Closing Date as though such
representations and warranties were made on and as of said date, except
with respect to changes expressly contemplated in this Agreement.
8.3 Performance and Compliance. The Company shall have performed or
complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed and satisfied by it
on or prior to the Closing Date.
8.4 No Proceeding or Litigation. At the Closing Date, no suit, action,
or proceeding shall be pending or overtly threatened, and no liability or
claim shall have been asserted against the Company, the Banks or any
Company Subsidiary that has not been disclosed in the Company Letter (a)
involving any of the assets, properties, business, or operations of the
Company or its Subsidiaries that would reasonably be expected to have a
Material Adverse Effect, or (b) before any court or other governmental
agency by the federal or any state government in which it is or will be
sought to restrain or prohibit the consummation of the Merger.
8.5 Pooling Letter. AMCORE shall have confirmation from McGladrey &
Pullen, LLP that the Merger will be accounted for as a
"pooling-of-interests" in accordance with generally accepted accounting
principles, as of a date no more than five (5) business days prior to the
Closing Date.
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8.6 Letters from the Company Affiliates. AMCORE shall have received
from (a) each person named in the Company Letter, as updated pursuant to
Section 6.13 hereof, and (b) from any person who to the Company's knowledge
becomes an Affiliate of the Company after the Company Letter is so updated,
an executed copy of an Affiliate's Undertaking.
8.7 Consents Under Agreements. The Company shall have obtained the
consent or approval of each person whose consent or approval shall be
required in order to permit consummation of the Merger under any loan or
credit agreement, note, mortgage, indenture, lease, or other agreement or
instrument, including, without limitation, if required, the Country Bank
Shares Corporation Restated Shareholders' Agreement dated April 23, 1996,
except those for which failure to obtain such consents and approvals would
not, in the reasonable opinion of AMCORE, individually or in the aggregate,
have a Material Adverse Effect on AMCORE whether prior to or following the
consummation of the transactions contemplated hereby.
8.8 Dissenters. Holders of not more than five percent (5%) of the
Company Common Stock outstanding as of the record date for the meeting of
the Company stockholders shall have undertaken steps to perfect their right
to object in accordance with Section 180.1302 of the WBCL and not lost or
abandoned such right.
8.9 1996 Audited Financial Statements. If the Closing Date shall occur
on or after February 15, 1997, the Company shall have delivered to AMCORE
audited consolidated financial statements as of and for the fiscal year
ended December 31, 1996, that (i) are prepared in accordance with GAAP
consistently applied, (ii) fairly reflect the financial positions of the
Company and its Subsidiaries, as of such date, and the results of
operations of the Company and its Subsidiaries, for the period ended on
such date, and (iii) reflect in accordance with GAAP consistently applied,
adequate provision for, or reserves against, the possible loan losses of
the Company and its Subsidiaries.
8.10 Certificate of the Company Officer. The Company shall have
furnished to AMCORE a certificate, signed by its Chief Executive Officer,
dated the Closing Date, to the effect that the conditions described in
Sections 8.1, 8.2, 8.3, 8.4, 8.7 and 8.8 of this Agreement have been fully
satisfied.
8.11 Good Standing Certificates. AMCORE and Newco shall have received
statements from the appropriate officials of the State of Wisconsin and
State of Nevada, certifying that each of the Company and the Nevada
Subsidiaries, respectively, is a corporation in active status or good
standing, and a statement from the Wisconsin Division stating that each
Bank is in good standing under the laws of the State of Wisconsin, each
dated within fifteen (15) business days prior to the Closing Date.
8.12 Accountant's Letter. The Company shall have caused to be
delivered to AMCORE letters from the Company's independent public
accountants dated the date on which the Registration Statement or last
amendment thereto shall become effective, and dated the date of the
Closing, and addressed to AMCORE and the Company, with respect to the
Company's consolidated financial position and results of operation,
reasonably customary in form, scope, and substance for letters delivered by
independent public accountants in connection with the information of the
Company contained in the Registration Statement and the other matters
contemplated by AICPA Statement No. 72 and customarily included in comfort
letters relating to transactions similar to those contemplated by the
Agreement.
8.13 Belleville Transactions. All of the Belleville Transactions (as
defined in Section 12.7) shall have been consummated and all of the former
shareholders of Belleville Bancshares, Inc. that received shares of Company
Common Stock in exchange for shares of Belleville Bancshares, Inc.,
pursuant to the Belleville Transactions, shall continue to own such shares
of Company Common Stock.
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ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement to cause the
transactions contemplated herein to be consummated shall be subject to the
satisfaction of the following conditions:
9.1 No Material Adverse Change. There shall not have been any material
adverse change, or discovery of a condition or the occurrence of any event
that has resulted or is likely to result in such a change, in the
consolidated condition (financial or otherwise), assets, liabilities,
results of operation, or business of AMCORE from the Latest Statement Date,
to the Closing Date.
9.2 Representations and Warranties. Each of the representations and
warranties of AMCORE and Newco contained in this Agreement shall be true
and correct in all material respects (or where any statement in a
representation or warranty expressly contains a standard of materiality
such statement shall be true and correct in all respects) at, or as of, the
date of this Agreement and (except to the extent such representation speaks
as of an earlier date) as of the Closing Date as though such
representations were made on and as of said date.
9.3 Performance and Compliance. AMCORE shall have performed or
complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed and satisfied by it
on or prior to the Closing Date.
9.4 No Proceeding or Litigation. At the Closing Date, no suit, action,
or proceeding shall be pending or overtly threatened before any court or
other governmental agency by the federal or any state government in which
it is sought to restrain or prohibit the consummation of the Merger.
9.5 Certificate of Financial Officer. AMCORE shall have furnished to
the Company a certificate, signed by its chief financial officer and dated
the Closing Date, to the effect that the conditions described in Sections
9.1. 9.2. 9.3. and 9.4 of this Agreement have been fully satisfied.
9.6 Tax Opinion. The Company shall have received an opinion from
Quarles & Brady, special tax counsel to the Company, opining that the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, dated the Closing Date on
or about the date that is two (2) business days prior to the date the Proxy
Statement/Prospectus is first mailed to stockholders of the Company, shall
have been delivered and shall not have been withdrawn or modified in any
material respect prior to the Closing Date.
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
In addition to the provisions of Articles VIII and IX hereof, the
obligations of the Company, AMCORE, and Newco under this Agreement to cause the
transactions contemplated herein to be consummated, shall be subject to the
satisfaction of the following conditions:
10.1 Governmental Approvals. The parties hereto shall have received
all necessary approvals of governmental agencies and authorities, on
conditions satisfactory to AMCORE, of the transactions contemplated by this
Agreement, each of such approvals shall remain in full force and effect and
all statutory waiting periods in connection therewith shall have expired
prior to the Closing Date, and such approvals and the transactions
contemplated thereby shall not have been contested by any federal or state
governmental authority nor by any other third party by formal proceeding.
If any contest as aforesaid is brought by formal proceedings, any party
may, but shall not be obligated to, answer and defend such contest.
10.2 Securities Law Compliance. The Registration Statement shall have
become effective by an order of the SEC, the AMCORE Common Stock to be
issued in the Merger shall have been qualified or exempted under all
applicable state securities or blue sky laws, there shall have been no stop
order issued
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or threatened by the SEC that suspends the effectiveness of the
Registration Statement, and no proceeding shall have been commenced,
pending, or overtly threatened for such purpose.
