<PAGE> 1
=====================
As filed with the Securities and Exchange Commission on May 10, 1996
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ASSOCIATED BANC-CORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
WISCONSIN 6711 39-1098068
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
112 NORTH ADAMS STREET
P.O. BOX 13307
GREEN BAY, WISCONSIN 54307-3307
(414) 433-3166
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
HARRY B. CONLON
ASSOCIATED BANC-CORP
112 NORTH ADAMS STREET
P.O. BOX 13307
GREEN BAY, WISCONSIN 54307-3307
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS TO BE SENT TO:
SHELDON I. SAITLIN, ESQ. DAVID B. HOFF, ESQ.
ROBERT J. WILD, ESQ. HOFF LAW OFFICES
SAITLIN, PATZIK, FRANK & SAMOTNY LTD. 6413 HAMMERSLEY ROAD
150 SOUTH WACKER DRIVE, SUITE 900 MADISON, WISCONSIN 53711
CHICAGO, ILLINOIS 60606 (608) 271-9067
(312) 551-8300 (608) 271-4531 (FACSIMILE)
(312) 551-1101 (FACSIMILE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement is declared 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
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=========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED (1) REGISTERED (2) SHARE PRICE REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par
value per share.................. 535,000 shares Not Applicable Not Applicable $3,008(3)
=========================================================================================================================
</TABLE>
(1) This Registration Statement relates to securities of the registrant
issuable to holders of (i) Common Stock of F&M Bankshares of Reedsburg,
Inc. (the "Company") in the proposed merger of the Company with and into a
subsidiary of the registrant (the "Merger") and (ii) Common Stock of
Farmers & Merchants Bank (the "Bank") in the proposed consolidation of the
Bank with and into a subsidiary of the registrant (the "Consolidation").
(2) Subject to increase in accordance with Rule 416(a) and (b) under the
Securities Act of 1933, as amended, pursuant to stock splits or stock
dividends.
(3) Pursuant to Rule 457(f)(2), the registration fee was computed on the
basis $8,721,386 calculated as the sum of (i) $8,073,463, the book value
of the Company Common Stock to be exchanged in the Merger and (ii)
$647,923, the book value of Bank Common Stock to be exchanged in the
Consolidation as of December 31, 1995, the latest practicable date.
---------------------
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> 2
ASSOCIATED BANC-CORP
Cross Reference Sheet
FORM S-4 ITEM NUMBER AND CAPTION PROXY STATEMENT/PROSPECTUS CAPTION
- -------------------------------- ----------------------------------
PART I
Information Required in the Prospectus
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus........................... Facing Page of Registration Statement;
Cross Reference Sheet; Cover Page of
Proxy Statement/Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus.................. Table of Contents; Available
Information; Incorporation of Certain
Documents by Reference
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Information.. Prospectus Summary
4. Terms of the Transaction............. The Merger and the Consolidation;
Certain Provisions of the Merger
Agreement; Certain Provisions of the
Consolidation Agreement
5. Pro Forma Financial Information...... Not Applicable
6. Material Contacts With the Company
Being Acquired....................... Summary; The Merger and the
Consolidation
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters............ Not Applicable
8. Interests of Named Experts and
Counsel.............................. Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.......................... Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to
S-3 Registrants..................... Available Information; Prospectus
Summary; Associated Banc-Corp;
Certain Information Concerning
Associated
11. Incorporation of Certain
Information by Reference............ Incorporation of Certain Documents
by Reference
12. Information with Respect to
S-2 or S-3 Registrants.............. Not Applicable
i
<PAGE> 3
FORM S-4 ITEM NUMBER AND CAPTION PROXY STATEMENT/PROSPECTUS CAPTION
- -------------------------------- ----------------------------------
13. Incorporation of Certain
Information by Reference........ Not Applicable
14. Information with Respect to
Registrants other than S-2 or
S-3 Registrants................. Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies....................... Not Applicable
16. Information with Respect to S-2
or S-3 Companies................ Not Applicable
17. Information with Respect to
Companies other than S-2 or S-3
Companies....................... Prospectus Summary;Certain Information
Concerning the Company; Certain
Information Concerning the Bank;
Exhibit F
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents
or Authorizations are to be
Solicited....................... Cover Page of Proxy Statement/Prospectus
Summary; The Special Meetings;The
Merger and the Consolidation; Certain
Information Concerning the Company;
Certain Information Concerning the Bank
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange
Offer........................... Not Applicable
ii
<PAGE> 4
F&M BANKSHARES OF REEDSBURG, INC. FARMERS & MERCHANTS BANK
170 MAIN STREET 170 MAIN STREET
REEDSBURG, WISCONSIN 53959 REEDSBURG, WISCONSIN 53959
May ___, 1996
To the Shareholders of F&M Bankshares of Reedsburg, Inc. and Farmers &
Merchants Bank:
Following this letter are notices of the Special Meetings of the
Shareholders of F&M Bankshares of Reedsburg, Inc. (the "Company") and Farmers &
Merchants Bank (the "Bank"), a Proxy Statement/Prospectus and proxy cards for
the Special Meetings. The Company Meeting will commence at _____ __.m. on
_______________, 1996 and the Bank Meeting will be held immediately following
the conclusion of the Company Meeting at the principal executive offices of the
Company at 170 Main Street, Reedsburg, Wisconsin 53959.
The Company shareholders will be asked to vote on a proposal to approve an
Agreement and Plan of Merger among Associated Banc-Corp ("Associated"),
Associated Banc-Shares, Inc. ("Holding"), a wholly-owned subsidiary of
Associated, and the Company dated as of January 23, 1996 as amended by the
First Amendment to Agreement and Plan of Merger dated as of May ___, 1996 (the
"Merger Agreement"). Shareholders of the Bank will be asked to approve an
Agreement and Plan of Consolidation between Associated Interim Bank ("Interim
Bank"), a wholly-owned subsidiary of Associated, and the Bank dated as of May
___, 1996 (the "Consolidation Agreement"). Associated is a Wisconsin bank
holding company owning all of the capital stock of eight commercial banks
located in Wisconsin and Illinois.
Subject to receipt of regulatory approval, approval by holders of a
majority of the shares of the Company Common Stock and two-thirds of the shares
of the Bank Common Stock, and satisfaction of other conditions, the Merger
Agreement provides that the Company will combine its business and operations
with those of Holding through a statutory merger (the "Merger") and the Bank
will combine its business and operations with those of Interim Bank through a
consolidation (the "Consolidation"). The Bank will thereafter operate its
banking business as "Associated Bank Reedsburg." As described in the
accompanying Proxy Statement/Prospectus, each of the directors of the Company
representing in aggregate 100% of the outstanding shares of the Company Common
Stock has approved the Merger and accordingly, is anticipated to vote in favor
of approval of the Merger Agreement. Assuming such shares are voted in this
manner, and provided the Merger Agreement has not been terminated prior to its
being voted upon by the Company shareholders, the approval of the Merger
Agreement is assured. The Company owns 93.64% of the Bank Common Stock and has
indicated that it will vote all shares of Bank Common Stock it owns in favor of
approval of the Consolidation Agreement. Assuming such shares are voted in
this manner and provided the Consolidation Agreement has not been terminated
prior to its being voted upon by the Bank shareholders, the approval of the
Consolidation Agreement is assured.
If the Merger and Consolidation become effective, each share of the
Company Common Stock will be converted into 173.7766 shares of Associated
Common Stock reflecting a value equivalent to 59.4441 shares of Associated
Common Stock for each share of Bank Common Stock owned by the Company. Each
share of Bank Common Stock (other than shares owned by the Company) will be
converted into 59.4441 shares of Associated Common Stock. See "The Merger and
the Consolidation - Merger and Consolidation Consideration" in the accompanying
Proxy Statement/Prospectus. Associated Common Stock trades on The Nasdaq Stock
Market and the shares of Associated Common Stock to be issued to you in
connection with the Merger and Consolidation will offer greater liquidity than
that of the Company Common Stock or Bank Common Stock which you presently own.
The Merger and Consolidation are intended to be tax-free for federal
income tax purposes to Company and Bank shareholders who receive Associated
Common Stock in exchange for Company Common Stock and Bank Common Stock,
respectively, except as discussed in "The Merger and the Consolidation -
Certain Material Federal Income Tax Consequences" in the accompanying Proxy
Statement/Prospectus. No fractional shares of Associated Common Stock will be
issued in the proposed transactions. Company and Bank shareholders entitled to
a fractional share of Associated Common Stock will receive an amount of cash
calculated upon the closing price as reported on The Nasdaq Stock Market on the
first business day following approval of the Merger by the Federal Reserve
Board. Company and Bank shareholders are advised to consult their tax advisors
with respect to income tax consequences of the transactions. Details of the
Merger and the Consolidation are set forth in the accompanying Proxy
Statement/Prospectus. We encourage you to read it carefully.
<PAGE> 5
Shareholders of F&M Bankshares of Reedsburg, Inc.
Shareholders of Farmers & Merchants Bank
Page 2
The Boards of Directors of the Company and the Bank have unanimously
approved the transactions as being in the best interest of the Company and the
Bank and their respective shareholders. Your respective Boards recommend that
the Company and Bank shareholders vote to approve the Merger Agreement and
Consolidation Agreement, respectively.
All shareholders of the Company and Bank are invited to attend the
respective Special Meeting. Whether or not you plan to attend the applicable
Special Meeting, holders of the Company Common Stock and Bank Common Stock are
asked to please complete, date and sign the enclosed proxy card, which is
solicited by the Boards of Directors of the Company and the Bank, and return it
promptly in the accompanying envelope, which requires no postage if mailed in
the United States. If you later find that you may be present at the applicable
Special Meeting or for any other reason desire to revoke your proxy, you may do
so at any time before it is voted.
IN ORDER TO APPROVE THE MERGER AGREEMENT, IT IS NECESSARY THAT HOLDERS OF
AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY VOTE IN FAVOR OF
THE MERGER AGREEMENT. IN ORDER TO APPROVE THE CONSOLIDATION AGREEMENT, IT IS
NECESSARY THAT AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES OF THE BANK BE
VOTED IN FAVOR OF THE CONSOLIDATION AGREEMENT.
Very truly yours,
/s/ J. Robert Fusch
---------------------------------
J. Robert Fusch
President of F&M Bankshares of Reedsburg, Inc.
and Farmers & Merchants Bank
<PAGE> 6
F&M BANKSHARES OF REEDSBURG, INC.
170 MAIN STREET
REEDSBURG, WISCONSIN 53959
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _______________, 1996
TO THE SHAREHOLDERS OF F&M BANKSHARES OF REEDSBURG, INC.:
A Special Meeting of Shareholders of F&M Bankshares of Reedsburg, Inc.
(the "Company") will be held at the principal executive offices of the Company
at 170 Main Street, Reedsburg, Wisconsin 53959, on _______________, 1996 at
______ __.m. for the purpose of voting on the following matters:
1. To approve the Agreement and Plan of Merger dated as of
January 23, 1996 among Associated Banc-Corp ("Associated"),
Associated Banc-Shares, Inc. ("Holding"), a wholly-owned subsidiary
of Associated, and the Company as amended by the First Amendment to
Agreement and Plan of Merger (the "Merger Agreement") providing for
the merger of the Company with and into Holding (the "Merger") (a
copy of the Merger Agreement is attached as Exhibits A and B
hereto).
2. To transact such other business as may properly come before
the meeting.
THE DIRECTORS OF THE COMPANY HAVE UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND RECOMMEND THAT THE SHAREHOLDERS APPROVE THE MERGER AGREEMENT.
Any shareholder desiring to exercise dissenters' rights and be paid in
cash for the fair value of his or her shares of Company Common Stock in
accordance with the provisions of the Wisconsin Business Corporation Law (i)
must file a written objection to the Merger prior to the Special Meeting of
Shareholders, (ii) must not vote in favor thereof, and (iii) must otherwise
comply with the procedures set forth in Subchapter XIII of the Wisconsin
Business Corporation Law, a copy of which is attached as Exhibit D to the Proxy
Statement/Prospectus. See "The Merger and the Consolidation-Dissenters'
Rights" in the accompanying Proxy Statement/Prospectus.
The Board of Directors has fixed the close of business on May ___, 1996 as
the record date for the determination of Company shareholders entitled to
notice of and to vote at the Special Meeting and any adjournment thereof.
Whether or not you plan to attend the Special Meeting, holders of the
Company Common Stock are asked to please complete, date and sign the enclosed
proxy card, which is solicited by the Board of Directors of the Company, and
return it promptly in the accompanying envelope. No postage is required if
mailed in the United States. 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 in the manner described in
the Proxy Statement/Prospectus.
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.
<PAGE> 7
Shareholders of F&M Bankshares of Reedsburg, Inc.
Page 2
THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST A MAJORITY OF THE
OUTSTANDING SHARES OF THE COMPANY COMMON STOCK IS REQUIRED FOR APPROVAL OF THE
MERGER AGREEMENT. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES
YOU OWN.
Shareholders are invited to attend the Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Robert Fusch
---------------------------
J. Robert Fusch
President
Reedsburg, Wisconsin
May ___, 1996
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES AT THIS TIME. IF THE MERGER IS
CONSUMMATED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF YOUR
STOCK CERTIFICATES.
<PAGE> 8
FARMERS & MERCHANTS BANK
170 MAIN STREET
REEDSBURG, WISCONSIN 53959
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _______________, 1996
TO THE SHAREHOLDERS OF FARMERS & MERCHANTS BANK:
A Special Meeting of Shareholders of Farmers & Merchants Bank (the "Bank")
will be held at the principal executive offices of the Bank at 170 Main Street,
Reedsburg, Wisconsin 53959, on _______________, 1996 at ______ __.m. for the
purpose of voting on the following matters:
1. To approve the Agreement and Plan of Consolidation by and
between Associated Interim Bank ("Interim Bank"), a wholly-owned
subsidiary of Associated Banc-Corp, and the Bank (the "Consolidation
Agreement") providing for the consolidation of the Bank with and
into Interim Bank (the "Consolidation") (a copy of the Consolidation
Agreement is attached as Exhibit C hereto).
2. To transact such other business as may properly come before
the meeting.
THE DIRECTORS OF THE BANK HAVE UNANIMOUSLY APPROVED THE CONSOLIDATION
AGREEMENT AND RECOMMEND THAT THE SHAREHOLDERS APPROVE THE CONSOLIDATION
AGREEMENT.
Any shareholder desiring to exercise dissenters' rights and be paid in
cash for the fair value of his or her shares of Bank Common Stock in accordance
with the provisions of Section 221.25 of the Wisconsin Statutes (i) must not
vote in favor thereof, (ii) must give notice to the directors of the Bank
within 20 days of the date that notice of the approval of the Consolidation by
the Wisconsin Commissioner of Banking is mailed or delivered to the
shareholder, and (iii) must otherwise comply with the procedures set forth in
Section 221.25 of the Wisconsin Statutes, a copy of which is attached as
Exhibit E to the Proxy Statement/Prospectus. See "The Merger and the
Consolidation-Dissenters' Rights" in the accompanying Proxy
Statement/Prospectus.