10.3 Stockholder Approval. The Merger shall have been duly approved
by consent or the requisite affirmative votes of the stockholders of the
Company.
ARTICLE XI
TERMINATION
11.1 Reasons for Termination. This Agreement may be terminated and the
Merger abandoned at any time before the Closing Date, notwithstanding the
approval or adoption of this Agreement by the stockholders of the Company and
subject to the payment obligations of Section 6.14 hereof:
(a) By mutual written consent of the Board of Directors of the Company
and the Board of Directors of AMCORE.
(b) By written notice from AMCORE to the Company if:
(i) any condition set forth in Article VIII or X of this Agreement
has not been substantially satisfied or waived in writing by September
30, 1997 (the "Termination Date"); or
(ii) any warranty or representation made by the Company shall be
discovered to be or to have become untrue, incomplete, or misleading in
any way that has resulted, or would reasonably be expected to result, in
a Material Adverse Effect on the Company or upon the consummation of the
transactions contemplated hereby, where any such breach has not been
cured within twenty (20) business days following receipt by the Company
of notice of such discovery; or
(iii) the Company shall have breached one or more provisions of
this Agreement in any way that has resulted, or would reasonably be
expected to result, in a Material Adverse Effect on the Company
considering all such breaches in the aggregate, or upon the consummation
of the transactions contemplated hereby, where such breach has not been
cured within twenty (20) business days following receipt by the Company
of notice of such breach.
(c) By written notice from the Company to AMCORE, authorized by the
Board of Directors of the Company, if:
(i) any condition set forth in Article IX or X of this Agreement
has not been substantially satisfied or waived in writing by the
Termination Date; or
(ii) any warranty or representation made by AMCORE shall be
discovered to be or to have become untrue, incomplete or, misleading in
any way that has resulted or would reasonably be expected to result, in
a Material Adverse Effect on AMCORE, or upon the consummation of the
transactions contemplated hereby, where any such breach has not been
cured within twenty (20) business days following receipt by AMCORE of
notice of such discovery; or
(iii) AMCORE shall have breached one or more provisions of this
Agreement in any way that has resulted, or would reasonably be expected
to result, in a Material Adverse Effect on AMCORE considering all such
breaches in the aggregate or upon the consummation of the transactions
contemplated hereby, where such breach has not been cured within twenty
(20) business days following receipt by AMCORE of notice of such breach.
(d) [Intentionally Omitted.]
(e) [Intentionally Omitted.]
(f) By written notice from AMCORE to the Company delivered not later
than the Meeting Date, if AMCORE's good faith estimate of Remediation Costs
based upon the Environmental Audits is $700,000 or more, provided that
AMCORE shall, upon such notice, provide the Company with full and complete
access to the Environmental Audits.
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(g) By AMCORE, if without the prior approval of AMCORE (A) the Company
(1) shall have withdrawn, modified, or amended in any respect its approval
or recommendation of this Agreement or the transactions contemplated
hereby, or (2) shall not at the appropriate time have recommended or shall
have withdrawn, modified, or amended in any respect its recommendation that
its shareholders vote in favor of this Agreement, or (3) shall not have
included such recommendation in the Proxy Statement/Prospectus (as defined
in Section 7.1 hereof); or (4) shall have taken any action or public
position inconsistent with such approval or recommendation; (B) the Board
of Directors of the Company shall have resolved to do any of the foregoing,
or (C) any director of the Company shall take any action inconsistent with
such approval or recommendation and such action has not been renounced by
the Board of Directors of the Company.
(h) By AMCORE, if (A) there is a Transaction Proposal initiated or
made by or relating to the Company which is approved of or agreed to by the
Board of Directors of the Company; (B) any person shall have solicited
proxies in opposition to the approval of the Merger, and the Board of
Directors of the Company has taken action or a public position consistent
with approving of such person's proxy solicitation; or (C) any person
(other than AMCORE or any AMCORE Subsidiary or any entity under the control
of AMCORE) shall have filed an application under the BHCA or the Change in
Bank Control Act, as amended, with respect to the acquisition by such
person of any shares of Company Common Stock or the capital stock of any of
the Banks, and the Board of Directors of the Company has taken action or a
public position consistent with both approving of such person's application
and approving of such person's attempt to gain control of the Company or
the Bank.
(i) By the Company, if the Board shall reasonably determine that a
proposal for a Transaction Proposal constitutes a Superior Proposal and the
Board shall have received a written opinion of Quarles & Brady that the
failure to accept such Superior Proposal could reasonably be expected to
result in a breach of the fiduciary duties of such Board under applicable
law; provided, however, that the Company may not terminate this Agreement
pursuant to this clause (i) unless (A) five (5) business days shall have
elapsed after delivery to AMCORE of a written notice of such determination
by such Board and, during such 5 business day period, the Company shall
have informed AMCORE of the material terms and conditions and financing
arrangements of such proposal for a Transaction Proposal and the identity
of the person or group making such proposal for a Transaction Proposal and
(B) at the end of such 5 business day period, such Board shall continue
reasonably to believe that such proposal for a Transaction Proposal
constitutes a Superior Proposal and promptly thereafter the Company shall
enter into a definitive acquisition, merger or similar agreement to effect
such Superior Proposal. Notwithstanding the foregoing, the Company shall
not have the right to terminate this Agreement pursuant to this subsection
(i) unless it has simultaneously or previously paid the $1,000,000 fee owed
to AMCORE pursuant to Section 6.14(b)(i) and confirms its obligation to
reimburse AMCORE for its Expenses pursuant to Section 6.14(a)(i).
11.2 Effect of Termination.
(a) In the event of termination of this Agreement by either the
Company or AMCORE as provided in Section 11.1 hereof, this Agreement shall
become void and, except with respect to claims by the terminating party for
damages for breaches described in Sections 11.1(b) and 11.1(c) hereof,
there shall be no liability or obligation on the part of AMCORE or the
Company or their respective officers or directors except with respect to
Sections 6.5 and 6.14 hereof; provided that the payment of the Termination
Fee to AMCORE shall be deemed to constitute full payment for any damages
incurred by AMCORE as a result of breaches described in Section 11.1(b)
with respect to which the Termination Fee was paid to AMCORE.
(b) In the event AMCORE terminates this Agreement pursuant to Section
11.1(b) and is entitled to the Termination Fee, the parties agree that
AMCORE would suffer direct and substantial damages, which damages cannot be
determined with reasonable certainty. To compensate AMCORE for such
damages, the Company has agreed to pay to AMCORE such Termination Fee as
liquidated damages. It is specifically agreed that the amount to be paid
pursuant to Section 6.14 hereof represents liquidated damages and not a
penalty.
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(c) Notwithstanding the foregoing, no party hereto shall be relieved
from liability for any willful or intentional breach of this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Non-survival of Representations, Warranties and Agreements. None of
the representations, warranties, and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements of the "affiliates" of the Company delivered
pursuant to Section 6.13 hereof and the agreements of AMCORE in Article II and
in Sections 5.1(b) and 7.3 hereof.
12.2 Expenses. Except as otherwise provided herein, all expenses incurred
by AMCORE and the Company in connection with or related to the authorization,
preparation, and execution of this Agreement, the solicitation of stockholder
approvals, and all other matters related to the closing of the transactions
contemplated thereby, including, without limitation of the generality of the
foregoing, all fees and expenses of agents, representatives, counsel, and
accountants employed by either such party or its affiliates, shall be borne
solely and entirely by the party that has incurred the same.