The Board of Directors has fixed the close of business on May ___, 1996 as
the record date for the determination of Bank shareholders entitled to notice
of and to vote at the Special Meeting and any adjournment thereof.
Whether or not you plan to attend the Special Meeting, holders of the Bank
Common Stock are asked to please complete, date and sign the enclosed proxy
card, which is solicited by the Board of Directors of the Bank, and return it
promptly in the accompanying envelope. No postage is required if mailed in the
United States. 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 in the manner described in the Proxy
Statement/Prospectus.
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.
<PAGE> 9
Shareholders of Farmers & Merchants Bank
Page 2
THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF THE
OUTSTANDING SHARES OF THE BANK COMMON STOCK IS REQUIRED FOR APPROVAL OF THE
CONSOLIDATION AGREEMENT. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF
SHARES YOU OWN.
Shareholders are invited to attend the Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ J. Robert Fusch
--------------------------
J. Robert Fusch
President
Reedsburg, Wisconsin
May ___, 1996
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES AT THIS TIME. IF THE CONSOLIDATION
IS CONSUMMATED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF YOUR
STOCK CERTIFICATES.
<PAGE> 10
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PRELIMINARY COPY SUBJECT TO COMPLETION MAY 10, 1996
PROXY STATEMENT
F&M BANKSHARES OF REEDSBURG, INC. AND
FARMERS & MERCHANTS BANK
SPECIAL MEETINGS OF SHAREHOLDERS
__________
PROSPECTUS
ASSOCIATED BANC-CORP
COMMON STOCK
This Proxy Statement/Prospectus is being furnished to the shareholders of
F&M Bankshares of Reedsburg, Inc., a Wisconsin corporation (the "Company") and
to the shareholders of Farmers & Merchants Bank, a Wisconsin state chartered
bank (the "Bank"), in connection with the solicitation of proxies by the Boards
of Directors of the Company and the Bank for use at their special meetings of
shareholders (including any adjournments or postponements thereof) to be held
on __________, _______________, 1996 (the "Special Meetings"). This Proxy
Statement/Prospectus relates to the proposed merger (the "Merger") of the
Company with and into Associated Banc-Shares, Inc., a Wisconsin corporation
("Holding"), and a wholly-owned subsidiary of Associated Banc-Corp, a Wisconsin
corporation ("Associated"), pursuant to the Agreement and Plan of Merger dated
as of January 23, 1996 as amended by the First Amendment to Agreement and Plan
of Merger (the "Merger Agreement"), a copy of which is attached hereto as
Exhibits A and B, and the consolidation (the "Consolidation") of the Bank with
Associated Interim Bank, a Wisconsin state chartered bank ("Interim Bank"),
pursuant to the Agreement and Plan of Consolidation (the "Consolidation
Agreement"), a copy of which is attached hereto as Exhibit C. FOR A MORE
COMPLETE DESCRIPTION OF THE MERGER AND THE CONSOLIDATION, THE MERGER AGREEMENT
AND THE CONSOLIDATION AGREEMENT AND CERTAIN RISK FACTORS ASSOCIATED THEREWITH,
SEE "THE MERGER AND THE CONSOLIDATION-CERTAIN CONSIDERATIONS," "CERTAIN
PROVISIONS OF THE MERGER AGREEMENT" AND "CERTAIN PROVISIONS OF THE
CONSOLIDATION AGREEMENT."
Your Boards recommend that the Company and Bank shareholders vote to
approve the Merger Agreement and the Consolidation Agreement, respectively. As
described herein, each of the directors of the Company has indicated that he or
she will vote his or her shares in favor of the approval of the Merger
Agreement. Assuming the shares are voted in this manner and provided that the
Merger Agreement has not been terminated prior to its being voted upon by the
Company shareholders, the approval of the Merger Agreement is assured. The
Company owns 93.64% of the Bank Common Stock and has indicated that it will
vote all shares of Bank Common Stock it owns in favor of approval of the
Consolidation Agreement. Assuming the shares are voted in this manner and
provided the Consolidation Agreement has not been terminated prior to its being
voted upon by the Bank shareholders, the approval of the Consolidation
Agreement is assured.
This Proxy Statement/Prospectus constitutes a prospectus of Associated
with respect to shares of Associated common stock, par value $0.01 per share
("Associated Common Stock") issuable to holders of the Company common stock, no
par value ("Company Common Stock") pursuant to the Merger Agreement and to
holders of the Bank common stock, par value $20 per share ("Bank Common Stock")
pursuant to the Consolidation Agreement. Pursuant to the Merger Agreement,
each of the outstanding shares of the Company Common Stock will be converted
into 173.7766 shares of Associated Common Stock. Pursuant to the Consolidation
Agreement, each of the outstanding shares of the Bank Common Stock will be
converted into 59.4441 shares of Associated Common Stock. See "The Merger and
the Consolidation - Merger and Consolidation Consideration."
This Proxy Statement/Prospectus and the accompanying proxy materials are
first being mailed to shareholders on or about May ___, 1996.
Associated Common Stock trades on The Nasdaq Stock Market under the symbol
ASBC. The closing price of Associated Common Stock on The Nasdaq Stock Market
on May 7, 1996 was $38.50.
______
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
______
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS MAY ___, 1996
<PAGE> 11
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED OR INCORPORATED IN THIS PROXY STATEMENT/PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY ASSOCIATED, THE COMPANY OR THE BANK. THIS
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO EXCHANGE OR SELL, OR
A SOLICITATION OF AN OFFER TO EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY
THIS PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR TO OR
FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS SPEAKS AS OF THE DATE
HEREOF UNLESS OTHERWISE SPECIFICALLY INDICATED. INFORMATION CONTAINED IN THIS
PROXY STATEMENT/PROSPECTUS REGARDING ASSOCIATED HAS BEEN FURNISHED BY
ASSOCIATED, AND INFORMATION HEREIN REGARDING THE COMPANY AND THE BANK HAS BEEN
FURNISHED BY THE COMPANY AND THE BANK, RESPECTIVELY.
AVAILABLE INFORMATION
Associated is subject to the informational reporting 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 room of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and copies of such materials can be obtained by mail
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, at prescribed rates. In addition, copies
of such materials are available for inspection and reproduction at the public
reference facilities of the Commission at its New York regional office, 75 Park
Place, 14th Floor, New York, New York 10007 and at its Chicago regional office,
500 West Madison Street, Suite 1400, Chicago, Illinois 60621. The principal
market on which Associated Common Stock is traded, under the symbol "ASBC," is
The Nasdaq Stock Market. Material filed by Associated with the Commission can
also be inspected at the offices of the National Association of Securities
Dealers, Inc., Reports Section, 1735 K Street, N.W., Washington, D.C. 20006
("NASD").
Associated has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
Associated Common Stock to be issued pursuant to the Merger Agreement and the
Consolidation Agreement. This Proxy Statement/Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits
thereto. Such additional information may be obtained from the Commission's
principal office in Washington, D.C. Statements contained in this Proxy
Statement/Prospectus or in any document incorporated in this Proxy
Statement/Prospectus by reference as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or such other documents.
Each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by Associated
(File No. 0-5519) pursuant to Section 13 of the Exchange Act are hereby
incorporated by reference in this Proxy Statement/Prospectus:
(1) Associated's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995; and
(2) The description of the Associated Common Stock set forth in
Associated's Registration Statement pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose of
updating any such description.
2
<PAGE> 12
In addition, all documents subsequently filed by Associated pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the date of the Special Meetings are hereby deemed to be
incorporated by reference in this Proxy Statement/Prospectus and to be a part
hereof from the dates of filing of such documents or reports. Any statements
contained in a document incorporated or deemed to be 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
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE DOCUMENTS
(OTHER THAN EXHIBITS THERETO, UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH INCORPORATED DOCUMENTS) ARE AVAILABLE
WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS
PROXY STATEMENT/PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST TO
ASSOCIATED BANC-CORP, 112 NORTH ADAMS STREET, P.O. BOX 13307, GREEN BAY,
WISCONSIN 54307-3307 (TELEPHONE NUMBER (414) 433-3166), ATTENTION: BRIAN R.
BODAGER, ESQ., GENERAL COUNSEL & SECRETARY. IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS PRIOR TO THE SPECIAL MEETINGS, REQUESTS SHOULD BE MADE BY
_______________, 1996. PERSONS REQUESTING COPIES OF EXHIBITS TO SUCH DOCUMENTS
WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS WILL BE
CHARGED THE COSTS OF REPRODUCTION AND MAILING.
________________
3
<PAGE> 13
F&M BANKSHARES OF REEDSBURG, INC.,
FARMERS & MERCHANTS BANK
AND
ASSOCIATED BANC-CORP
PROXY STATEMENT/PROSPECTUS
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
----
<S> <C>
AVAILABLE INFORMATION........................................................................ 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................................. 2
PROSPECTUS SUMMARY........................................................................... 7
The Companies......................................................................... 7
The Merger and the Consolidation...................................................... 7
Status of Associated Common Stock..................................................... 8
The Special Meetings.................................................................. 8
Reasons for the Merger and Consolidation.............................................. 9
Recommendation of the Boards of Directors............................................. 9
Conditions to the Merger and Consolidation............................................ 9
Termination........................................................................... 10
Regulatory Approvals Required......................................................... 11
Certain Material Federal Income Tax Consequences...................................... 11
Anticipated Accounting Treatment...................................................... 11
Dissenting Shareholders' Rights....................................................... 11
Certain Considerations................................................................ 12
SELECTED FINANCIAL DATA OF ASSOCIATED BANC-CORP, THE COMPANY AND THE BANK.................... 13
COMPARATIVE STOCK PRICES AND DIVIDENDS....................................................... 15
Associated Common Stock............................................................... 15
The Company Common Stock.............................................................. 15
Bank Common Stock..................................................................... 15
COMPARATIVE UNAUDITED PER SHARE DATA......................................................... 16
RECENT RESULTS............................................................................... 17
RECENT AND PROPOSED ACQUISITIONS............................................................. 17
Historical and Pro Forma Selected Financial Contributions............................. 18
INTRODUCTION................................................................................. 19
ASSOCIATED BANC-CORP......................................................................... 19
THE SPECIAL MEETINGS......................................................................... 19
Matters to Be Considered at the Special Meetings...................................... 19
The Company Meeting............................................................ 19
The Bank Meeting............................................................... 19
Required Vote......................................................................... 20
Voting of Proxies..................................................................... 20
</TABLE>
4
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<TABLE>
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Page
<S> <C>
Revocability of Proxies............................................................... 20
Record Date; Stock Entitled to Vote; Quorum........................................... 21
Solicitation of Proxies............................................................... 21
THE MERGER AND THE CONSOLIDATION............................................................. 21
Background of the Merger and the Consolidation........................................ 22
Reasons for the Merger and the Consolidation.......................................... 26
Recommendations of the Boards of Directors of the Company and the Bank................ 27
Certain Considerations................................................................ 27
Merger and Consolidation Consideration................................................ 28
Regulatory Approvals Required......................................................... 29
The Merger Effective Time............................................................. 30
The Consolidation Effective Time...................................................... 31
Conversion of Shares; Procedures for Exchange of Certificates; Fractional Shares...... 31
Description of Associated Common Stock Issuable in the Merger and the Consolidation... 33
Comparison of Shareholder Rights...................................................... 34
Authorized Capital Stock....................................................... 34
Appraisal Rights and Dissenters' Rights........................................ 35
Required Vote.................................................................. 35
Classified Board of Directors.................................................. 35
Removal of Directors For "Cause"............................................... 36
Newly Created Directorships and Vacancies on the Board of Directors............ 36
Certain Business Combinations.................................................. 36
Advance Notice of Proposals to Be Brought at the Annual Meeting................ 37
Resale of Associated Common Stock Issued Pursuant to the Merger and the Consolidation. 37
Pre-Merger Dividend Policy............................................................ 37
Post-Merger Dividend Policy........................................................... 38
Conduct of Business Pending the Merger................................................ 38
Certain Material Federal Income Tax Consequences...................................... 38
Anticipated Accounting Treatment...................................................... 39
Dissenters' Rights.................................................................... 40
The Merger..................................................................... 40
The Consolidation.............................................................. 41
Other Related Party Transactions...................................................... 42
Management After the Merger........................................................... 42
CERTAIN PROVISIONS OF THE MERGER AGREEMENT................................................... 42
The Merger............................................................................ 42
Representations and Warranties........................................................ 43
Certain Covenants..................................................................... 43
No Solicitation of Transactions....................................................... 44
Conditions to Consummation of the Merger.............................................. 45
Termination........................................................................... 46
Amendment and Waiver.................................................................. 47
Expenses.............................................................................. 47
</TABLE>
5
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<TABLE>
<CAPTION>
Page
<S> <C>
CERTAIN PROVISIONS OF THE CONSOLIDATION AGREEMENT............................................ 47
The Consolidation..................................................................... 47
Representations and Warranties........................................................ 48
Certain Covenants..................................................................... 48
Conditions to the Consummation of the Consolidation................................... 48
Termination........................................................................... 48
Waiver................................................................................ 49
Expenses.............................................................................. 49
CERTAIN INFORMATION CONCERNING ASSOCIATED.................................................... 49
CERTAIN INFORMATION CONCERNING THE COMPANY................................................... 50
Certain Historical Financial Data and Management's Discussion and
Analysis of Financial Condition and Results of Operations........................... 50
Ownership of the Company Common Stock.................................................. 50
CERTAIN INFORMATION CONCERNING THE BANK...................................................... 51
Farmers & Merchants Bank............................................................... 51
Certain Historical Financial Data and Management's Discussion and
Analysis of Financial Condition and Results of Operations........................... 51
Ownership of the Bank Common Stock..................................................... 52
EXPERTS...................................................................................... 52
LEGAL OPINIONS............................................................................... 53
SHAREHOLDER PROPOSALS........................................................................ 53
Exhibit A: Agreement and Plan of Merger among Associated Banc-Corp,
Associated Banc-Shares, Inc. and F&M Bankshares of Reedsburg, Inc.
dated as of January 23, 1996 ............................................ A-1
Exhibit B: Form of First Amendment to Agreement and Plan of Merger.......................... B-1
Exhibit C: Form of Agreement and Plan of Consolidation between Associated Interim Bank
and Farmers & Merchants Bank............................................. C-1
Exhibit D: Subchapter XIII of the Wisconsin Business Corporation Law........................ D-1
Exhibit E: Section 221.25 of the Wisconsin Statutes......................................... E-1
Exhibit F: F&M Bankshares of Reedsburg, Inc. and Subsidiaries Financial Statements
and Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................ F-1
</TABLE>
6
<PAGE> 16
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere in
this Proxy Statement/Prospectus and is not intended to be complete. All
information concerning Associated included in this Proxy Statement/Prospectus
has been provided by Associated, and all information concerning the Company and
the Bank has been provided by the Company and the Bank, respectively.
Reference is made to, and this summary is qualified in its entirety by, the
more detailed information contained or incorporated by reference in this Proxy
Statement/Prospectus and the Exhibits attached hereto. Shareholders are urged
to read this Proxy Statement/Prospectus and the Exhibits attached hereto in
their entirety. Cross-references in this summary are to captions in this Proxy
Statement/Prospectus.