12.3 Waivers; Amendments. At any time prior to the Closing Date, either
AMCORE, by action taken by its Board of Directors, or any committee or officers
hereunto authorized, or the Company, by action taken by its Board of Directors,
or any committee or officers hereunto authorized, may waive the performance of
any of the obligations of the other or waive compliance by the other with any of
the covenants or conditions contained in this Agreement or agree to the
amendment or modification of this Agreement by an agreement in writing executed
in the same manner as this Agreement; provided, however, that after consent of
or a favorable vote by the stockholders of the Company pursuant to Section 6.9
of this Agreement, any such action shall be taken by the Company only if, in the
opinion of its Board of Directors, such waiver, amendment, or modification will
not have any material adverse effect on the stockholders of the Company and will
not require resolicitation of any proxies from such stockholders.
12.4 Assignment; Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
successors and assigns, but shall not be assigned by the parties hereto, by
operation of law or otherwise, without the prior written consent of the other
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
12.5 Entire Agreement. This Agreement, together with the Confidentiality
Agreement, the Stockholders' Agreements, and the Affiliate's Undertakings
supersede any other agreement, whether written or oral, that may have been made
or entered into by the Company or AMCORE or Newco or by any officer or officers
of such parties relating to the acquisition of the business or the capital stock
of the Company by AMCORE or Newco. The aforementioned agreements constitute the
entire agreement by the respective parties, and there are no agreements or
commitments except as set forth herein and therein.
12.6 Captions and Counterparts. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in several counterparts, each of which shall
constitute one in the same instrument.
12.7 Certain Definitions. For purposes of this Agreement, the term:
(a) "Affiliate" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, another person;
(b) "AMCORE Reports" shall mean all reports, registrations, and
statements, together with any amendments required to be made with respect
thereto, that were or are required to be filed with the SEC, the Federal
Reserve Board, the Office of the Comptroller of the Currency, FDIC, and any
applicable state securities or banking authorities;
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(c) "Belleville Transactions" shall mean (i) the proposed acquisition
by the Company of Belleville Bancshares, Inc. in exchange for shares of
Company Common Stock, in accordance with the Agreement and Plan of
Reorganization dated July 9, 1996, and (ii) the transactions in which each
of the minority shareholders of Belleville State Bank (with the exception
of holders of no more than two and one half percent (2.5%) of Belleville
State Bank common stock) will provide a full release of the Company,
Belleville Bancshares Corporation, and their officers, directors, related
parties, affiliates, successors and assigns from any and all claims such
minority shareholders have or may have against such persons or entities
(subject to appropriate exceptions), in a form and substance reasonably
acceptable to AMCORE, and the Company would acquire up to 1,166 shares of
common stock of Belleville Sate Bank currently held by minority
shareholders thereof, for cash in the amount of $1,110 for each share of
Belleville State Bank common stock, all in accordance with the letter of
AMCORE to the Company dated October 3, 1996.
(d) "Company Reports" shall mean all reports, registrations, and
statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with the Federal Reserve
Board, the OCC, the FDIC, and any applicable state banking and securities
authorities;
(e) "Material Adverse Effect" shall mean any condition of, change in,
or effect on the business, operations, properties, condition (financial or
otherwise), assets, or liabilities of the Company and the Company
Subsidiaries taken as a whole, on the one hand, or AMCORE and its
Subsidiaries taken as a whole, on the other hand, as applicable, that is or
would reasonably be expected to be materially adverse to the business,
operations, properties, condition (financial or otherwise), assets, or
liabilities of the Company and the Company Subsidiaries taken as a whole,
on the one hand, or AMCORE and its Subsidiaries taken as a whole, on the
other hand, respectively;
(f) "Person" shall mean an individual, corporation, partnership,
association, trust, unincorporated organization or, as applicable, any
other entity, unless otherwise indicated;
(g) "Subsidiary" shall mean any corporation or other organization
whether incorporated or unincorporated (i) of which a party or any
subsidiary of such party is a general partner (excluding partnerships, the
general partnership interest of which held by such party or any subsidiary
of such party does not have a majority of the voting interest in such
partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its
subsidiaries; and
(h) "To the Company's knowledge" as used in this Agreement means to
the knowledge of any officer of the Company, the Banks or any Company
Subsidiary as reflected in the recollection of such officers or in the
books and records of the Company, the Banks or any Company Subsidiary.
12.8 Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Illinois without regard to the
conflicts of laws rules.
12.9 Notices. All notices given hereunder shall be in writing (including a
telecopy) and shall be mailed by first class mail, postage prepaid, or sent by
facsimile transmission or by nationally recognized overnight delivery service,
addressed as follows:
(a) If to AMCORE or Newco, to:
Mr. John R. Hecht
AMCORE Financial, Inc.
Senior Vice President
501 Seventh Street
Rockford, Illinois 61104
Telecopy No. (815) 961-3443
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with a copy to:
William R. Kunkel, Esq.
Peter C. Krupp, Esq. Skadden, Arps, Slate,
Meagher & Flom (Illinois)
333 West Wacker Drive
Suite 2100
Chicago, Illinois 60606
Telecopy No. (312) 407-0411
(b) If to the Company to:
Mr. Thomas D. Heuerman
County Bank Shares Corporation
100 S. First Street, Box 108
Mt. Horeb, Wisconsin 53572
Telecopy No. (608) 437-4968
with a copy to:
Kenneth V. Hallet, Esq.
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Telecopy No. (414) 271-3552
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Merger to be duly executed as of the date first above written.
AMCORE FINANCIAL, INC.
By: /s/ JOHN R. HECHT
---------------------------------
Attest: /s/ ANN FARMER
-----------------------------
CBS ACQUISITION CORP.
By: /s/ JOHN R. HECHT
---------------------------------
Attest: /s/ ANN FARMER
-----------------------------
COUNTRY BANK SHARES CORPORATION
By: /s/ NEAL H. BRUNNER
---------------------------------
Attest: /s/ THOMAS D. HEUERMAN
-----------------------------
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ANNEX III
WISCONSIN BUSINESS CORPORATION LAW
SUBCHAPTER XIII
DISSENTERS' RIGHTS
180.1301 DEFINITIONS. IN SS. 180.1301 TO 180.1331:
(1) "Beneficial shareholder" means a person who is a beneficial owner
of shares held by a nominee as the shareholder.
(1m) "Business combination" has the meaning given in s. 180.1130(3).
(2) "Corporation" means the issuer corporation or, if the corporate
action giving rise to dissenters' rights under s.180.1302 is a merger or
share exchange that has been effectuated, the surviving domestic
corporation or foreign corporation of the merger or the acquiring domestic
corporation or foreign corporation of the share exchange.
(3) "Dissenter" means a shareholder or beneficial shareholder who is
entitled to dissent from corporate action under s.180.1302 and who
exercises that right when and in the manner required by ss. 180.1320 to
1328.
(4) "Fair value", with respect to a dissenter's shares other than in a
business combination, means the value of the shares immediately before the
effectuation of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable. "Fair value", with respect to
a dissenter's shares in a business combination, means market value, as
defined in s.180.1130(9)(a) 1 to 4.
(5) "Interest" means interest from the effectuation date of the
corporate action until the date of payment, at the average rate currently
paid by the corporate on its principal bank loans or, if none, at a rate
that is fair and equitable under all the circumstances.