THE COMPANIES: Associated. Associated Banc-Corp ("Associated")
is a diversified multi-bank holding company which
owns eight commercial banks located in Wisconsin
and Illinois. Associated Banc-Shares, Inc.
("Holding") is a wholly-owned subsidiary of
Associated. Associated Interim Bank, a Wisconsin
state chartered bank ("Interim Bank"), is a
newly-formed, wholly-owned subsidiary of
Associated. As of December 31, 1995, Associated
had total assets of $3.70 billion. Associated
Common Stock trades on The Nasdaq Stock Market.
The principal executive offices of Associated are
located at 112 North Adams Street, P.O. Box 13307,
Green Bay, Wisconsin 54307-3307 and its telephone
number is (414) 433-3166. See "Certain Information
Concerning Associated."
The Company. F&M Bankshares of Reedsburg, Inc.
(the "Company") is a one-bank holding company
which owns 93.64% of the stock of Farmers &
Merchants Bank (the "Bank"). As of December 31,
1995 the Company had total assets of $138.4
million. The principal executive offices of the
Company are located at 170 Main Street, Reedsburg,
Wisconsin 53959 and its telephone number is (608)
524-4364. See "Certain Information Concerning the
Company."
The Bank. The Bank is a state chartered
commercial bank. The principal banking office is
located at 170 Main Street, Reedsburg, Wisconsin
53959 and its telephone number is (608) 524-4364
and it has one branch in Loganville, Wisconsin.
The Bank has one wholly-owned subsidiary, Fusch
Corporation. As of December 31, 1995, the Bank
had total assets of $138.6 million. See "Certain
Information Concerning the Bank."
THE MERGER AND THE The Company. Following the approval of the Merger
CONSOLIDATION: Agreement by the shareholders of the Company and
the satisfaction or waiver of the other conditions
to the Merger, the Company will be merged with and
into Holding, and each outstanding share of the
Company Common Stock will be converted into the
right to receive 173.7766 shares of Associated
Common Stock (the "Exchange Ratio"). The Merger
will be effective on the date the Articles of
Merger are filed with the Secretary of State of
the State of Wisconsin (the "Effective Time"). At
the Effective Time, the Company will be merged
with and into Holding and will not continue its
separate existence or operations, to which Holding
as the surviving corporation will succeed. See
"The Merger and the Consolidation - The Effective
Time."
The Bank. Following the approval of the Merger
Agreement by the shareholders of the Company, the
shareholders of the Bank will vote to approve the
Consolidation Agreement. As the Company owns
93.64% of the outstanding
7
<PAGE> 17
shares of the Bank Common Stock, approval of the
Consolidation Agreement is assured. The
consolidation of Interim Bank and the Bank will
occur immediately following completion of the
Merger, unless delayed by order of any regulatory
authority having jurisdiction or by resolution of
the Board of Directors of Interim Bank (the
"Consolidation Effective Time"). At the
Consolidation Effective Time, the Bank will
consolidate with Interim Bank under the charter of
Interim Bank, and each share of Bank Common Stock
(except for treasury shares, shares owned by
Associated or any subsidiary thereof and shares
for which dissenters' rights have been exercised)
will be converted into the right to receive
59.4441 shares of Associated Common Stock (the
"Bank Conversion Ratio"). The Bank Conversion
Ratio was calculated to provide holders (other
than the Company) of Bank Common Stock with shares
of Associated Common Stock equivalent in value to
the shares of Associated Common Stock provided to
holders of Company Common Stock based upon the
shares of Bank Common Stock owned by the Company.
The resulting bank from the consolidation will
conduct its banking operations under the name of
"Associated Bank Reedsburg." See "The Merger and
the Consolidation - Background of the Merger and
Consolidation" and Consolidation Effective Time."
STATUS OF ASSOCIATED Other than shares of Associated Common Stock
COMMON STOCK: issued to "affiliates" of the Company as defined
under the federal securities laws, shares of
Associated Common Stock will be freely tradeable.
The Company has determined that its directors are
its only affiliates. See "The Merger and the
Consolidation - Resale of Associated Common Stock
Issuable in the Merger."
THE SPECIAL MEETINGS: The Company. A special meeting of the
shareholders of the Company will be held at 170
Main Street, Reedsburg, Wisconsin on
_______________, 1996 at _____ __.m. (the "Company
Meeting"). Holders of the Company Common Stock
entitled to vote at the Company Meeting will
consider and vote upon a proposal to approve the
Merger Agreement. The affirmative vote of the
holders of a majority of the outstanding shares of
Company Common Stock entitled to vote at the
Company Meeting is required to approve the Merger
Agreement under the Wisconsin Business Corporation
Law (the "WBCL"). As of the Record Date,
directors and executive officers of the Company
had voting power with respect to all the
outstanding shares of the Company Common Stock
entitled to vote at the Company Meeting and,
consistent with their adoption and approval of the
Merger as members of the Board of Directors as
required under the WBCL, will vote their shares in
favor of the Merger Agreement. See "The Special
Meetings - Required Vote" and "Certain Information
Concerning the Company; Ownership of the Company
Common Stock". Shareholders of Associated are not
required to approve the Merger Agreement. See "The
Merger and the Consolidation" and "Certain
Provisions of the Merger Agreement."
The Bank. A special meeting of the shareholders
of the Bank will be held immediately following the
conclusion of the Company Meeting at the principal
office of the Bank, 170 Main Street, Reedsburg,
Wisconsin, on _________, 1996 (the "Bank Meeting")
(the Company Meeting and the Bank Meeting
hereinafter the "Special Meetings"). Holders of
Bank Common Stock entitled to vote at the Bank
Meeting will consider and vote upon a proposal to
approve the Consolidation Agreement. See "The
Merger and the Consolidation" and "Certain
Provisions of the Consolidation Agreement." The
affirmative vote of the
8
<PAGE> 18
the holders of two-thirds of the outstanding
shares of Bank Common Stock entitled to vote at
the Bank Meeting is required to approve the
Consolidation Agreement. As of the Record Date,
the Company had voting power with respect to a
total of 8,428 shares, or 93.64% of the Bank
Common Stock entitled to vote at the Bank Meeting.
See "The Special Meetings - Required Vote" and
"Certain Information Concerning the Bank -
Ownership of Bank Common Stock".
Record Date. The record date for the Special
Meetings is May __, 1996 (the "Record Date").
REASONS FOR THE MERGER The Boards of Directors of the Company and the
AND CONSOLIDATION: Bank believe that the Merger and the Consolidation
will have a positive impact on the customers and
employees of the Company and the Bank by providing
overall additional financial strength to the
banking business of the Bank. Shareholders of the
Company and the Bank will benefit as a result of
the enhanced liquidity, marketability and dividend
paying capacity of the Associated Common Stock to
be received in the Merger and the Consolidation.
The Board of Directors of Associated believes the
Merger will enable Associated to increase its
presence and heighten its visibility in South
Central Wisconsin. See "The Merger and the
Consolidation - Reasons for the Merger."
RECOMMENDATION OF THE The Boards of Directors of the Company and the
BOARDS OF DIRECTORS: Bank, after consideration of the terms and
conditions of the Merger Agreement and the
Consolidation Agreement and other factors deemed
relevant by the Boards of Directors, believe that
the Merger and the Consolidation, and the Exchange
Ratio and the Bank Conversion Ratio are fair to
and in the best interests of the shareholders of
the Company and the Bank, respectively. As
required by Section 180.1101 of the WBCL and
Section 221.25 of the Banking Code, the Boards of
Directors of the Company and the Bank,
respectively, have approved the Merger Agreement
and the Consolidation Agreement, respectively, and
the transactions contemplated thereby. See "The
Merger and the Consolidation - Background of the
Merger," "- Reasons for the Merger" and "-
Recommendations of the Board of Directors of the
Company."
CONDITIONS TO THE MERGER The obligations of Associated and the Company to
AND CONSOLIDATION: consummate the Merger and the obligations of
Interim Bank and the Bank to consummate the
Consolidation are subject to various conditions,
including, among other things, obtaining approval
of Company and Bank shareholders and requisite
regulatory approvals, and the absence of any
materially burdensome restriction or condition
imposed in connection with obtaining such
regulatory approvals. Furthermore, the obligation
of Associated to consummate the Merger is subject
to various conditions, including, among other
things, receipt of an opinion of independent
counsel to Associated (anticipated to be from the
independent public accountants of Associated) at
the closing of the Merger in respect of certain
federal income tax consequences of the business
combinations resulting from the Merger and the
Consolidation, receipt of an opinion from the
independent public accountants of Associated that
the business combinations resulting from the
Merger and the Consolidation, qualify for "pooling
of interests" accounting treatment, that the
aggregate of (i) the fractional shares of
Associated Common Stock paid in cash and (ii) the
number of shares of Associated Common Stock that
is not issued in the Merger and the Consolidation
due to the exercise of dissenters' rights, shall
not be more than 10% of the shares of Associated
Common Stock which would
9
<PAGE> 19
otherwise have been issued pursuant to the Merger
and the Consolidation, that the Bank's
consolidated monthly earnings shall average at
least $135,000 between January 1, 1996 and the end
of the month prior to the month of the Effective
Time and all conditions in the Consolidation
Agreement shall have been satisfied. The
following conditions to the obligation of
Associated to consummate the Merger have been
satisfied: approval of the Merger by the Federal
Reserve Board, receipt by Associated of a written
environmental evaluation by Associated's
environmental consultant of the Company's real
property stating that the Company's property
complies with environmental laws and that there
are no material contingent liabilities, that the
Company shall have taken reasonably appropriate
action in response to any environmental condition
identified by Associated's environmental
consultant, that the Company's consolidated
after-tax earnings for calendar year 1995 shall be
at least $68,000 and the Bank's consolidated
after-tax earnings for calendar year 1995 shall be
at least $388,000, that the Company shall have
good and marketable title to all parcels of land
on which the Bank is located except for a certain
designated parcel, that the Company shall have
terminated all salary continuation agreements and
neither the Company or any of its affiliates have
liabilities thereunder, that the Company shall
have satisfied or extinguished any rights or
benefits of employees under the Company's
voluntary employees beneficiary association and
that the Bank shall receive a "2" or better rating
for safety and soundness from the Commissioner
examination conducted in November 1995. See
"Certain Provisions of the Merger Agreement -
Conditions to Consummation of the Merger."
TERMINATION: The Merger. The Merger Agreement may be
terminated by the applicable Board of Directors at
any time prior to the Effective Time (whether
before or after approval of the Merger by the
shareholders of the Company): (i) by mutual
consent of Associated and the Company; (ii) by
Associated or the Company if there has been a
breach by the other party in any material respect
of any representation, warranty, covenant or
agreement in the Merger Agreement, or if any
representation or warranty of the Company or
Associated shall be discovered to have become
untrue in any material respect, in either case
which breach has not been cured within 10 business
days following receipt by the non-terminating
party of notice of such breach; (iii) by
Associated or the Company if any permanent
injunction preventing the consummation of the
Merger or the Consolidation shall have become
final and nonappealable; (iv) by Associated or the
Company if the Merger and Consolidation shall not
have been consummated before July 31, 1996 for a
reason other than the failure of the terminating
party to comply with its obligations under the
Merger Agreement; (v) by Associated or the Company
if the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") or the
Wisconsin Commissioner of Banking (the "Wisconsin
Commissioner") has denied approval of the Merger
or the Consolidation, and neither Associated nor
the Company has, within 30 days after the entry of
such order, filed a petition seeking review of
such order as provided by applicable law; (vi) by
Associated if the Company fails to take reasonably
appropriate action in response to any
environmental condition identified by Associated's
environmental consultant; or (vii) by Associated
if dissenters' rights are exercised with respect
to in excess of 10% of the shares of Associated
Common Stock which would otherwise have been
issued pursuant to the Merger and the
Consolidation. See "Certain Provisions of the
Merger Agreement - Termination."
10
<PAGE> 20
The Consolidation. The Consolidation Agreement may
be terminated at any time prior to the
Consolidation Effective Time, whether before or
after approval of the matters presented in
connection with the Consolidation by the
shareholders of the Bank and Interim Bank: (i) by
mutual consent of the Bank and Interim Bank; or
(ii) by either the Bank or Interim Bank if the
conditions to the Consolidation contained in the
Consolidation Agreement, including, among other
things that shareholders of 95% of the Bank Common
Stock vote in favor of the Consolidation and that
all government approvals and third party consents
have been received, have not been met and such
failure to meet the conditions has not been waived
in writing with the approval of Associated. See
"Certain Provisions of the Consolidation Agreement
- Termination."
REGULATORY APPROVALS The Merger and the Consolidation are subject to
REQUIRED: prior approval by the Federal Reserve Board, the
Wisconsin Commissioner and the Federal Deposit
Insurance Corporation ("FDIC"). The Federal
Reserve Board has approved the Merger as of May 3,
1996. See "The Merger and the Consolidation -
Regulatory Approvals Required."
CERTAIN MATERIAL The Merger and the Consolidation are conditioned
FEDERAL INCOME upon Associated receiving an opinion of
TAX CONSEQUENCES: independent counsel to Associated (anticipated to
be from the independent public accountants of
Associated), subject to customary assumptions and
representations, to the effect that the Merger and
the Consolidation will be tax-free reorganizations
for federal income tax purposes. Such opinion,
however, is not binding on the Internal Revenue
Service. In the event that the Merger and the
Consolidation qualify as tax-free reorganizations,
no gain or loss will be recognized by holders of
the Company Common Stock or Bank Common Stock upon
conversion of their shares of stock into shares of
Associated Common Stock, except to the extent they
receive cash in lieu of fractional share interests
of Associated Common Stock, and no gain or loss
will be recognized by Associated, Holding, the
Company or the Bank. See "The Merger and the
Consolidation - Certain Material Federal Income
Tax Consequences."
ANTICIPATED ACCOUNTING The Merger and the Consolidation are expected to
TREATMENT: qualify as a "pooling of interests" for accounting
and financial reporting purposes. The receipt of
an opinion from KPMG Peat Marwick LLP, the
independent public accountants of Associated,
confirming that the Merger and the Consolidation
will qualify for "pooling of interests" accounting
treatment is a condition to consummation of the
Merger. See "The Merger and the Consolidation -
Anticipated Accounting Treatment."
DISSENTING SHAREHOLDERS' The Company. Holders of Company Common Stock who
RIGHTS: comply with the procedural requirements of the
WBCL will have appraisal rights in connection with
the Merger. Pursuant to Section 180.1302(1) of
the WBCL, holders of shares of stock entitled to
notice of a shareholders' meeting at which
shareholders are to vote on a merger are provided,
subject to certain procedural requirements, with
statutory rights of appraisal pursuant to which
such shareholders may be entitled to receive cash
in the amount of the "fair value" of their shares
(as determined pursuant to the WBCL) instead of
the shares or cash offered pursuant to the merger.
See "The Merger and the Consolidation -
Dissenters' Rights; The Merger" and Exhibit D
hereto.