(6) "Issuer corporation" means a domestic corporation that is the
issuer of the shares held by a dissenter before the corporate action.
180.1302 RIGHT TO DISSENT. (1) Except as provided in sub (4) and s.
180.1008(3), a shareholder or beneficial shareholder may dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of
the following corporate actions:
(a) Consummation of a plan of merger to which the issuer corporation
is a party if any of the following applies:
1. Shareholder approval is required for the merger by s. 180.1103
or by the articles of incorporation.
2. The issuer corporation is a subsidiary that is merged with its
parent under s. 180.1104.
(b) Consummation of a plan of share exchange if the issuer
corporation's shares will be acquired, and the shareholder or the
shareholder holding shares on behalf of the beneficial shareholder is
entitled to vote on the plan.
(c) Consummation of a sale or exchange of all, or substantially all,
of the property of the issuer corporation other than in the usual and
regular course of business, including a sale in dissolution, but not
including any of the following:
1. A sale pursuant to court order.
2. 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.
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(d) Except as provided in sub. (2), any other corporate action taken
pursuant to a shareholder vote to the extent that the articles of
incorporation, bylaws or a resolution of the board of directors provides
that the voting or nonvoting shareholder or beneficial shareholder may
dissent and obtain payment for his or her shares.
(2) Except as provided in sub. (4) and s. 180.1008(3), the articles of
incorporation may allow a shareholder or beneficial shareholder to dissent from
an amendment of the articles of incorporation and obtain payment of the fair
value of his or her shares if the amendment materially and adversely affects
rights in respect of a dissenter's shares because it does any of the following:
(a) Alters or abolishes a preferential right of the shares.
(b) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares.
(c) Alters or abolishes a preemptive right of the holder of shares to
acquire shares or other securities.
(d) Excludes or limits the right of the shares to vote on any matter
or to cumulate votes, other than a limitation by dilution through issuance
of shares or other securities with similar voting rights.
(e) Reduces the number of shares owned by the shareholder or
beneficial shareholder to a fraction of a share if the fractional share so
created is to be acquired for cash under s. 180.0604.
(3) Notwithstanding sub. (1)(a) to (c), if the issuer corporation is a
statutory close corporation under ss. 180.1801 to 180.1837, a shareholder of the
statutory close corporation may dissent from a corporate action and obtain
payment of the fair value of his or her shares, to the extent permitted under
sub. (1)(d) or (2) or s. 180.1803, 180.1813(1)(d) or (2)(b), 180.1815(3) or
180.1829(1)(c).
(4) Except in a business combination or unless the articles of
incorporation provide otherwise, subs. (1) and (2) do not apply to the holders
of shares of any class or series if the shares of the class or series are
registered on a national securities exchange or quoted on the national
association of securities dealers, inc., automated quotations system on the
record date fixed to determine the shareholders entitled to notice of a
shareholders meeting at which shareholders are to vote on the proposed corporate
action.
(5) Except as provided in s. 180.1833, a shareholder or beneficial
shareholder entitled to dissent and obtain payment for his or her shares under
ss. 180.1301 to 180.1331 may not challenge the corporate action creating his or
her entitlement unless the action is unlawful or fraudulent with respect to the
shareholder, beneficial shareholder or issuer corporation.
180.1303 DISSENT BY SHAREHOLDERS AND BENEFICIAL SHAREHOLDERS. (1) A
shareholder may assert dissenters' rights as to fewer than all of the shares
registered in his or her name only if the shareholder dissents with respect to
all shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he or she asserts
dissenters' rights. The rights of a shareholder who under this subsection
asserts dissenters' rights as to fewer than all of the shares registered in his
or her name are determined as if the shares as to which he or she dissents and
his or her other shares were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his or her behalf only if the beneficial shareholder does all of the
following:
(a) Submits to the corporate the shareholder's written consent to the
dissent not later than the time that the beneficial shareholder assets
dissenters' rights.
(b) Submits the consent under par. (a) with respect to all shares of
which he or she is the beneficial shareholder.
180.1320 NOTICE OF DISSENTERS' RIGHTS. (1) If proposed corporate action
creating dissenters' rights under s. 180.1302 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that
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shareholders and beneficial shareholders are or may be entitled to assert
dissenters' rights under ss. 180.1301 to 180.1331 and shall be accompanied by a
copy of those sections.
(2) If corporate action creating dissenters' rights under s. 180.1302 is
authorized without a vote of shareholders, the corporation shall notify, in
writing and in accordance with s. 180.0141 [which is set forth below], all
shareholders entitled to assert dissenters' rights that the action was
authorized and send them the dissenters' notice described in s. 180.1322.
180.1321 NOTICE OF INTENT TO DEMAND PAYMENT. (1) If proposed corporate
action creating dissenters' rights under s. 180.1302 is submitted to a vote at a
shareholder's meeting, a shareholder or beneficial shareholder who wishes to
assert dissenters' rights shall do all of the following:
(a) Deliver to the issuer corporation before the vote is taken written
notice that complies with s. 180.0141 of the shareholder's beneficial
shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated.
(b) Not vote his or her shares in favor of the proposed action.
(2) A shareholder or beneficial shareholder who fails to satisfy sub. (1)
is not entitled to payment for his or her shares under ss. 180.1301 to 180.1331.
180.1322 DISSENTERS' NOTICE. (1) If proposed corporate action creating
dissenters' rights under s. 180.1302 is authorized at a shareholders' meeting,
the corporation shall deliver a written dissenters' notice to all shareholders
and beneficial shareholders who satisfied s. 180.1321.
(2) The dissenters' notice shall be sent no later than 10 days after the
corporate action is authorized at a shareholders' meeting or without a vote of
shareholders, whichever is applicable. The dissenters' notice shall comply with
s. 180.0141 and shall include or have attached all of the following:
(a) A statement indicating where the shareholder or beneficial must
send the payment demand ad where and when certificates for certificated
shares must be deposited.
(b) For holders of uncertificated shares, an explanation of the extent
to which transfer of the shares will be restricted after the payment demand
is received.
(c) A form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and that whether he or she acquired beneficial ownership
of the shares before that date.
(d) A date by which the corporation must receive the payment demand,
which may not be fewer than 30 days nor more than 60 days after the date on
which the dissenters' notice delivered.
(e) A copy of ss. 180.1301 to 180.1331.
180.1323 DUTY TO DEMAND PAYMENT. (1) A shareholder or beneficial
shareholder who is sent a dissenters' notice described in s. 180.1322, or a
beneficial shareholder whose shares are held by a nominee who is sent a
dissenters' notice described in s. 180.1322, must demand payment in writing and
certify whether he or she acquired beneficial ownership of the shares before the
date specified in the dissenters' notice under s. 180.1322(2)(c). A shareholder
or beneficial shareholder with certificated shares must also deposit his or her
certificates in accordance with the terms of the notice.
(2) A shareholder or beneficial shareholder with certificated shares who
demands payment and deposits his or her share certificates under sub. (1)
retains all other rights of a shareholder or beneficial shareholder until these
rights are canceled or modified by the effectuation of the corporate action.
(3) A shareholder or beneficial shareholder with certificated or
uncertificated shares who does not demand payment by the date set in the
dissenters' notice, or a shareholder or beneficial shareholder with certificated
shares who does not deposit his or her share certificates where required and by
the date set in the dissenters' notice is not entitled to payment for his or her
shares under ss. 180.1301 to 180.1331.