The Bank. Holders of Bank Common Stock who comply
with the procedural requirements of the Wisconsin
Banking Code (the "Banking Code") will have
appraisal rights in connection with the
Consolidation ("Bank Dissenters'
11
<PAGE> 21
Rights"). Pursuant to Section 221.25 of the
Banking Code, holders of shares of stock entitled
to notice of the shareholders' meeting at which
shareholders are to vote on a consolidation are
provided, subject to certain procedural
requirements, with statutory rights of appraisal
pursuant to which such shareholders may be
entitled to receive cash in the amount of the
"value" of their shares (as determined pursuant to
Section 221.25 of the Banking Code) instead of the
shares or cash offered pursuant to the
Consolidation. See "The Merger and the
Consolidation - Dissenters' Rights; The
Consolidation" and Exhibit E hereto.
CERTAIN CONSIDERATIONS: In deciding whether to vote in favor of the Merger
Agreement and the Consolidation Agreement,
shareholders of the Company and the Bank,
respectively, should carefully evaluate the
matters set forth in the section herein entitled
"The Merger and the Consolidation - Certain
Considerations." Shareholders of the Bank should
consider that the exercise of dissenters' rights
is the only alternative to avoid conversion of
Bank Common Stock to shares of Associated Common
Stock as shareholder approval is assured because
the Company owns 93.64% of the outstanding shares
of Bank Common Stock and it is anticipated that
the Company will vote all shares of Bank Common
Stock it owns in favor of approval of the
Consolidation Agreement. In addition, holders of
Company Common Stock and Bank Common Stock should
consider the changing legislative and regulatory
environment affecting the banking and financial
services businesses in which Associated, the
Company and Bank engage.
12
<PAGE> 22
SELECTED FINANCIAL DATA OF ASSOCIATED BANC-CORP, THE COMPANY AND THE BANK
(In thousands, except per share amounts)
The following table sets forth selected historical data as of and for each
of the years in the five year period ended December 31, 1995 derived from the
audited consolidated financial statements of Associated, including the
respective notes thereto, which should be read in conjunction therewith. The
audited consolidated financial statements of Associated as of and for each of
the years in the three year period ended December 31, 1995 are incorporated by
reference to this Proxy Statement/Prospectus. See "Incorporation of Certain
Documents by Reference." The Company's selected historical data as of and for
the year ended December 31, 1995 and as of and for each of the years in the two
year period ended December 31, 1994 are derived from the audited and unaudited
consolidated financial statements of the Company, respectively, attached hereto
as Exhibit F. The Bank's selected historical data as of and for each of the
years in the three year period ended December 31, 1995 is derived from the
unaudited consolidated statements of the Bank.
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
ASSOCIATED (1):
<S> <C> <C> <C> <C> <C>
CONDENSED STATEMENT OF INCOME:
Interest Income ............................................ $ 264,380 $ 219,351 $ 209,446 $ 226,817 $ 247,671
Interest Expense............................................ 117,814 82,801 80,272 102,969 136,124
Less: Provision for Possible Loan Losses.................... 3,156 2,211 5,700 10,581 21,768
--------- --------- ---------- ---------- ----------
Net Interest Income After Provision
for Possible Loan Losses.................................. 143,410 134,339 123,474 113,267 89,779
Plus: Non-Interest Income................................... 53,042 49,103 49,980 48,449 41,849
Less: Non-Interest Expense.................................. 123,079 119,079 117,022 117,043 110,706
--------- ---------- ----------- ---------- ----------
Net Non-Interest Expense.................................... 70,037 69,976 67,042 68,594 68,857
Net Income.................................................. $ 46,652 $ 41,662 $ 37,398 $ 31,622 $ 12,918
========= ========= ========== ========== ==========
PER COMMON SHARE DATA:
Net Income Per Share (2)(3) ................................ $ 2.83 $ 2.53 $ 2.30 $ 1.99 $ 0.83
Cash Dividends Per Share (2) ............................... 0.97 0.85 0.74 0.61 0.57
SELECTED BALANCE SHEET DATA:
Total Assets................................................ $3,697,842 $3,418,330 $3,114,310 $3,100,879 $3,066,403
Long-Term Borrowings........................................ 18,067 3,867 5,347 17,925 39,841
THE COMPANY (4): (UNAUDITED)
CONDENSED STATEMENT OF INCOME:
Interest Income............................................. $ 10,418 $ 9,145 $ 8,984
Interest Expense............................................ 6,342 5,173 4,922
Less: Provision for Loan Losses............................. 1,685 46 87
---------- ---------- ----------
Net Interest Income After Provision for
Loan Losses............................................... 2,391 3,926 3,975
Plus: Non-Interest Income.................................. 372 370 447
Less: Non-Interest Expense................................. 3,058 2,780 2,614
---------- ---------- ----------
Net Non-Interest Expense.................................... 2,686 2,410 2,167
Net Income.................................................. $ 69 $ 1,050 $ 1,307
========== ========== ==========
PER COMMON SHARE DATA:
Net Income Per Share (3).................................... $ 23.83 $ 364.08 $ 453.51
Cash Dividends Per Share....................................
SELECTED BALANCE SHEET DATA:
Total Assets................................................ $ 138,351 $ 133,403 $ 122,211
Long-Term Debt.............................................. 9,000 7,000 6,000
</TABLE>
13
<PAGE> 23
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
THE BANK (4): (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CONDENSED STATEMENT OF INCOME:
Interest Income............................ $ 10,213 $ 8,947 $ 8,719
Interest Expense........................... 6,225 5,062 4,813
Less: Provision for Loan Losses............ 1,685 46 87
Net Interest Income After Provision for
Loan Losses................................ 2,303 3,839 3,819
Plus: Non-Interest Income................. 393 396 426
Less: Non-Interest Expense................ 2,308 2,966 2,745
Net Non-Interest Expense................... 1,915 2,570 2,319
Net Income................................. $388 $ 1,269 $ 1,500
PER COMMON SHARE DATA:
Net Income Per Share (3)................... $43.18 $ 141.06 $ 166.71
Cash Dividends Per Share................... 50.00 50.00 50.00
SELECTED BALANCE SHEET DATA:
Total Assets............................... $138,624 $133,675 $122,460
Long-Term Debt............................. 9,000 7,000 6,000
</TABLE>
---------------
(1) All information presented for Associated has been restated for the merger
of GN Bancorp, Inc. with and into a wholly-owned subsidiary of Associated,
which was accounted for as a pooling of interests, on August 3, 1995 (the
"GNB Acquisition").
(2) Per share data for Associated adjusted retroactively for the
five-for-four stock split effected as a stock dividend paid on June 15,
1995 (the "Stock Split") and stock dividend declared in 1993.
(3) Earnings per share are calculated based upon the weighted average shares
outstanding.
(4) Information for the Company and the Bank is not available for 1992 and
1991.
14
<PAGE> 24
COMPARATIVE STOCK PRICES AND DIVIDENDS
ASSOCIATED COMMON STOCK
Associated Common Stock trades on The Nasdaq Stock Market. The following
table sets forth, for the periods indicated, the high and low sales prices per
share as reported on The Nasdaq Stock Market and the regular cash dividends
declared for Associated Common Stock as adjusted to reflect the Stock Split.
<TABLE>
<CAPTION>
ASSOCIATED COMMON STOCK
--------------------------------------
HIGH LOW DIVIDEND
---- --- --------
<S> <C> <C> <C>
1994
First Quarter....................... $28.80 $25.00 $0.20
Second Quarter...................... $30.60 $25.00 $0.22
Third Quarter....................... $30.20 $28.00 $0.22
Fourth Quarter...................... $28.40 $25.00 $0.22
1995
First Quarter....................... $30.10 $27.40 $0.22
Second Quarter...................... $31.00 $28.40 $0.22
Third Quarter....................... $37.25 $30.38 $0.27
Fourth Quarter...................... $40.94 $36.25 $0.27
1996
First Quarter....................... $39.50 $35.25 $0.27
Second Quarter (through May 7, 1996) $39.13 $37.50 $0.29
</TABLE>
On August 16, 1995, the last trading day before the announcement of the
signing of the letter of intent for the Merger, the last sale price of
Associated Common Stock as reported on The Nasdaq Stock Market was $32.88 per
share. On May 7, 1996 the last sale price of Associated Common Stock as
reported on The Nasdaq Stock Market was $38.50 per share. Shareholders are
urged to obtain current market prices for Associated Common Stock.
On the Record Date, there were approximately 5,000 holders of record of
Associated Common Stock.
THE COMPANY COMMON STOCK
The Company Common Stock is not listed on any exchange nor is there an
established trading market for Company Common Stock. There have been no sales
of Company Common Stock since its incorporation.
The Board of Directors of the Company has never declared a dividend.
Pursuant to the Merger Agreement, the ability of the Company to pay dividends
on the Company Common Stock prior to the Effective Time has been restricted.
See "The Merger and the Consolidation - Pre-Merger Dividend Policy."
On the Record Date, there were 5 holders of record of the Company Common
Stock.
BANK COMMON STOCK
The Bank Common Stock is not listed on any exchange nor is there an
established trading market for Bank Common Stock. In the opinion of the Bank,
due to the lack of an active market for the shares of the Bank Common Stock,
transactions in Bank Common Stock of which the Bank is aware are not frequent
enough to constitute representative prices. The last sale of the Bank Common
Stock of which the Bank is aware was $1000 per share on July 18, 1994.
The Board of Directors of the Bank declared dividends of $50 per share in
each of 1994 and 1995 and declared a dividend of $16 per share payable on May
3, 1996 to shareholders of record on April 30, 1996. Pursuant to the Merger
Agreement, the ability of the Bank to pay dividends on the Bank Common Stock
prior to the Effective Time has been restricted. See "The Merger and the
Consolidation -Pre-Merger Dividend Policy."
On the Record Date, there were 22 holders of record of the Bank Common
Stock, including the Company which owns 93.64% of the outstanding Bank Common
Stock.
15
<PAGE> 25
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth for Associated Common Stock, Company Common
Stock and the Bank Common Stock certain unaudited historical, pro forma and pro
forma equivalent per share financial information as of and for each of the
years in the three year period ended December 31, 1995. The following data
assumes that each outstanding share of Company Common Stock and Bank Common
Stock will be converted into 173.7766 and 59.4441 shares, respectively, of
Associated Common Stock. The information presented herein should be read in
conjunction with the audited consolidated financial statements of Associated
incorporated by reference into this Proxy Statement/Prospectus, the
consolidated financial statements of the Company attached hereto as Exhibit F
and the consolidated financial statements of the Bank, including the notes
thereto. See "Incorporation of Certain Documents By Reference."
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
ASSOCIATED
Net Income Per Common Share (1):
Historical........................ $ 2.83 $ 2.53 $ 2.30
Pro forma (2)..................... 2.74 2.51 2.31
Dividends Per Common Share (1):
Historical........................ $ 0.97 $ 0.85 $ 0.74
Pro forma (3)..................... 0.97 0.85 0.74
Book Value Per Common Share:
Historical........................ $ 19.71 $ 17.32 $ 16.23
Pro forma (2)..................... 19.61 17.28 16.17
THE COMPANY
Net Income Per Common Share:
Historical........................ $ 23.83 $ 364.08 $453.51
Pro forma equivalent (4).......... 476.15 436.18 401.42
Dividends Per Common Share:
Historical........................ $ -0- $ -0- $ -0-
Pro forma equivalent (4).......... 168.56 147.71 128.59
Book Value Per Common Share:
Historical........................ $2,800.37 $2,745.64 $2,427.11
Pro forma equivalent (4).......... 3,407.76 3,002.86 2,809.97
THE BANK
Net Income Per Common Share:
Historical........................ $ 43.18 $ 141.06 $ 166.71
Pro forma equivalent (5).......... 162.88 149.20 137.32
Dividends Per Common Share:
Historical........................ $ 50.00 $ 50.00 $ 50.00
Pro forma equivalent (5).......... 57.66 50.53 43.99
Book Value Per Common Share:
Historical........................ $1,131.53 $1,128.16 $1,054.66
Pro forma equivalent (5).......... 1,165.70 1,027.19 961.21
</TABLE>
- ----------
(1) Per share data adjusted retroactively for the GNB Acquisition and the
Stock Split. Earnings per share are calculated based upon the weighted
average shares outstanding.
(2) The Associated pro forma per share amounts give effect to the Merger and
the Consolidation.
(3) The Associated pro forma dividends per share amounts represent historical
dividends of Associated as adjusted retroactively for the Stock Split.
(4) The Company pro forma equivalent per share amounts are calculated by
multiplying the Associated pro forma per share amounts by the Exchange
Ratio of 173.7766 shares.
(5) The Bank pro forma equivalent per share amounts are calculated by
multiplying the Associated pro forma per share amounts by the Bank
Conversion Ratio of 59.4441 shares.
16
<PAGE> 26
RECENT RESULTS
For the three months ended March 31, 1996, Associated reported net income
of $12.2 million up 13.7% from the comparable prior period in 1995. Earnings
per share were $0.73 for the first quarter 1996 up 12.3% from $0.65 for the
same period. Total assets were $3.72 billion at March 31, 1996 up 10.9% from
reported assets at March 31, 1995. On April 24, 1996, Associated declared a
dividend of $0.29 per share payable May 16, 1996 to shareholders of record as
of May 6, 1996.
For the three months ended March 31, 1996, the Bank reported net income of
$469,000 compared to 1995 first quarter net income of $304,000. Earnings per
share were $52.11. Total assets were $139.1 million compared to assets of
$136.2 million at March 31, 1995. Company consolidated financial information
for the three months ended March 31, 1996 has not been compiled.
RECENT AND PROPOSED ACQUISITIONS
On March 1, 1996 and April 8, 1996, Associated consummated
stock-for-stock merger transactions with SBL Capital Bank Shares, Inc. ("SBL")
and Greater Columbia Bancshares, Inc. ("Greater Columbia"), respectively. SBL
is a $63.4 million one bank holding company with main offices in Lodi,
Wisconsin and Greater Columbia is a $211 million one bank holding company with
main offices in Portage, Wisconsin. Each of these acquisitions will be
accounted for as a pooling of interests although Associated will not restate
its reported financial results for years prior to 1996 as a result of the SBL
acquisition. On March 20, 1996, Associated announced the signing of a
definitive agreement to acquire Mid-America National Bancorp Inc. and its $39
million asset subsidiary, Mid-America National Bank of Chicago, in a cash
transaction for approximately $7.9 million which is expected to be consummated
in the second quarter of 1996. On April 10, 1996, Associated announced the
signing of a letter of intent to acquire the $82 million asset Centra
Financial, Inc. and its subsidiary, Central Bank of West Allis, in a
stock-for-stock merger transaction. Subject to the completion of a definitive
merger agreement and regulatory approval and approval by the shareholders of
Centra Financial, the transaction is expected to be completed in the third
quarter of 1996. There is no assurance that such transactions will be
consummated or that if consummated, that the proposed terms will not be
modified. Moreover, Associated from time to time is engaged in preliminary
negotiations for potential acquisitions involving stock-for-stock mergers or
cash purchases. Such proposed acquisitions are announced when agreements in
principle have been reached.
17
<PAGE> 27
HISTORICAL AND PRO FORMA SELECTED FINANCIAL CONTRIBUTIONS
The following table sets forth certain consolidated financial data of
Associated as of and for the year ended December 31, 1995 and the data on an
unaudited pro forma combined basis after giving effect to the acquisition of
the Company and the acquisitions of SBL and Greater Columbia which were
consummated after year end. The information is derived from the historical
audited financial statements of Associated, the Company and Greater Columbia
and the unaudited consolidated financial statements of SBL. The audited
consolidated financial statements of Associated and the Company, including the
related notes thereto, are incorporated by reference and attached as Exhibit F
to this Proxy Statement/Prospectus. See "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
ASSOCIATED, THE
PRO FORMA COMBINED SBL AND GREATER COMPANY, SBL
THE COMPANY ASSOCIATED AND THE COLUMBIA AND GREATER COLUMBIA
ASSOCIATED HISTORICAL COMPANY PRO FORMA PRO FORMA COMBINED
---------- ----------- -------------------- -------------------- --------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1995:
Total revenue:
Amount................. $ 317,422 $ 10,790 $ 328,212 $ 22,053 $ 350,265
Percentage of total.... 90.6% 3.1% 93.7% 6.3% 100%
Net income:
Amount................. $ 46,652 $ 69 $ 46,721 $ 1,996 $ 48,717
Percentage of total.... 95.8% 0.1% 95.9% 4.1% 100%
At December 31, 1995:
Total assets:
Amount................. $ 3,697,842 $ 138,351 $ 3,836,193 $ 279,866 $ 4,116,059
Percentage of total.... 89.8% 3.4% 93.2% 6.8% 100%
Shareholders' equity:
Amount................. $ 325,596 $ 8,073 $ 333,669 $ 22,338 $ 356,007
Percentage of total.... 91.5% 2.2% 93.7% 6.3% 100%
Shares of common stock:
Amount................. 16,728,061 535,000 (1) 17,263,061 1,300,591 (1) 18,563,652
Percentage of total.... 90.1% 2.9% (1) 93.0% 7.0%(1) 100%
</TABLE>
- ----------
(1) Assumes consummation of each transaction and conversion to shares of
Associated Common Stock based upon the respective proposed exchange
ratios.
18
<PAGE> 28
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to holders of the
Company Common Stock and the Bank Common Stock in connection with the
solicitation of proxies by the Company's Board of Directors and the Bank's
Board of Directors for use at the Special Meetings of Shareholders of the
Company and the Bank and at any adjournment or postponement thereof. The
Company Meeting and the Bank Meeting will be held at the principal executive
offices of the Company at 170 Main Street, Reedsburg, Wisconsin on
_______________, 1996. The Company Meeting will commence at _______ ___.m. and
the Bank Meeting will be held immediately following the conclusion of the
Company Meeting.
At the Special Meetings, the shareholders of the Company and the Bank will
be asked to approve the Merger Agreement and the Consolidation Agreement,
respectively, as more fully described herein. The Merger Agreement is attached
hereto as Exhibits A and B and the Consolidation Agreement is attached hereto
as Exhibit C. See "The Special Meetings," "The Merger and the Consolidation,"
"Certain Provisions of the Merger Agreement" and "Certain Provisions of the
Consolidation Agreement." The approximate date on which this Proxy
Statement/Prospectus is first being mailed to shareholders of the Company and
the Bank is on or about May __, 1996.
ASSOCIATED BANC-CORP
Associated is a diversified multi-bank holding company registered with the
Federal Reserve Board pursuant to the Bank Holding Company Act of 1956, as
amended (the "BHC Act"). Associated owns directly or indirectly all of the
capital stock of eight commercial banks located in Wisconsin and Illinois, and
all of the capital stock of subsidiaries engaged in the following non-banking
businesses: personal property lease financing, commercial mortgage banking,
residential mortgage banking, trust services, reinsurance and general insurance
agency activities. As of December 31, 1995, Associated had total assets of
$3.7 billion. The principal executive offices of Associated are located at 112
North Adams Street, P.O. Box 13307, Green Bay, Wisconsin 54307-3307 and its
telephone number is (414) 433-3166. See "Certain Information Concerning
Associated."
THE SPECIAL MEETINGS
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETINGS
THE COMPANY MEETING
At the Company Meeting, holders of Company Common Stock will consider and
vote upon a proposal to approve the Merger Agreement and any other matters that
may properly come before the Company Meeting. For a detailed description of
the Merger and the Merger Agreement, see "The Merger and the Consolidation" and
"Certain Provisions of the Merger Agreement."
THE BANK MEETING
At the Bank Meeting, holders of Bank Common Stock will consider and vote
upon a proposal to approve the Consolidation Agreement and any other matters
that may properly come before the Bank Meeting. For a detailed description of
the Consolidation and the Consolidation Agreement, see "The Merger and the
Consolidation" and "Certain Provisions of the Consolidation Agreement."
19
<PAGE> 29
REQUIRED VOTE
The Company. The affirmative vote of the holders of a majority of the
outstanding shares of the Company Common Stock entitled to vote at the Company
Meeting is required to approve the Merger Agreement. Each share of the Company
Common Stock outstanding on the Record Date is entitled to one vote.
At the Record Date, the Company's directors and executive officers are
beneficial owners of all shares of Company Common Stock. The directors and
executive officers of the Company have approved the Merger as required by the
WBCL and accordingly, are anticipated to vote their shares for approval of the
Merger Agreement. See "Certain Information Concerning the Company - Ownership
of the Company Common Stock."
The Bank. The affirmative vote of the holders of two-thirds of the
outstanding shares of Bank Common Stock entitled to vote at the Bank Meeting is
required to approve the Consolidation Agreement. Each share of Bank Common
Stock outstanding on the Record Date is entitled to one vote.
At the Record Date, the Company owned 93.64% of the outstanding Bank
Common Stock. If the Company shareholders approve the Merger at the Company
Meeting, the Company Board of Directors intends to vote the shares of the Bank
Common Stock owned by the Company in favor of the Consolidation at the Bank
Meeting. As the Company owns greater than two-thirds of the outstanding Bank
Common Stock, the Company is able to assure approval of the Consolidation at
the Bank Meeting. See "Certain Information Concerning the Bank - Ownership of
the Bank Common Stock."
Associated. The holders of Associated Common Stock are not required to
approve the Merger under the WBCL nor the Consolidation under the Banking Code.
VOTING OF PROXIES
The Company. Shares represented by all properly executed proxies for the
Company Common Stock received in time for the Company Meeting will be voted at
the Company Meeting in the manner specified by the holders thereof. Proxies
which do not contain voting instructions will be voted FOR approval of the
Merger Agreement.
It is not expected that any matter other than that referred to herein will
be brought before the Company Meeting. If, however, other matters are properly
presented, the persons named as proxies will vote in accordance with their
judgment with respect to such matters.
The Bank. Shares represented by all properly executed proxies for Bank
Common Stock received in time for the Bank Meeting will be voted at the Bank
Meeting in the manner specified by the holders thereof. Proxies which do not
contain voting instructions will be voted FOR approval of the Consolidation
Agreement.
It is not expected that any matter other than those referred to herein
will be brought before the Bank Meeting. If, however, other matters are
properly presented, the persons named as proxies will vote in accordance with
their judgment with respect to such matters.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form of proxy does not preclude a
shareholder from voting in person. A shareholder may revoke a proxy at any
time prior to its exercise by delivering to the Secretary of the Company or to
the Secretary of the Bank, as appropriate, a duly executed proxy or revocation
of proxy bearing a later date or by voting in person at the Company Meeting or
the Bank Meeting. Attendance at the Company Meeting or the Bank Meeting, as
appropriate, will not of itself constitute revocation of a proxy.
20
<PAGE> 30
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of the Company Common Stock or Bank Common Stock at
the close of business on May ___, 1996 (the "Record Date") will be entitled to
receive notice of and to vote at the Company Meeting or the Bank Meeting,
respectively.
The Company. At the Record Date, 2,883 shares of Company Common Stock
were outstanding. Shares representing a majority of the outstanding shares of
Company Common Stock entitled to vote must be represented in person or by proxy
at the Company Meeting in order for a quorum to be present.
The Bank. At the Record Date, 9,000 shares of Bank Common Stock were
outstanding. Shares representing a majority of the outstanding shares of Bank
Common Stock entitled to vote must be represented in person or by proxy at the
Bank Meeting in order for a quorum to be present.
Abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum but as unvoted for
purposes of determining the approval of the Merger Agreement or the
Consolidation Agreement, as the case may be. If a broker or other holder of
record indicates on the proxy that it does not have discretionary authority as
to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of proxies from its
shareholders and the shareholders of the Bank, except that Associated and the
Company will share equally the cost of printing this Proxy Statement/Prospectus
and all regulatory filing fees in connection therewith. In addition to
solicitation by mail, the directors, officers and employees of the Company and
the Bank may solicit proxies from shareholders of the Company and the Bank by
telephone or telegram, or in person, but will receive no additional
compensation for such services.
SHAREHOLDERS SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH THEIR PROXY
CARDS. AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE TIME, THE COMPANY
SHAREHOLDERS AND THE BANK SHAREHOLDERS WILL BE PROVIDED WITH MATERIALS RELATING
TO THE EXCHANGE OF THEIR STOCK CERTIFICATES. SEE "THE MERGER AND THE
CONSOLIDATION - CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES;
FRACTIONAL SHARES."
THE MERGER AND THE CONSOLIDATION
This section of the Proxy Statement/Prospectus describes certain aspects
of the proposed Merger and Consolidation. To the extent that it relates to the
Merger Agreement or the Consolidation Agreement, the following description does
not purport to be complete and is qualified in its entirety by reference to the
Merger Agreement which is attached hereto as Exhibits A and B, and the
Consolidation Agreement, which is attached hereto as Exhibit C, which are
incorporated herein by reference. All shareholders are urged to read the
Merger Agreement and the Consolidation Agreement and the other exhibits to this
Proxy Statement/Prospectus in their entirety.
21
<PAGE> 31
BACKGROUND OF THE MERGER AND THE CONSOLIDATION
The Company was organized in 1985 as a one bank holding company and
acquired at such time 7,016 of the Bank's 8,000 then outstanding shares. Since
the early 1990's, the Boards of Directors of the Company and the Bank studied
the future of independent banks in smaller communities in Wisconsin, such as
Reedsburg. The Boards recognized and discussed the demands that would be
placed upon the Company and the Bank to remain competitive in the banking
industry into the 21st Century. The Boards studied the potential for an
increase in banking competition in the Bank's marketing area, identified the
need for significant growth in deposits and loans and expenditure of time and
resources in the areas of marketing, technology, training and auxiliary
services, such as expanded trust services and non-traditional banking products,
the need for capital expenditures required to provide its customers with the
desired service, and the increased rules and regulations imposed by regulatory
authorities upon the banking industry. The Boards also reviewed and studied
the substantial changes in the banking industry which had occurred over the
years and the foreseeable potential for changes of equal or greater magnitude
in the future.
As a result of this review and analysis, since the Company's
formation, the directors and officers of the Company and the Bank led
successful efforts to remain competitive in the Bank's marketing area by
developing in-house initiatives and purchasing resources to implement them.
The Boards believe that those efforts yielded earnings essentially competitive
with bank holding companies of similar size as well as steady growth in assets
and loans. However, the Boards acknowledged that ever advancing marketing,
financial products and services and technology of the financial services
industry demanded implementation of further upgrades of bank services,
training, technology, and marketing.
The Boards considered several options to meet the anticipated demand
for changes and upgrades, including but not limited to, the following: (i)
continuing to create, purchase and implement initiatives internally developed;
(ii) utilizing the Company's capital position to acquire or merge with one or
more banks of similar size and nature to increase the cost efficiency of
implementing new initiatives; (iii) negotiating the sale of the Company and the
Bank to a larger financial institution with greater resources that could be
utilized to meet these demands.
The Boards concluded that continued internal initiatives would not be
sufficient to maintain and increase the Company's market share in future years.
Acquisition of or merger with one or more banks was considered to magnify the
tasks necessary for the Company to compete in its market, rather than achieving
the objectives identified by the Board, and, as a practical matter, an
acquisition or merger seemed unlikely to the Boards because of competition with
larger financial institutions actively seeking mergers and acquisitions.
Further, the Boards determined that these two options provided limited
potential for maximizing value to Company and Bank shareholders. These
factors, combined with the Boards' fiduciary duty to shareholders, employees
and the communities the Company serves (particularly the fiduciary duty to Bank
minority shareholders who represented less than 7% ownership of the Bank),
resulted in a decision to pursue a sale to a publicly-traded financial
institution as the preferred strategy.
The Boards concluded that a merger with a larger publicly-traded
financial institution would be the most effective and beneficial approach for
the Company's customers and employees and a tax-free reorganization would
provide the most benefit to shareholders. The Boards were concerned that the
opportunity for financial institutions of the Company's size to be acquired by
publicly-traded regional financial institutions would become less likely in the
future because of such organizations' apparent desire to make themselves
attractive to potential acquirors. Further, the Boards realized that the
expenditure of time and resources by a potential acquiror were not
significantly different in acquiring an institution several times larger than
the Company thereby also making acquisitions of institutions the size of the
Company less attractive. As a result, the Boards believed that the Bank's
attractiveness as an acquisition candidate would be diminished as consolidation
among financial institutions increasingly involves substantially larger
institutions.
22
<PAGE> 32
Of significant importance to the Boards in consideration of any
proposed merger/acquisition were compatibility of the acquiror with the
Company's existing and future customers and markets, a commitment to the
communities served by the Company, and professional opportunities for the
Company's officers and employees. A fair and reasonable price to Company and
Bank shareholders in any acquisition of the Company and the Bank was one of the
essential considerations for the Boards, but not the sole consideration.
The Boards analyzed other recent mergers and acquisitions in the
banking industry, taking into account the form of consideration (cash, stock,
or other), asset size, equity to asset ratio, return on average assets, and
location. This information, along with the Boards' combined experience and
knowledge in such matters, helped to formulate acceptable ranges of ratios and
prices to evaluate a merger/acquisition proposal.
In late 1994, as a first step, the Boards approached a publicly-held
bank holding company to determine its interest in a merger with or acquisition
of the Company and the Bank. Although strong interest was expressed initially,
because of that holding company's concentration of assets in Sauk County, the
holding company concluded it could not reasonably pursue a merger with or
acquisition of the Company and the Bank.
The Boards approached another publicly-held holding company to
determine its interest in a merger/acquisition. Although this institution also
expressed strong initial interest, it declined to proceed also because of
concentration of assets in the Bank's region. The Boards' approach to a third
publicly-held holding company resulted in no interest in merger or acquisition
being expressed by that holding company.
There was no public dissemination of notice that the Company was
seeking offers from potential buyers or merger proposals nor retention of an
investment banking firm to solicit offers. The Boards believe that the
Company's interest in considering offers became generally known through
traditional channels in the banking community in south central Wisconsin and
beyond as well as through contacts by members of the Boards with financial
institutions potentially compatible with the Company's identified strategies,
and through a referral by the Company's public accounting firm.