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180.1324 RESTRICTIONS ON UNCERTIFICATED SHARES. (1) The issuer corporation
may restrict the transfer of uncertificated shares from the date that the demand
for payment for those shares is received until the corporate action is
effectuated or the restrictions released under s. 180.1326.
(2) The shareholder or beneficial shareholder who asserts dissenters'
rights as to uncertificated shares retains all of the rights of a shareholder or
beneficial shareholder, other than those restricted under sub. (1), until these
rights are canceled or modified by the effectuation of the corporate action.
180.1325 PAYMENT. (1) Except as provided in s. 180.1327, as soon as the
corporate action is effectuated or upon receipt of a payment demand, whichever
is later, the corporation shall pay each shareholder or beneficial shareholder
who has complied with s. 180.1323 the amount that the corporation estimates to
be the fair value of his or her shares, plus accrued interest.
(2) The payment shall be accompanied by all of the following:
(a) The corporation's latest available financial statements, audited
and including footnote disclosure if available, but including not less than
a balance sheet as of the end of a fiscal year ending not more than 16
months before the date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year and the latest
available interim financial statements, if any.
(b) A statement of the corporation's estimate of the fair value of the
shares.
(c) An explanation of how the interest was calculated.
(d) A statement of the dissenter's right to demand payment under s.
180.1328 if the dissenter is dissatisfied with the payment.
(e) A copy of ss. 180.1301 to 180.1331.
180.1326 FAILURE TO TAKE ACTION. (1) If an issuer corporation does not
effectuate the corporate action within 60 days after the date set under s.
180.1322 for demanding payment, the issuer corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertified shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the issuer corporation effectuates the corporate action, the
corporation shall deliver a new dissenters' notice under s. 180.1322 and repeat
the payment demand procedure.
180.1327 AFTER-ACQUIRED SHARES. (1) A corporation may elect to withhold
payment required by s. 180.1325 from a dissenter unless the dissenter was the
beneficial owner of the shares before the date specified in the dissenters'
notice under s. 180.1322(2)(c) as the date of the first announcement to news
media or to shareholders of the terms of the proposed corporate action.
(2) To the extent that the corporation elects to withhold payment under
sub. (1) after effectuating the corporate action, it shall estimate the fair
value of the shares, plus accrued interest, and shall pay this amount to each
dissenter who agrees to accept it in full satisfaction of his or her demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenter's right to demand payment under s. 180.1328 if the
dissenter is dissatisfied with the offer.
180.1328 PROCEDURE IF DISSENTER DISSATISFIED WITH PAYMENT OR OFFER. (1) A
dissenter may, in the manner provided in sub. (2), notify the corporation of the
dissenter's estimate of the fair value of his or her shares and amount of
interest due, and demand payment of his or her estimate, less any payment
received under s. 180.1325, or reject the offer under s. 180.1327 and demand
payment of the fair value of his or her shares and interest due, if any of the
following applies:
(a) The dissenter believes that the amount paid under s. 180.1325 or
offered under s. 180.1327 is less than the fair value of his or her shares
or that the interest due is incorrectly calculated.
(b) The corporation fails to make payment under s. 180.1325 within 60
days after the date set under s. 180.1322 for demanding payment.
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(c) The issuer corporation, having failed to effectuate the corporate
action, does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after the date
set under s. 180.1322 for demanding payment.
(2) A dissenter waives his or her rights to demand payment under this
section unless the dissenter notifies the corporation of his or her demand under
sub. (1) in writing within 30 days after the corporation made or offered payment
for his or her shares. The notice shall comply with s. 180.0141.
180.1330 COURT ACTION. (1) If a demand for payment under s. 180.1328
remains unsettled, the corporation shall bring a special proceeding within 60
days after receiving the payment demand under s. 180.1328 and petition the court
to determine the fair value of the shares and accrued interest. If the
corporation does not bring the special proceeding within the 60-day period, it
shall pay each dissenter whose demand remains unsettled the amount demanded.
(2) The corporation shall bring the special proceeding in the circuit court
for the county where its principal office or, if none in this state, its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall bring the special proceeding
in the county in the state in which was located the registered office of the
issuer corporation that merged with or whose shares were acquired by the foreign
corporation.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the special proceeding.
Each party to the special proceeding shall be served with a copy of the petition
as provided in s. 801.14.
(4) The jurisdiction of the court in which the special proceeding is
brought under sub. (2) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. An appraiser has the power described in the order
appointing him or her or in any amendment to the order. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the special proceeding is entitled to
judgment for any of the following:
(a) the amount, if any, by which the court finds the fair value of his
or her shares, plus interest, exceeds the amount paid by the corporation.
(b) The fair value, plus accrued interest, of his or her shares
acquired on or after the date specified in the dissenter's notice under s.
180.1322(2)(c), for which the corporation elected to withhold payment under
s. 180.1327.
180.1331 COURT COSTS AND COUNSEL FEES. (1)(a) Notwithstanding ss. 814.01 to
814.04, the court in a special proceeding brought under s. 180.1330 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court and shall assess the costs against
the corporation, except as provided in par. (b).
(b) Notwithstanding ss. 814.01 and 814.04, the court may assess costs
against all or some of the dissenters, in amounts that the court finds to
be equitable, to the extent that the court finds the dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment under s.
180.1328.
(2) The parties shall bear their own expenses of the proceeding, except
that, notwithstanding ss. 814.01 to 814.04, the court may also assess the fees
and expenses of counsel and experts for the respective parties, in amounts that
the court finds to be equitable, as follows:
(a) Against the corporation and in favor of any dissenter if the court
finds that the corporation did not substantially comply with ss. 180.1320
to 180.1328.
(b) Against the corporation or against a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith
with respect to the rights provided by this chapter.
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(3) Notwithstanding sec.sec.814.01 to 814.04, if the court finds that the
services of counsel and experts for any dissenter were of substantial benefit to
other dissenters similarly situated, the court may award to these counsel and
experts reasonable fees to be paid out of the amounts awarded the dissenters who
were benefited.
* * *
180.0141 NOTICE. (1) This section applies to notice that is required under
this chapter and that is made subject to this section by express reference to
this section.
(2) (a) A person shall give notice in writing, except as provided in par.
(b).
(b) A person may give oral notice is oral notice is permitted by the
articles of incorporation or bylaws and not otherwise prohibited by this
chapter.
(3) Except as provided in sec.180.0721(4) or unless otherwise provided in
the articles of incorporation or bylaws, notice may be communicated in person,
by telephone, telegraph, teletype, facsimile or other form of wire or wireless
communication, or by mail or private carrier, and, if these forms of personal
notice are impracticable, notice may be communicated by a newspaper of general
circulation in the area where published, or by radio, television or other form
of public broadcast communication.
(4) Written notice to a domestic corporation or a foreign corporation
authorized to transact business in this state may be addressed to its registered
agent at its registered office or to the domestic corporation or foreign
corporation at its principal office. With respect to a foreign corporation that
has not yet filed an annual report under sec.180.1622, the address of the
foreign corporation's principal office may be determined from its application
for a certificate of authority.
(5) (a) Except as provided in par. (b) and sec.sec.180.0807(2) and
180.0843(1), written notice is effective at the earliest of the following:
1. When received.
2. Five days after its deposit in the U.S. mail, if mailed postpaid
and correctly addressed.
3. On the date shown on the return receipt, if sent by registered
or certified mail, return receipt requested, and the receipt is signed
by or on behalf of the addressee.
4. On the effective date specified in the articles of incorporation
or bylaws.
(b) Written notice by a domestic corporation or foreign corporation to
its shareholder is effective when mailed and may be addressed to the
shareholder's address shown in the domestic corporation's or foreign
corporation's current record of shareholders.
(c) Oral notice is effective when communicated.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AMCORE has purchased for the benefit of its officers and directors, and
those of certain subsidiaries, insurance policies whereby the insurance
companies agree, among other things, that in the event any such officer or
director becomes legally obligated to make a payment (including legal fees and
expenses) in connection with an alleged wrongful act, such insurance companies
will pay AMCORE up to $5,000,000. Wrongful act means any breach of duty,
neglect, error, misstatement, misleading statement or other act done by an
officer or director of AMCORE or any subsidiary.
Reference is made to the caption "Comparison of Stockholders' Rights
Indemnification and Personal Liability of Directors and Officers" in the Proxy
Statement/Prospectus for a description of certain statutory and charter
provisions under which controlling persons, directors and officers of AMCORE are
afforded indemnification against liabilities which they may incur in such
capacities and for the statement of the Commission with respect thereto as to
the enforceability thereof.
Pursuant to the Merger Agreement, AMCORE has agreed to indemnify the
executive officers and directors of CBSC and its subsidiaries for a period of
six years after the Effective Time to the same extent such persons are currently
indemnified pursuant to CBSC's Articles of Incorporation and Bylaws.
ITEM 21. EXHIBITS.
(a) The following exhibits have been filed (except where otherwise
indicated) as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<C> <S>
2.1 Amended and Restated Agreement and Plan of Merger, dated as
of May 1, 1997, among AMCORE Financial, Inc., CBS
Acquisition Corp. and Country Bank Shares Corporation
(included as Annex II to the Proxy Statement/Prospectus)
3.1 Amended and Restated Articles of Incorporation of AMCORE
Financial, Inc. dated May 1, 1990 (Incorporated by reference
to Exhibit 23 of AMCORE's Annual Report on Form 10-K for the
year ended December 23, 1989)
3.2 Bylaws of AMCORE Financial, Inc. as amended May 17, 1990
(Incorporated by reference as Exhibit 3.1 of AMCORE's Annual
Report on Form 10-K for the year ended December 31, 1994)
4.1 Shareholder Rights Plan of AMCORE Financial, Inc.
(incorporated by reference to Exhibit 4.1 to the AMCORE
Financial, Inc. Form 8-K dated February 21, 1996)
5.1 Opinion of Marshall Hill Cassas & de Lipkau
8.1 Opinion of Quarles & Brady
10.1 Form of Stockholder Voting Agreement, dated as of January
30, 1997, between AMCORE Financial, Inc. and certain
directors, officers and other significant shareholders of
Country Bank Shares Corporation (included as Exhibit B to
Annex II to the Proxy Statement/ Prospectus)
23.1 Consent of McGladrey and Pullen, LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
23.4 Consent of Quarles & Brady (included in Exhibit 8.1)
23.5 Consent of Marshall Hill Cassas & de Lipkau (included in
Exhibit 5.1)
23.6 Consent of ABN AMRO Chicago Corporation
24.1 Power of Attorney
99 Form of Proxy for Country Bank Shares Corporation
</TABLE>
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<PAGE> 144
(b) No financial statement schedules are required to be filed with regard
to AMCORE or CBSC.
ITEM 22. UNDERTAKINGS.
(1) AMCORE hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, as amended, each filing of the
Registrant's Special report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, 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) AMCORE hereby undertakes that 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) AMCORE 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, as amended, each such post-effective amendment
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.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of AMCORE pursuant to the foregoing provisions, or otherwise, AMCORE 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 AMCORE of expenses incurred or paid
by a director, officer or controlling person or AMCORE 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, AMCORE
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 is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
(5) AMCORE hereby undertakes to respond to requests for information that is
incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11 or
13 of Form S-4, 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) AMCORE 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.
(7) AMCORE hereby undertakes to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
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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 Rockford, State of
Illinois, on this 13th day of May 1997.
AMCORE FINANCIAL, INC.
By: /s/ JOHN R. HECHT
------------------------------------
John R. Hecht
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of AMCORE Financial, Inc. hereby constitutes and appoints Robert J.
Meuleman and John R. Hecht, or either of them (with full power to each of them
to act alone), his true and lawful attorney-in-fact and agent, with full power
of substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file this Registration Statement
under the Securities Act of 1933, as amended, and any or all amendments
(including, without limitation, post-effective amendments and any amendment or
amendments or additional registration statements filed pursuant to Rule 462 of
the Securities Act increasing the amount of securities for which registration is
being sought), with all exhibits and any and all documents required to be filed
with respect thereto, with the Securities and Exchange Commission or any
regulatory authority, granting unto such attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully to all intents and purposes as he himself might or
could do if personally present, hereby ratifying and confirming that all such
attorneys-in-fact and agents, or any of them, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ROBERT J. MEULEMAN Director and President and Chief May 13, 1997
- ------------------------------------------------ Executive Officer (principal
Robert J. Meuleman executive officer)
/s/ JOHN R. HECHT Senior Vice President and Chief May 13, 1997
- ------------------------------------------------ Financial Officer (principal
John R. Hecht financial officer and principal
accounting officer)
/s/ MILTON R. BROWN Director May 13, 1997
- ------------------------------------------------
Milton R. Brown
/s/ LAWRENCE E. GLOYD Director May 14, 1997
- ------------------------------------------------
Lawrence E. Gloyd
</TABLE>
II-3
<PAGE> 146
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WILLIAM R. MCMANAMAN Director May 14, 1997
- ------------------------------------------------
William R. McManaman
/s/ RICHARD C. DELL Director May 14, 1997
- ------------------------------------------------
Richard C. Dell
/s/ ROBERT A. DOYLE Director May 14, 1997
- ------------------------------------------------
Robert A. Doyle
/s/ TED ROSS Director May 13, 1997
- ------------------------------------------------
Ted Ross
/s/ JACK D. WARD, ESQ. Director May 13, 1997
- ------------------------------------------------
Jack D. Ward, Esq.
</TABLE>
II-4
<PAGE> 147
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
2.1 Amended and Restated Agreement and Plan of Merger, dated as
of May 1, 1997, among AMCORE Financial, Inc., CBS
Acquisition Corp. and Country Bank Shares Corporation
(included as Annex II to the Proxy Statement/Prospectus)
3.1 Amended and Restated Articles of Incorporation of AMCORE
Financial, Inc. dated May 1, 1990 (Incorporated by reference
to Exhibit 23 of AMCORE's Annual Report on Form 10-K for the
year ended December 23, 1989)
3.2 Bylaws of AMCORE Financial, Inc. as amended May 17, 1990
(Incorporated by reference as Exhibit 3.1 of AMCORE's Annual
Report on Form 10-K for the year ended December 31, 1994)
4.1 Shareholder Rights Plan of AMCORE Financial, Inc.
(incorporated by reference to Exhibit 4.1 to the AMCORE
Financial, Inc. Form 8-K dated February 21, 1996)
5.1 Opinion of Marshall Hill Cassas and de Lipkau
8.1 Opinion of Quarles & Brady
10.1 Form of Stockholder Voting Agreement, dated as of January
30, 1997, between AMCORE Financial, Inc. and certain
directors, officers and other significant shareholders of
Country Bank Shares Corporation (included as Exhibit B to
Annex II to the Proxy Statement/ Prospectus)
23.1 Consent of McGladrey and Pullen, LLP
23.2 Consent of Arthur Andersen LLP
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
23.4 Consent of Quarles & Brady (included in Exhibit 8.1)
23.5 Consent of Marshall Hill Cassas and de Lipkau (included in
Exhibit 5.1)
23.6 Consent of ABN AMRO Chicago Corporation
24.1 Power of Attorney
99 Form of Proxy for Country Bank Shares Corporation
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[Marshall Hill Cassas & de Lipkau Letterhead]
May 14, 1997
AMCORE Financial, Inc.