The Boards received indications of interest and/or initiated
discussions with two publicly-traded bank holding companies larger than the
Company (of which one was Associated) for preliminary discussions of their
level of interest in a possible acquisition of or merger with the Company and
the Bank. In mid-summer 1995, two senior members of the Boards met with each
of these bank holding companies which had expressed interest in, and which had
a reasonable prospect for, a merger or acquisition. These two financial
institutions were the sole entities which had responded with an indication of
interest. Discussions with each holding company focused on a tax-free exchange
of stock in a business combination, along with discussions of compatibility,
strengths, performance, short and long term goals, and other issues of mutual
interest. In these discussions, the members of the Boards sought answers to
specific questions concerning both economic and social aspects of any proposed
merger, to help determine the financial aspects of the merger to the
shareholders of the Company and the Bank, as well as the operational
similarities between the Company and Bank and the potential acquiror.
In early August 1995, the chief executive officers of Associated and
the other holding company each provided a written proposal to the Company for
the acquisition of the Company and the Bank through a tax-free exchange of
stock.
The Boards' analyzed Associated's and the other holding company's
initial proposed exchange ratio, their respective financial strength, financial
history, short and long term return to shareholders, potential liquidity and
Nasdaq trading activity. In addition, the Boards considered compatibility,
short and long term goals, and other issues of mutual interest. The Boards
considered the past performance of each bank holding company's stock, and the
Board's perception of the long-range potential stock appreciation of each
holding company. It was determined that Associated would be the better merger
partner, both from the standpoint of the past performance and future potential
performance of Associated stock, and from the standpoint of various social
issues and management philosophy.
23
<PAGE> 33
As a result of the Boards' analysis of the two holding companies, in
early August 1995, the Company confirmed its interest in Associated's proposal
and thereafter Associated provided the Company an outline of the basic terms of
Associated's proposal, subject to a due diligence review period.
The mutual due diligence period commenced in late August 1995 and
continued through early December 1995, during which time financial and other
information of the Company and Associated were exchanged and analyzed. The due
diligence period reconfirmed the Boards' belief that a merger with Associated
would achieve the necessary upgrades of bank services, training, technology and
marketing to serve the Bank's customers better, and would also present desired
professional opportunities to the Bank's employees and officers. During this
due diligence period, Associated also conducted on site due diligence of the
Bank's loan files and premises. After mutual due diligence, the Boards and
representatives of Associated concluded that it was in the best interest of all
entities to proceed toward a definitive merger agreement. In early December
1995, counsel for the Company received the initial draft of a proposed merger
agreement from counsel for Associated.
The draft merger agreement included as a condition to Associated's
obligations to consummate the merger (i) that all agreements of the Company be
materially complied with which included that the Company Board (a) unanimously
approve the merger and (b) obtain the approval of the required majority vote of
shareholders of the Company and (ii) consistent with the foregoing, that the
directors, who in aggregate owned 100% of the Company Common Stock, enter into
a voting agreement pursuant to which the directors as shareholders would agree
to vote their shares in favor of adoption and approval of the Merger Agreement,
and against any Competing Transactions (as defined herein). Pursuant to the
voting agreement, if a shareholder breached the agreement and thereby did not
vote in favor of adoption and approval of the Merger Agreement, Associated had
the right to purchase such shareholder's shares of Company Common Stock at a
price established based upon the Exchange Ratio and an Associated Common Stock
share price of $35.00, which was the approximate value of Associated Common
Stock at the date the voting agreement was requested by Associated. The draft
merger agreement also required as a condition to Associated's obligations that
all shareholders of the Bank enter into a stock exchange agreement whereby Bank
shareholders agreed, subject to consummation of the Merger, to exchange Bank
Common Stock for that number of shares of Associated Common Stock as calculated
by the Bank Conversion Ratio.
The Boards gave full consideration of the various factors having an
effect upon a determination of the fair value of the Company Common Stock and
the Bank Common Stock in the context of a sale. In determining the amount of
consideration to be received by the Company and Bank shareholders, the Boards
considered the relative financial condition, earnings, and history of dividend
payments of Associated, the Company and the Bank, in addition to the benefits
of liquidity and diversification in Associated Common Stock, and the
prospective growth potential of Associated and the Company and the Bank, based
on their respective businesses, locations and market areas.
The proposed issuance of an aggregate of 535,000 shares of Associated
Common Stock to holders of Company Common Stock and Bank Common Stock was the
starting point for the calculation of the Exchange Ratio and Bank Conversion
Ratio which were intended by the Boards to allocate consideration between
holders of Company Common Stock and Bank Common Stock. The resulting ratios
provide equivalent value of Associated Common Stock for each share of Bank
Common Stock outstanding ($2,080 per share of Bank Common Stock assuming
Associated Common Stock was $35.00 per share), whether the Bank Common Stock
was held as a majority interest by the Company or was held as a minority
interest by Bank shareholders.
The proposed Exchange Ratio and Bank Conversion Ratio (when Associated
Common Stock was $35.00 per share), accordingly, represented a purchase price
which was approximately 12.48 times Company estimated earnings for 1995 (before
provision for loan loss), or a total of $18.7 million for all outstanding
shares of the Company and the Bank. As the proposed Exchange Ratio and Bank
Conversion Ratio were fixed, the Company, the Bank and Associated, upon
execution of a definitive agreement, would assume the risk of fluctuating
Associated Common Stock prices. When analyzing the fairness of the offer,
members of the Boards considered a 10% variation from the $35.00 per share
price of Associated Common Stock. If the price of Associated Common Stock
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declined 10% to $31.50, based upon the Exchange Ratio and Bank Conversion
Ratio, the offer would equal 11.24 times estimated earnings for 1995 (before
provision for loan loss), or a total of approximately $16.9 million for all
outstanding shares of the Company and the Bank. If the price of Associated
Common Stock increased 10% to $38.50, based upon the Exchange Ratio and the
Bank Conversion Ratios, the offer would equal 13.73 times estimated earnings
for 1995 (before provision for loan losses), or a total of approximately $20.6
million. Members of the Boards determined that these ranges and multiples were
within acceptable parameters based upon their review and analysis of industry
information known and developed by them.
The Boards concluded that an investment banking firm would not be
engaged to render an opinion that the Exchange Ratio and Bank Conversion Ratio
were fair from a financial point of view. As discussed above, the respective
Boards concluded that the Merger and the Exchange Ratio and the Consolidation
and the Bank Conversion Ratio would be recommended as fair to and in the best
interests of the Company and the Bank when the price of Associated Common Stock
ranged between $31.50 and $38.50 per share. The Boards were aware that the
price would likely continue to fluctuate until the Consummation of the Merger
and the Consolidation, however, the Board believed that the benefit to the
shareholders of the Company and the Bank of a "fairness opinion" would not be
commensurate with its costs.
The Boards concluded that they would recommend that the Exchange Ratio
and Bank Conversion Ratio proposed by Associated were fair to and in the best
interests of Company and Bank shareholders, respectively, from a financial
standpoint, at a time when the price of Associated Common Stock ranged between
$35 and $37 per share. The Boards were aware that the price would fluctuate
until the Effective Time. See "Comparative Stock Prices and Dividends -
Associated Common Stock" for recent share prices of Associated Common Stock.
The Merger and Consolidation will afford the Bank the advantage of
joining a multi-bank holding company while preserving the individual identity
of the Bank. Because of Associated's size and financial strength, it has a
greater range of financing alternatives available to raise additional capital,
if necessary, to meet the financial requirements of the Bank. The Merger and
Consolidation will permit the Bank to function with a large degree of autonomy,
and, additionally, it will enable the Bank through its affiliation with
Associated to improve and expand its services and to utilize its present
personnel more effectively by permitting the deployment of additional skilled
personnel on an economical basis, particularly in the audit, trust, investment
and data processing areas. The affiliation with other banks owned by
Associated will permit the group participation and credit extensions which
enable the Bank to handle more effectively the credit needs of businesses which
might otherwise do their banking outside the service area of the Bank.
The outstanding shares of Associated Common Stock are, and the shares
of such stock to be issued in the Merger and the Consolidation for Company and
Bank Common Stock will be, listed for trading on the Nasdaq Stock Market, and
hence will have greater liquidity than shares of the Company or Bank Common
Stock which are not traded regularly in any established market. The existence
of an established trading market for Associated Common Stock also provides a
means of valuing the shares received in the Merger and Consolidation
accurately, and such valuation is not now available for shares of Company
Common Stock.
Definitive agreement negotiations among counsel, members of
the Boards and representatives of Associated continued through approximately
January 23, 1996, when final terms, conditions and language of the Merger
Agreement, voting agreement and stock exchange agreement were agreed upon. The
voting agreement and the stock exchange agreement were subsequently executed by
each of the shareholders of the Company and the Bank, respectively. The
aggregate consideration based upon the closing price of Associated Common Stock
on January 23, 1996, as reported on the Nasdaq Stock Market of $36.75 per share
was approximately 13.05 times estimated earnings for 1995 (before provision for
loan losses), or a total of approximately $19.7 million, with the understanding
and accompanying risk that the actual consideration would fluctuate until the
Effective Time. On January 26, 1996, the Company and Associated issued a joint
press release announcing the execution of the Merger Agreement.
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In April 1996, in connection with preliminary review of the structure
of the transaction performed by Associated's independent public accountants
relative to the tax opinion to be issued, it was concluded that the structure
of the transaction should be modified. It was determined that in connection
with the tax opinion to be rendered, that a business combination was required
to be effected whereby the Bank was consolidated into a newly-formed interim
bank wholly-owned by Associated such that Associated Common Stock issued to
shareholders of the Bank would be tax free. As it was at all times the Boards'
objectives to structure a business combination involving the Company and the
Bank which would result in tax-free treatment to both shareholders of the
Company and the Bank, counsel to Associated commenced preparation of the
Consolidation Agreement between Interim Bank and Bank and an amendment to the
Merger Agreement consistent therewith. In light of the modifications to the
transaction, obligations of all parties related to both agreements with the
Company and Bank shareholders (the voting agreement and stock exchange
agreement) were released pursuant to documentation prepared for this purpose.
REASONS FOR THE MERGER AND THE CONSOLIDATION
The Company and the Bank. In considering the Merger and the
Consolidation, the Boards reviewed the terms and conditions of the proposed
Merger Agreement and Consolidation Agreement, along with certain business and
financial information related to Associated, the Company, and the Bank. In
addition to the factors discussed above, the Boards determined to approve the
proposed transaction because the Merger and the Consolidation will increase the
financial strength of the Bank by enabling it to serve its depositors and
customers better and will provide additional opportunities for professional
advancement of Bank employees as well as allow the Bank to be more competitive
with bank subsidiaries of other larger bank holding companies currently doing
business in south central Wisconsin, or which might locate and do business in
the community. The Boards also concluded that the Merger and the Consolidation
will improve both the long-term and short-term value of the investments of
holders of Company Common Stock and Bank Common Stock.
Among the additional factors important to the Boards in approving the
Merger and Consolidation were: (i) the increased opportunity and resources to
serve the Bank's customers; (ii) the possibility for career advancement which
employees of the Bank might be provided as a result of the Merger and
Consolidation; (iii) the increased resources and expertise to keep the Bank
competitive and meet the ever changing demands of the banking industry; (iv)
the marketability and liquidity of Associated Common Stock and the consistent
dividend history and rate of dividends of Associated Common Stock to be
received in connection with the Merger and the Consolation, as compared to the
relative illiquidity and limited marketability of Company and Bank Common
Stock, and the dividend history of Bank and Company Common Stock; (v) the
tax-free nature of the Merger and the Consolidation for federal income tax
purposes which permits Company and Bank shareholders who receive shares of
Associated Common Stock to defer state and federal income taxation under
certain circumstances; (vi) the potential for future appreciation of Associated
Common Stock because of Associated's greater market presence and financial
resources; and (vii) the financial terms of other recent business combinations
in the financial services industry. See "The Merger and the Consolidation -
Certain Material Federal Income Tax Consequences."
While each member of the Boards evaluated each of the foregoing as
well as other factors, the Boards collectively did not assign any specific or
relative weights to the factors considered and did not make any determination
with respect to any individual factor. The Boards collectively made their
determination with respect to the Merger and the Consolidation based on their
unanimous conclusion that the Merger and the Consolidation, in light of the
factors that each of them individually considered as appropriate, is fair and
in the best interests of the shareholders.
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Associated. Prior to authorizing the Merger and the Consolidation,
Associated's Board of Directors considered, among other things, the improving
financial performance and condition, business operations, capital levels, asset
quality and future growth prospects of the Company and the Bank. The Board
also considered the benefits to Associated of expanding in South Central
Wisconsin by acquisition of the Company and the Bank as opposed to the opening
of a new branch bank, the positive impact of the Merger and the Consolidation
on Associated by enhancing its visibility in the region and the terms of the
Merger Agreement and the Consolidation Agreement.
Associated's Board of Directors believes the Merger and the Consolidation
will, (i) result in operational and managerial efficiencies which will better
enable the Company and the Bank to contain costs and grow more rapidly than
historic growth rates; (ii) result in the Company and the Bank having greater
financial strength, increased competitiveness and market diversification,
thereby also benefiting Associated and its customers; and (iii) result in an
increase in long-term shareholder value for the shareholders of Associated.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF THE COMPANY AND THE BANK
The Boards of Directors of the Company and the Bank have determined that
the terms of the Merger and the Consolidation are fair to, and in the best
interests of, the Company, the Bank and their respective shareholders for the
reasons stated immediately above.
THE BOARD OF DIRECTORS OF THE COMPANY AND THE BANK HAVE UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE CONSOLIDATION AGREEMENT, RESPECTIVELY,
AND RECOMMEND A VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE CONSOLIDATION
AGREEMENT, RESPECTIVELY.
CERTAIN CONSIDERATIONS
In deciding whether to vote in favor of the Merger and the Consolidation,
the Company shareholders and the Bank shareholders should consider the
following factors, in addition to the other matters set forth herein:
Anticipated Shareholder Approval of the Consolidation. Assuming the
Merger Agreement has not been terminated prior to its being voted upon by the
Company shareholders, the Company has indicated that it intends to vote its
shares of Bank Common Stock in favor of the approval and adoption of the
Consolidation Agreement. Accordingly, shareholders of the Bank who do not wish
to have their shares of Bank Common Stock converted into the right to receive
shares of Associated Common Stock pursuant to the Consolidation Agreement, must
in addition to voting against the Consolidation or abstaining from the vote,
also exercise Dissenters' Rights. See "The Merger and the Consolidation -
Dissenters' Rights; The Consolidation" and Exhibit E hereto.
Uncertain Legislative and Regulatory Environment. The banking and
financial services businesses in which the Company, the Bank and Associated
engage are highly regulated. The laws and regulations affecting such
businesses may be changed dramatically in the near future. Such changes could
affect the ability of banks to engage in nationwide branch banking and the
ability of bank holding companies to engage in non-banking businesses, such as
securities underwriting and insurance, in which they have been allowed to
engage only on a limited basis. Such changes may also affect the capital that
banks and bank holding companies are required to maintain, the premiums paid
for or the availability of deposit insurance or other matters directly
affecting earnings. Neither the Company, the Bank nor Associated can predict
what changes will occur or the effect that any such changes would have on the
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ability of the combined entity to compete effectively or to take advantage of
new opportunities after the Merger and the Consolidation.
Competition. The markets in which the Company, the Bank and Associated
operate are highly competitive. Competition in such markets is likely to
increase in light of the changing legislative and regulatory environment in
which the Company, the Bank and Associated operate. In addition, consolidation
and mergers in the banking industry are expected to continue, resulting in
stronger and more effective competitors. Neither the Company, the Bank nor
Associated can predict the degree to which competition in the industry will
increase in the future or the effect any such increased competition will have
on the combined entity.
Rapid Technological Changes. Evolving technology will play a major role
in the processing and delivery of financial services. The effective use of new
technology will enable banking and financial service businesses to improve
information concerning their customers and markets. It will also enable them
to reduce overhead expenses while improving the quality of service to
customers. Communications technology will substantially improve the ability of
financial institutions to exchange information with their customers and
employees. Banks and financial institutions that are unwilling or unable to
access this evolving new technology could experience lower earnings and a loss
of competitiveness.
Uncertain Economic Environment. Until recently, banks and financial
service companies in the Midwest have experienced a relatively long period of
price stability and a growing economy. Price stability enables banks to better
protect themselves against interest rate risks. A strong economy enhances the
opportunity of the commercial sector of the economy to improve earnings and
performance. It also provides an environment for financial institutions to
experience positive and profitable growth. Recent economic changes present
additional risks for all banks and financial service companies.
Nature of Business. The financial performance of the Company and the Bank
results primarily from its retail banking activities located in the City of
Reedsburg, Wisconsin and surrounding markets in South Central Wisconsin.
Company shareholders and Bank shareholders who receive shares of Associated
Common Stock will own an interest in a diversified multi-bank holding company
with over 95 banking offices, substantially all of which are located in various
communities throughout Wisconsin, which is engaged in several non-banking
businesses including personal property lease financing, commercial and
residential mortgage banking, trust services, reinsurance and general insurance
agency activities. Financial performance of Associated is accordingly
dependent on its activities and the economic factors in such markets and
businesses. See "Certain Information Concerning Associated."
Business Combinations. Associated seeks additional expansion
opportunities and accordingly may enter into business combinations with banking
and non-banking entities involving the issuance of its shares or payment of
cash consideration which may not require a vote of holders of Associated Common
Stock.
Share Price Fluctuation. The price of shares of Company Common Stock and
Bank Common Stock is based upon the financial condition of the Company and the
Bank and the market value for similar non-publicly traded bank holding
companies and banks and other factors. The share price of Associated Common
Stock on The Nasdaq Stock Market is by nature subject to the general price
fluctuations in the market for publicly-traded equity securities. Such
fluctuations are not necessarily related to a change in the financial
performance or condition of Associated.
MERGER AND CONSOLIDATION CONSIDERATION
Upon consummation of the Merger, each share of the Company Common Stock
outstanding at the Effective Time will be converted (subject to the provisions
with respect to fractional shares described below) into the right to receive
173.7766 shares of Associated Common Stock; provided, however, that each share
of Company Common
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Stock held in the treasury of the Company and each share owned by Associated or
any direct or indirect wholly-owned subsidiary of Associated immediately prior
to the Effective Time shall be cancelled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
At the Consolidation Effective Time, each outstanding share of Bank Common
Stock will be converted (subject to the provisions with respect to fractional
shares described below) into the right to receive 59.4441 shares of Associated
Common Stock; provided, however, that each share of Bank Common Stock held in
the treasury of the Bank and each share owned by Associated or the Company or
any direct or indirect wholly-owned subsidiary of Associated or the Company
immediately prior to the Consolidation Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto.
Based upon the outstanding number of shares of Associated Common Stock as
of the Record Date and the number of shares of Associated Common Stock to be
issued in the Merger and the Consolidation, the shareholders of the Company and
the Bank will own Associated Common Stock representing approximately 2.9% of
the outstanding voting shares of Associated following consummation of the
Merger and the Consolidation (assuming no exercise of dissenters' rights).
REGULATORY APPROVALS REQUIRED
Federal. The Merger is subject to prior approval by the Federal Reserve
Board under the BHC Act, which requires that the Federal Reserve Board take
into consideration, among other factors, the financial and managerial resources
and future prospects of the respective institutions and the convenience and
needs of the communities to be served. The BHC Act 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 to substantially 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
anticompetitive 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. It is highly improbable that the
Merger poses any antitrust issues. The Federal Reserve Board also has the
authority to deny an application if it concludes that the combined organization
would have an inadequate capital position. Furthermore, the Federal Reserve
Board must also assess the records of the bank subsidiaries of Associated and
the Company 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 bank's record of meeting the
credit needs of its local communities, including low and moderate income
neighborhoods, consistent with safe and sound operation.
Under the BHC Act, the Merger may not be consummated until up to 30 days
following the date of Federal Reserve Board approval, during which time the
United States Department of Justice may challenge the Merger on antitrust
grounds. Although a challenge is highly improbable, there can be no assurance
that the Department of Justice will not challenge the Merger or, if such a
challenge is made, as to the result thereof. The commencement of an antitrust
action would stay the effectiveness of the Federal Reserve Board's approval
unless a court specifically orders otherwise. The BHC Act provides for the
publication of notice and public comment on the applications and authorizes the
regulatory agency to permit interested parties to intervene in the proceedings.
Associated filed an application with the Federal Reserve Bank of Chicago
(the "Federal Reserve Bank") that was accepted for filing by the Federal
Reserve Bank on March 22, 1996. Associated has been advised that the Federal
Reserve Bank accepted the application for processing under delegated authority
from the Federal Reserve Board on April 18, 1996 and has approved the
application under such authority on May 3, 1996.
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Wisconsin. The Merger is also subject to the prior approval by the
Wisconsin Commissioner of Banking (the "Wisconsin Commissioner") under Section
221.59 of the Banking Code which requires that the Wisconsin Commissioner take
into consideration (i) the financial and managerial resources and future
prospects of the respective institutions and whether the transaction would be
contrary to the best interests of the shareholders or customers of the bank or
bank holding company to be acquired; (ii) whether the action would be
detrimental to the safety and soundness of the respective institutions or any
subsidiary or affiliate of the respective institutions; (iii) the record of
performance, management, financial responsibility and integrity, and the CRA
rating of the applicant; and (iv) whether, upon consummation of the
transaction, the applicant would control in excess of 30% of the total amount
of deposits of insured depository institutions in Wisconsin as specified under
federal banking law.
Associated filed an application with the Wisconsin Commissioner on March
22, 1996 which was accepted for processing on the date filed. There can be no
assurance that the Wisconsin Commissioner will approve the Merger, and if the
Merger is approved, there can be no assurance as to the date of such approval.
The Merger may be consummated at any time within one year of the date approval
was granted by the Wisconsin Commissioner (subject to the foregoing federal
approvals).
The Consolidation is subject to approval by the Wisconsin Commissioner
pursuant to Section 221.25 of the Banking Code, and the FDIC pursuant to
Section 18(c) of the Federal Deposit Insurance Act. Application for such
approval was filed with the Commissioner on April 12, 1996, and with the FDIC
on April 12, 1996. There can be no assurance that the Consolidation will be
approved by the Commissioner and the FDIC.
General. The Merger and the Consolidation cannot proceed in the absence
of all requisite regulatory approvals. In the Merger Agreement, Associated and
the Company have agreed to take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed with respect to the
Merger, including furnishing information to the Federal Reserve Board or in
connection with approvals or filings with other governmental entities.
Associated and the Company have also agreed to take all reasonable action
necessary to obtain approvals of the Federal Reserve Board, the Wisconsin
Commissioner and other governmental entities. However, the obligation to take
reasonable actions is not to be construed as including an obligation to accept
any terms or conditions to an agreement or other approval of, or any exemption
by, any party that are not customarily contained in approvals of similar
transactions granted by such regulators or if Associated in good faith
determines that such terms or conditions would have a material adverse effect
on its business or financial condition or would materially detract from the
value of the Company to Associated. There can be no assurance that any
regulatory approvals will not contain a term or condition that causes such
approvals to fail to satisfy the conditions described above under "The Merger
Agreement - Conditions to Consummation of the Merger."
Associated, the Company and the Bank are not aware of any other
governmental approvals or actions that are required for consummation of the
Merger and the Consolidation except as described above. Should any other
approval or action be required, it is presently contemplated that such approval
or action would be sought. There can be no assurance that any such approval or
action, if needed, could be obtained and, if such approvals or actions are
obtained, there can be no assurance as to the timing thereof.
THE MERGER EFFECTIVE TIME
The Merger will be consummated and will become effective as of the date
Articles of Merger are filed with the Secretary of State of the State of
Wisconsin (the "Effective Time"). The filing with respect to the Merger will
occur as promptly as practicable after the satisfaction or, if permissible,
waiver of the conditions to the Merger as set forth in the Merger Agreement.
The Merger Agreement may be terminated by either party if, among other reasons,
the Merger shall not have been consummated on or before July 31, 1996. Upon
consummation of the Merger, the Company will be merged into Holding and will
not continue its separate existence or operations, to which Holding as the
surviving corporation will succeed. See "Certain Provisions of the Merger
Agreement - Conditions to Consummation of the Merger" and "Certain Provisions
of the Merger Agreement - Termination."
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THE CONSOLIDATION EFFECTIVE TIME
The Consolidation will be consummated immediately following the
consummation of the Merger or at such other time as may be designated by order
of any regulatory authority having jurisdiction or by resolution of the Board of
Directors of Interim Bank adopted at least 10 days prior to the date so
designated (the "Consolidation Effective Time"). Following consummation of the
Consolidation, the Bank will consolidate with Interim Bank under the charter of
Interim Bank. The resulting bank from the consolidation will conduct its
banking operations under the name of "Associated Bank Reedsburg." See "Certain
Provisions of the Consolidation Agreement - Conditions to Consummation of the
Consolidation" and "Certain Provisions of the Consolidation Agreement -
Termination."
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL
SHARES
At the Effective Time and, at the Consolidation Effective Time, and
without any action on the part of Associated, the Company, the Bank, or the
holders of the Company Common Stock or the Bank Common Stock, each share of the
Company Common Stock and Bank Common Stock issued and outstanding immediately
prior to the Effective Time and the Consolidation Effective Time, respectively,
(other than shares held by Company or Bank shareholders exercising their
dissenters' rights under the WBCL or Banking Code, as applicable) shall be
converted into the right to receive shares of Associated Common Stock. See "The
Merger and the Consolidation - Dissenters' Rights." All such shares of the
Company Common Stock and Bank Common Stock shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
stock certificate previously representing any such shares of the Company Common
Stock or the Bank Common Stock (other than shares held by dissenting
shareholders as described above) shall thereafter represent the right to receive
a certificate representing shares of Associated Common Stock into which such the
Company Common Stock or the Bank Common Stock has been converted. Certificates
previously representing shares of the Company Common Stock or the Bank Common
Stock shall be exchanged for certificates representing whole shares of
Associated Common Stock upon the surrender of such certificates as provided
below. No fractional share of Associated Common Stock shall be issued, and, in
lieu thereof, a cash payment shall be made as provided below.
As of the Effective Time and the Consolidation Effective Time, Associated
shall deposit, or cause to be deposited, with Harris Trust and Savings Bank,
Chicago, Illinois (the "Exchange Agent"), for the benefit of the holders of
shares of the Company Common Stock and Bank Common Stock and for exchange in
accordance with the terms of the Merger Agreement and the Consolidation
Agreement, certificates representing the shares of Associated Common Stock.
Certificates for shares of Associated Common Stock to be exchanged for the
Company Common Stock, together with any dividends or distributions with respect
thereto (the "Company Exchange Fund") and certificates for shares of Associated
Common Stock to be exchanged for Bank Common Stock, together with any dividends
or distributions with respect thereto ("Bank Exchange Fund") shall be issuable
pursuant to the terms of the Merger Agreement or the Consolidation Agreement in
exchange for outstanding shares of the Company Common Stock and Bank Common
Stock, respectively.
As soon as reasonably practicable after the Effective Time and the
Consolidation Effective Time, the Exchange Agent shall mail to each holder of
record of a certificate which immediately prior to the Effective Time and the
Consolidation Effective Time represented outstanding shares of the Company
Common Stock or Bank Common Stock whose shares were converted into the right to
receive shares of Associated Common Stock, (i) a letter of transmittal and (ii)
instructions for use in effecting the surrender of the Company stock
certificates or Bank stock certificates in exchange for certificates
representing shares of Associated Common Stock. Upon surrender of a certificate
previously representing shares of the Company Common Stock or Bank Common Stock
to the Exchange Agent together with such duly executed letter of transmittal,
the holder of such certificate shall receive in exchange therefor a certificate
representing that number of whole shares of Associated Common Stock to which
such holder is entitled and the certificate so surrendered shall forthwith be
cancelled. In the event of a transfer of ownership of shares which is not
registered in the transfer records of the Company or the Bank, a certificate
representing the proper number of shares of Associated Common Stock may be
issued to a transferee if the certificate representing such shares is presented
to the Exchange Agent, accompanied by all documents required to
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evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered, each certificate previously
representing shares of the Company Common Stock or Bank Common Stock shall be
deemed at any time after the Effective Time and the Consolidation Effective
Time to represent only the right to receive upon such surrender a certificate
representing shares of Associated Common Stock and cash in lieu of any
fractional shares of Associated Common Stock as described below.
THE COMPANY SHAREHOLDERS AND THE BANK SHAREHOLDERS SHOULD NOT FORWARD
THEIR STOCK CERTIFICATES TO THE EXCHANGE AGENT WITHOUT A LETTER OF TRANSMITTAL
NOR RETURN THEIR STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
No dividends or other distributions declared or made after the Effective
Time and the Consolidation Effective Time with respect to Associated Common
Stock with a record date after the Effective Time and the Consolidation
Effective Time shall be paid to the holder of any unsurrendered certificate with
respect to the shares of Associated Common Stock represented thereby, and no
cash payment in lieu of fractional shares shall be paid to any such holder,
until such certificate is surrendered. Subject to the effect of applicable
laws, following surrender of any such certificate, there shall be paid to the
holder of said certificate, which represents whole shares of Associated Common
Stock issued in exchange therefor, without interest, (i) promptly, the amount of
cash payable with respect to a fractional share of Associated Common Stock to
which such holder is entitled and the amount of dividends or other distributions
with a record date after the Effective Time and the Consolidation Effective Time
paid with respect to such whole shares of Associated Common Stock, and (ii) at
the appropriate payment date, the amount of dividends or other distributions,
with a record date after the Effective Time and the Consolidation Effective
Time, but prior to surrender and a payment date occurring after surrender,
payable with respect to such whole shares of Associated Common Stock.
All shares of Associated Common Stock issued upon conversion of the shares
of the Company Common Stock and Bank Common Stock (including any cash paid for
fractional shares) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of the Company Common Stock and Bank Common
Stock.