501 Seventh Street
Rockford, Illinois 61104
Re: AMCORE Financial, Inc. -- Registration Statement
Form S-4 - Country Bank Shares Corporation Merger
Ladies and Gentlemen:
We have acted as special counsel to AMCORE Financial, Inc., a Nevada
corporation (the "Company"), in connection with the preparation of the
Registration Statement (as defined below) for the registration under the
Securities Act of 1933, as amended (the "Act"), of up to 2,473,175 shares (the
"Shares") of Common Stock, par value $0.33 per share (the "Common Stock"), of
the Company, together with the share purchase rights (the "Rights") associated
therewith.
The Shares are to be issued pursuant to the terms of the Amended and
Restated Agreement and Plan of Merger, dated as of May 1, 1997 (the "Merger
Agreement"), among the Company, CBS Acquisition, Corp., a Wisconsin corporation
and a wholly owned subsidiary of the Company ("Newco"), and Country Bank Shares
Corporation, a Wisconsin corporation ("CBSC"), which provides for the merger
(the "Merger") of Newco with and into CBSC, with CBSC surviving as a
wholly-owned subsidiary of the Company.
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K promulgated under the Securities Act.
In connection with this opinion, we have examined and are familiar
with originals or copies, certified or otherwise identified to our satisfaction,
of the following:
(i) the Proxy Statement/Prospectus dated May 14, 1997 which
constitutes part of the Registration Statement on Form S-4
(the "Registration Statement") filed with the Securities and Exchange
Commission (the "Commission") on May 14, 1997 under the Act;
<PAGE> 2
AMCORE Financial, Inc.
May 14, 1997
Page 2
(ii) the Registration Statement;
(iii) a specimen certificate representing the Common Stock;
(iv) the Merger Agreement;
(v) the Bylaws of the Company, as presently in effect;
(vi) certain resolutions of the Board of Directors of the
Company relating to the issuance of the Shares;
(vii) copies of the following charter documents of the Company
certified by the Nevada Secretary of State:
(a) Articles of Incorporation for Americorp Financial,
Inc. filed June 1, 1982;
(b) Certificate of Amendment changing
name from AMERICORP FINANCIAL, INC. to AMCORE FINANCIAL, INC.
filed December 12, 1985;
(c) Certificate of Amendment filed May 12, 1986;
(d) Certificate of Amendment filed May 28, 1986;
(e) Certificate of Amendment filed June 7, 1988;
(f) Certificate of Amendment filed May 10, 1990;
(g) Certificate of Ownership And Merger filed
December 17, 1990;
(h) Certificate of Stock Split Pursuant to NRS 78.207
filed December 13, 1993.
We have also examined originals or copies, certified or otherwise identified to
our satisfaction, of such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic or telecopied copies
<PAGE> 3
AMCORE Financial, Inc.
May 14, 1997
Page 3
and the authenticity of the originals of such copies. We have assumed that all
documents submitted to us unsigned have been properly executed by the proper
parties and delivered in a timely manner. As to any facts material to this
opinion that we did not independently establish or verify, we have relied upon
the Registration Statement and statements and representations of the officers
and other representatives of the Company and others.
We are admitted to practice in the State of Nevada and we express no
opinion as to the laws of any other jurisdiction.
Based upon the foregoing, it is our opinion that, under Nevada law when
(i) the Registration Statement, as finally amended, becomes effective, (ii) the
Merger becomes effective under the Business Corporation law of the State of
Wisconsin pursuant to the terms of the Merger Agreement, and (iii) certificates
representing the Shares have been duly executed by an authorized officer of the
exchange agent for the Common Stock and registered by such exchange agent and
duly delivered in accordance with the terms of the Merger Agreement:
1. The Shares will be validly issued, fully paid and
nonassessable; and
2. Each Right associated with the Shares will be validly
issued when the associated Shares have been duly issued as set forth in
paragraph 1.
This opinion is limited to matters governed by the laws of the State of
Nevada, excluding any Nevada state "blue sky" law. We hereby consent to the
use of our name under the heading "OPINIONS" in the Proxy Statement/Prospectus
which forms a part of the Regisration Statement. We also hereby consent to the
filing of this opinion with the Commission as an exhibit to the Registration
Statement. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder. This
opinion is expressed as of the date hereof unless otherwise expressly stated
and we disclaim any undertaking to advise you of the facts stated or assumed
herein or any subsequent changes in applicable law.
Very truly yours,
/s/ MARSHALL HILL CASSAS & de LIPKAU
JPF:kae
<PAGE> 1
EXHIBIT 8.1
[Quarles & Brady Letterhead]
May 14, 1997
Country Bank Shares Corporation
100 South First Street
Mount Horeb, WI 53532
Re: Registration Statement on Form S-4 for Proposed Merger of CBS
Acquisition Corp., a subsidiary of AMCORE Financial, Inc., with and
into Country Bank Shares Corporation
We have acted on behalf of Country Bank Shares Corporation, Inc., a
Wisconsin corporation ("CBSC"), in connection with the Agreement and Plan of
Merger by and among (i) AMCORE Financial, Inc., a Nevada Corporation;
("AMCORE"), (ii) CBS Acquisition Corp., a Wisconsin corporation and a
wholly-owned subsidiary of AMCORE, and (iii) CBSC, dated as of January 30, 1997
(the "Merger Agreement") and the Registration Statement on Form S-4 to which
this letter is an exhibit (the "Registration Statement").
We have reviewed the section of the Registration Statement entitled "THE
MERGER - Certain Federal Income Tax Consequences" and that section accurately
reflects our opinion regarding the matters of law discussed in that section.
This opinion is based on our interpre-
<PAGE> 2
tation of the currently applicable sections of the Internal Revenue
Code of 1986, as amended, Treasury Regulations, Internal Revenue Service
rulings, and the cases we believe are controlling.
The transactions contemplated by the Merger Agreement are conditioned upon
the issuance by Quarles & Brady of its opinion to the effect that the proposed
merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended. That opinion regarding reorganization treatment has not yet been
given and is not contained in this letter.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "OPINIONS"
in this Proxy Statement/Prospectus.
Very truly yours,
/s/ QUARLES & BRADY
-------------------
Quarles & Brady
<PAGE> 1
EXHIBIT 23.1
[MCGLADREY & PULLEN, LLP LETTERHEAD]
The Board of Directors
AMCORE Financial, Inc.
We consent to incorporation by reference in the Registration Statement on Form
S-4 of AMCORE Financial, Inc. of our report dated January 20, 1997, relating
to the consolidated balance sheets of AMCORE Financial, Inc. and subsidiaries
as of December 31, 1996 and 1995, and the related consolidated statements of
income, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1996, which report appears in the December
31, 1996 annual report on Form 10-K of AMCORE Financial, Inc. and to the
reference of our firm under the heading "Experts" in the Proxy
Statement-Prospectus.
/s/ McGladrey & Pullen, LLP
Rockford, Illinois
May 14, 1997
<PAGE> 1
EXHIBIT 23.2
[ARTHUR ANDERSEN LLP LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we consent to the use of our reports (and to
all references to our Firm) included in or made a part of this registration
statement.
/s/ ARTHUR ANDERSEN LLP
May 14, 1997
Madison, Wisconsin
<PAGE> 1
EXHIBIT 23.3
[SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)]
May 14, 1997
AMCORE Financial, Inc.
501 Seventh Street
Rockford, Illinois 61104
Ladies & Gentlemen:
Reference is made to the Registration Statement on Form S-4 (the
"Registration Statement") of AMCORE Financial, Inc., a Nevada corporation
("AMCORE"), relating to the merger of CBS Acquisition Corp., a Wisconsin
corporation and a wholly owned subsidiary of AMCORE, with and into Country Bank
Shares Corporation, a Wisconsin corporation ("CBSC") (the "Merger"). We
have acted as special counsel to AMCORE in connection with the Merger.
We hereby consent to the reference to our firm under the heading "OPINIONS"
in the Proxy Statement/Prospectus that is part of the Registration Statement.
In giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations promulgated thereunder.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom (Illinois)
<PAGE> 1
EXHIBIT 23.6
CONSENT OF ABN AMRO CHICAGO CORPORATION
We hereby consent to the summarization of our fairness opinion letter and
references to our firm under the captions "SUMMARY--Opinion of Financial
Advisor" and "THE MERGER" and to the inclusion of such letter as an Appendix to
the Proxy Statement-Prospectus which is part of this Registration Statement on
Form S-4 of AMCORE Financial, Inc. By giving such consent, we do not thereby
admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "expert" as used in the Securities
Act of 1933, as amended, or the rules and regulations promulgated thereunder.
ABN AMRO CHICAGO CORPORATION
/s/ ABN AMRO Chicago Corporation
Chicago, Illinois
May 14, 1997
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Power of
Attorney has been signed by the following persons in the capacities and on the
dates indicated. By so signing, each of the undersigned, in his or her capacity
as a director or officer, or both, as the case may be, of AMCORE Financial, Inc.
(the "Corporation"), does hereby appoint Robert J. Meuleman and John R. Hecht or
either of them (with full power to each of them to act alone) attorney to
execute in his or her name, place and stead, in his or her capacity as a
director or officer or both, as the case may be, of the Corporation, the
Registration Statement on Form S-4 to be filed with the Securities and Exchange
Commission (the "Commission"), and any and all amendments to said Registration
Statement and all instruments necessary or incidental in connection therewith,
and to file the same with the Commission. Each of said attorneys shall have full
power and authority to do and perform in the name and on behalf of each of the
undersigned, in any and all capacities, every act whatsoever requisite or
necessary to be done in the premises as fully and to all intents and purposes as
each of the undersigned might or could do in person, hereby ratifying and
approving the acts of said attorneys and each of them.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ROBERT J. MEULEMAN Director, President and Chief Executive May 13, 1997
- --------------------------------------------- Officer (principal executive officer)
(Robert J. Meuleman)
/s/ JOHN R. HECHT Senior Vice President and Chief May 13, 1997
- --------------------------------------------- Financial Officer (principal financial
(John R. Hecht) officer and principal accounting
officer)
/s/ MILTON R. BROWN Director May 13, 1997
- ---------------------------------------------
(Milton R. Brown)
/s/ LAWRENCE E. GLOYD Director May 14, 1997
- ---------------------------------------------
(Lawrence E. Gloyd)
/s/ TED ROSS Director May 13, 1997
- ---------------------------------------------
(Ted Ross)
/s/ JACK D. WARD, ESQ. Director May 13, 1997
- ---------------------------------------------
(Jack D. Ward, Esq.)
/s/ RICHARD C. DELL Director May 14, 1997
- ---------------------------------------------
(Richard C. Dell)
/s/ ROBERT A. DOYLE Director May 13, 1997
- ---------------------------------------------
(Robert A. Doyle)
/s/ WILLIAM R. MCMANAMAN Director May 14, 1997
- ---------------------------------------------
(William R. McManaman)
</TABLE>
<PAGE> 1
CBSC
MAY 14, 1997
PROXY
COUNTRY BANK SHARES CORPORATION
100 South First Street
Mt. Horeb, Wisconsin 53572
Notice of Special Meeting of Stockholders
June 18, 1997
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints Neal H. Brunner and Thomas D. Heuerman, and
each of them, as Proxies, each with the power to appoint his/her substitute, and
hereby authorizes each of them to represent and to vote, as designated below,
all the shares of stock of Country Bank Shares Corporation held of record by the
undersigned on May 5, 1997 at the Special Meeting of shareholders of Country
Bank Shares Corporation to be held on June 18, 1997 and at all adjournments
thereof.
The Board of Directors Recommend a Vote "FOR" the following Proposals:
(1) To approve and adopt the Amended and Restated Agreement and Plan of Merger,
dated as of May 1, 1997, as amended (the "Merger Agreement"), among AMCORE
Financial, Inc., a Nevada corporation ("AMCORE"), CBS Acquisition Corp., a
Wisconsin corporation and a wholly-owned subsidiary of AMCORE ("Newco"), and
CBSC and the transactions contemplated thereby, pursuant to which, among
other things, (i) Newco will merge with and into CBSC, with CBSC being the
surviving corporation in the merger (the "Merger"), and (ii) each
outstanding share of common stock, no par value, of CBSC ("CBSC Common
Stock") (other than shares of CBSC Common Stock held by CBSC as treasury
stock immediately prior to the Effective Time (as defined in the Merger
Agreement) and shares of CBSC Common Stock held by AMCORE, Newco, or any
direct or indirect subsidiary of AMCORE, which shares will be cancelled, and
other than shares of CBSC Common Stock held by stockholders of CBSC who have
properly exercised their dissenters' rights under Wisconsin law) will be
cancelled and converted into the right to receive a number of shares
(ranging from 5.6247 to 3.7193) (the "Exchange Ratio") of common stock, par
value $0.33 per share, of AMCORE, to be determined based upon the average
per share closing price of AMCORE Common Stock as reported on the Nasdaq
National Market for the period of twenty trading days ending at the end of
the third trading day immediately preceding the date of the Special Meeting.
A description of the procedure to be used in determining the Exchange Ratio,
together with other important information, is contained in the accompanying
CBSC Proxy Statement and AMCORE Prospectus ("Proxy Statement/Prospectus").
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ] FOR approval and adoption of [ ] AGAINST approval and adoption [ ] ABSTAIN from vote on the
the Merger Agreement of the Merger Agreement Merger Agreement
</TABLE>
(2) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before this meeting.
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ] FOR approval and adoption of [ ] AGAINST approval and adoption
the Merger Agreement of the Merger Agreement
</TABLE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTIONS MADE FOR A PROPOSAL, THIS PROXY WILL BE VOTED FOR THAT
PROPOSAL.
Dated: Signature
- ---------------------------------- --------------------------------------
--------------------------------------
Signature, if held jointly
Please sign exactly as name appears hereon. When shares are held by joint
tenants, each should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. When executed by a
corporation, the proxy should be signed by a duly authorized officer, including
title as such. If a partnership, please sign in partnership name by an
authorized person.
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