No certificates or scrip representing fractional shares of Associated
Common Stock shall be issued upon the surrender for exchange of the
certificates, and such fractional share interest will not entitle the owner
thereof to vote or to any rights of a shareholder of Associated. Each holder of
a fractional share interest shall be paid an amount in cash equal to the product
obtained by multiplying such fractional share interest to which such holder
would otherwise be entitled by the closing price of a share of Associated Common
Stock as quoted on The Nasdaq Stock Market on the first business day following
the date the Federal Reserve Board issues an order approving consummation of the
Merger. As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of fractional share interests, the Exchange Agent
shall notify Associated and Associated shall make available such amounts to such
holders of such factional share interests subject to and in accordance with the
terms of the Merger Agreement and Consolidation Agreement, as relevant.
Any portion of the Exchange Fund or the Bank Exchange Fund which remains
undistributed to the shareholders of the Company or the Bank, respectively, for
six months after the Effective Time or the Consolidation Effective Time,
respectively, shall be delivered to Associated, upon demand, and any
shareholders of the Company or the Bank who have not theretofore complied with
the procedures described above shall thereafter look only to Associated for
payment of their claim for Associated Common Stock, any cash in lieu of
fractional shares of Associated Common Stock and any dividends or distributions
with respect to Associated Common Stock.
Neither Associated, the Company nor the Bank shall be liable to any holder
of shares of the Company Common Stock or Bank Common Stock for any such shares
of the Company Common Stock or Bank Common Stock (or dividends or distributions
with respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
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Associated shall be entitled to deduct and withhold from any cash
consideration payable pursuant to the Merger Agreement or the Consolidation
Agreement to any holder of shares of the Company Common Stock or Bank Common
Stock such amounts as Associated is required to deduct and withhold with respect
to the making of such payment under the Internal Revenue Code of 1986, as
amended (the "Code"), or any provision of state, local or foreign tax law.
At the Effective Time, the stock transfer books of the Company shall be
closed, and at the Consolidation Effective Time, the stock transfer books of the
Bank shall be closed, and there shall be no further registration of transfers of
shares of the Company Common Stock or Bank Common Stock, respectively,
thereafter on said record books. From and after the Effective Time or the
Consolidation Effective Time, the holders of certificates shall cease to have
any rights with respect to such shares of the Company Common Stock and Bank
Common Stock except as otherwise provided in the Merger Agreement, Consolidation
Agreement or by law. On or after the Effective Time, and on or after the
Consolidation Effective Time, any certificates presented to the Exchange Agent
or Associated for any reason shall be converted into shares of Associated Common
Stock in accordance with the terms of the Merger Agreement or Consolidation
Agreement, as described above.
DESCRIPTION OF ASSOCIATED COMMON STOCK ISSUABLE IN THE MERGER AND THE
CONSOLIDATION
The following description of Associated Common Stock issuable in the
Merger and the Consolidation is a summary and is qualified in its entirety by
reference to the terms of such security, which is incorporated by reference
herein and is set forth in full in Article III of Associated's Articles of
Incorporation (the "Associated Articles"). The description set forth below is
subject in all respects to the WBCL and the Associated Articles.
Harris Trust and Savings Bank is the transfer agent and registrar for all
outstanding Associated Common Stock.
THE FOLLOWING DESCRIPTION OF ASSOCIATED COMMON STOCK SHOULD BE READ
CAREFULLY BY THE COMPANY AND BANK SHAREHOLDERS SINCE, AT THE EFFECTIVE TIME AND
THE CONSOLIDATION EFFECTIVE TIME, RESPECTIVELY, EACH ISSUED AND OUTSTANDING
SHARE OF THE COMPANY COMMON STOCK AND THE BANK COMMON STOCK, AS APPLICABLE,
WILL BE CONVERTED INTO THE RIGHT TO RECEIVE SHARES OF ASSOCIATED COMMON STOCK
AT THE APPLICABLE CONVERSION RATIO.
General. Associated has one class of common stock, the Associated Common
Stock. Of the 48,000,000 shares of Associated Common Stock authorized,
_______________ shares were outstanding as of the Record Date, exclusive of
shares held in its treasury. Of the 750,000 shares of Associated preferred
stock with a par value of $1.00 per share authorized, none were issued and
outstanding as of the Record Date.
Dividend Rights. Dividends on Associated Common Stock will be payable out
of the assets of Associated legally available therefor as, if and when declared
by the Associated Board of Directors. No share of Associated Common Stock is
entitled to any preferential treatment with respect to dividends.
Voting Rights. Each holder of Associated Common Stock will be entitled at
each shareholders' meeting of Associated, as to each matter to be voted upon,
to cast one vote, in person or by proxy, for each share of Associated Common
Stock registered in his or her name on the stock transfer books of Associated.
Such voting rights are not cumulative.
Rights Upon Liquidation. Subject to the rights of holders of any
Associated preferred stock which may be issued from time to time, in the event
of liquidation, dissolution or winding up of Associated, whether voluntary or
involuntary, the holders of Associated Common Stock will be entitled to receive
all assets of Associated remaining for distribution to its shareholders, on a
pro rata basis.
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Miscellaneous. Shares of Associated Common Stock are not convertible into
shares of any other class of capital stock. Shares of Associated Common Stock
are not and will not be entitled to any preemptive or subscription rights. The
issued and outstanding shares of Associated Common Stock are fully paid and
nonassessable (except as otherwise provided under the WBCL).
COMPARISON OF SHAREHOLDER RIGHTS
The following is a summary of material differences between the rights of
holders of Company Common Stock and Bank Common Stock and Associated Common
Stock. As the Company and Associated are both incorporated under the laws of
the State of Wisconsin, rights of shareholders are substantially similar.
Differences in the rights of shareholders of the Company and Associated arise
from differences between the provisions of the Associated Articles and By-laws
and those of the Company. Shareholders of the Company, whose rights are
governed by the Company's Articles of Incorporation, By-laws and the WBCL will,
on consummation of the Merger, become shareholders of Associated. Differences
in the rights of shareholders between the Bank and Associated exist as the
former is organized under the Banking Code while the latter is organized under
the WBCL. Shareholders of the Bank, whose rights are governed by the Bank's
Articles of Incorporation, By-laws and the Banking Code, will, on consummation
of the Consolidation, become shareholders of Associated. The rights of
shareholders of the Company and the Bank as Associated shareholders will then
be governed by Associated's Articles of Incorporation and By-laws and by the
WBCL. The following is a summary of the material differences between the
rights of shareholders of the Company and the Bank and the rights of
shareholders of Associated.
AUTHORIZED CAPITAL STOCK
The Company. Under the Company's Articles of Incorporation, the aggregate
number of shares which it is authorized to issue is 10,000 shares of one class
of common stock, no par value. All shares of the Company Common Stock are
identical in rights and have one vote. The holders of the Company Common Stock
are entitled to such dividends as may be declared from time to time by the
Board of Directors of the Company from funds available therefor and upon
liquidation are entitled to receive pro rata all assets of the Company
available for distribution to such holders. The Company has no authorized
shares of preferred stock and, accordingly, the rights of holders of Company
Common Stock to receive dividends or payment in the event of voluntary or
involuntary dissolution, liquidation or winding up of the Company are not
subject to the prior satisfaction of the rights of any other shareholders.
The Bank. Under the Bank's Articles of Incorporation, the aggregate
number of shares which it is authorized to issue is 9,000 shares of one class
of common stock, $20 par value. All shares of the Bank Common Stock are
identical in rights and have one vote. The holders of the Bank Common Stock
are entitled to such dividends as may be declared from time to time by the
Board of Directors of the Bank from funds available therefor and upon
liquidation are entitled to receive pro rata all assets of the Bank available
for distribution to such holders. The Bank has no authorized shares of
preferred stock and, accordingly, the rights of holders of Bank Common Stock to
receive dividends or payment in the event of voluntary or involuntary
dissolution, liquidation or winding up of the Bank are not subject to the prior
satisfaction of the rights of any other shareholders.
Associated. Under Associated's Articles of Incorporation, Associated is
authorized to issue 48,000,000 shares of common stock, par value $0.01 per
share and 750,000 shares of preferred stock, $1.00 par value. All shares of
Associated Common Stock are identical in rights and have one vote. For a
description of Associated Common Stock, see "Description of Associated Common
Stock Issuable in the Merger and the Consolidation." The preferred stock shall
be cumulative and dividends shall accrue thereon. The Board of Directors may
divide the preferred stock into series and establish the relative rights and
preferences of preferred stock issued in the future as specified in the
Articles without shareholder action and issue such stock in series. As of the
date hereof, no shares of any series of Associated preferred stock are issued
and outstanding.
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APPRAISAL RIGHTS AND DISSENTERS' RIGHTS
The Company. Under the WBCL, a shareholder of a corporation is generally
entitled to receive payment of the fair value of such shareholder's stock if
such shareholder dissents from a proposed merger or share exchange or a sale or
exchange of all or substantially all of the property and assets of the
corporation.
The Bank. The Bank's shareholders have statutory rights of appraisal
under the Banking Code as described herein. See "The Merger and the
Consolidation - Dissenters' Rights; The Consolidation."
Associated. Dissenters' rights under the WBCL are not available to
holders of shares, such as shares of Associated Common Stock, which are
registered on a national securities exchange or quoted on Nasdaq on the record
date fixed to determine shareholders entitled to notice of the meeting at which
shareholders are to vote on the proposed corporate action. Associated Common
Stock is quoted on The Nasdaq Stock Market.
REQUIRED VOTE
The Company. Pursuant to the WBCL, the affirmative vote of a majority of
the shares of the Company Common Stock is required to adopt amendments to the
Company's Articles of Incorporation or approve mergers and certain other
extraordinary transactions.
The Bank. Pursuant to Section 221.12 of the Banking Code, any amendment
to the articles of incorporation of a state chartered bank must be approved by
the affirmative vote of two-thirds of the shares entitled to vote at a meeting
called for that purpose. Furthermore, Section 221.25 of the Banking Code
provides that any two or more state chartered banks, may, with the approval of
the Commissioner and the vote of the shareholders of each such bank owning at
least two-thirds of the shares entitled to vote at a meeting called for that
purpose, consolidate into one bank.
Associated. Pursuant to 180.1706(1) of the WBCL, except as otherwise
provided in a corporation's articles of incorporation or bylaws, any amendment
to the articles of incorporation, merger or certain other extraordinary events
involving a corporation organized before January 1, 1973, which did not
expressly elect before January 1, 1991 to be governed by a majority or greater
voting requirement, must be approved by the affirmative vote of two-thirds of
the shares entitled to vote at a meeting called for that purpose. The
Associated articles were amended in 1992 to reduce the vote required pursuant
to Section 180.1706(1) of the WBCL to a majority vote. Thus, the affirmative
vote of a majority of the shares of Associated is required to adopt amendments
to the Associated Articles which create dissenters' rights or approve mergers
and certain other extraordinary transactions other than those in "Comparison of
Shareholder Rights - Takeover Provisions."
CLASSIFIED BOARD OF DIRECTORS
The Company. The Company's Board of Directors consists of a single class
of directors, not less than four nor more than seven in number. The Company
currently has four directors, each of whom serves for one year or until his or
her successor is elected and qualified.
The Bank. The Bank's Board of Directors consists of a single class of
directors, not less than five nor more than ten in number. The Bank currently
has five directors, each of whom serves for one year or until his or her
successor is elected and qualified.
Associated. The Board of Directors of Associated is divided into three
classes as nearly equal in number as possible, with the directors in each class
serving for staggered three-year terms. However, the By-laws require that a
director retire as of the first annual meeting of shareholders subsequent to
the director's 65th birthday unless such director's term is extended for a
one-year term by a two-thirds vote of Associated's Board. At each annual
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meeting of Associated's shareholders, 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. Associated's Board consists of ten
directors.
REMOVAL OF DIRECTORS FOR "CAUSE"
The Company. The Company's By-laws provide that a director may be removed
from office "with or without cause" by an affirmative vote of a majority of the
outstanding shares entitled to vote for the election of such director taken at
a special meeting called for that purpose.
The Bank. The Bank's By-laws provide that a director may be removed from
office "with or without cause" by an affirmative vote of a majority of the
outstanding shares entitled to vote for the election of such director taken at
a special meeting called for that purpose.
Associated. Shareholders of Associated may remove a director only for
"cause." "Cause" is defined as conviction of a felony, declaration of unsound
mind by an order of a court of competent jurisdiction, gross dereliction of
duty or commission of an action which constitutes intentional misconduct or a
knowing violation of law and that results in both an improper substantial
personal benefit and a material injury to Associated.
NEWLY CREATED DIRECTORSHIPS AND VACANCIES ON THE BOARD OF DIRECTORS
The Company. Pursuant to 180.0810 of the WBCL, unless otherwise provided
in a corporation's Articles, shareholders may fill vacancies on a corporation's
Board of Directors. The Company's By-laws authorize the Board of Directors by
the affirmative vote of the directors then in office, though less than a
quorum, to fill vacancies on the Company's Board of Directors until the next
succeeding election of directors.
The Bank. The Bank's Bylaws and Section 221.08(5) of the Banking Code
authorize the Board of Directors of the Bank to fill vacancies on the Bank's
Board of Directors until the next succeeding election of directors of the Bank.
Associated. The Associated's Articles provide that newly created
directorships and any vacancies on Associated's Board of Directors may only be
filled by the Board of Directors. Associated's By-laws provide that the
remaining members of the Board shall appoint a director in accordance with the
WBCL.
CERTAIN BUSINESS COMBINATIONS
The Company. The Company's Articles of Incorporation and By-laws do not
contain any supermajority voting provisions relating to the approval by holders
of the Company Common Stock of mergers or other business combinations.
The Bank. The Bank's Articles of Incorporation and Bylaws do not contain
any supermajority voting provisions relating to the approval by holders of Bank
Common Stock of consolidations or other business combinations.
Associated. Article VII of Associated's Articles provides that an
affirmative vote of 80% of Associated's outstanding shares is required to
approve a merger or other business combination involving a beneficial owner of
10% or more of Associated's outstanding voting shares (an "interested
shareholder"). In addition, if the consideration offered in connection with
such transaction does not satisfy certain "fair price" requirements, the
affirmative vote of 80% of the "non-interested outstanding shares" (defined as
voting shares not beneficially owned by an interested shareholder) of
Associated will also be required to approve such a transaction. These
requirements do not apply if (a) the board of directors approves the
transaction and a majority of the directors voting to approve the transaction
are "continuing directors" (defined as a director who was either (i) a director
at the time the
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interested shareholder became "interested" and who is not otherwise affiliated
with such shareholder, or (ii) a director designated (prior to his or her
initial election as a director) as a continuing director by a majority of the
then continuing directors) or (b) the transaction is between Associated and a
subsidiary of Associated and no interested shareholder (together with such
shareholder's affiliates and associates) owns any of the outstanding shares of
the subsidiary. The foregoing provision may only be amended, modified or
repealed by the affirmative vote of not less than 80% of the outstanding shares
and the non-interested outstanding shares of Associated.
ADVANCE NOTICE OF PROPOSALS TO BE BROUGHT AT THE ANNUAL MEETING
The Company. The Company's Articles and By-laws do not contain any
provisions relating to advance notice of proposals to be brought before an
annual meeting.
The Bank. The Bank's Articles of Incorporation and Bylaws do not contain
any provisions relating to advance notice of proposals to be brought before an
annual meeting.
Associated. Pursuant to Article II, Section 5 of Associated's By-laws,
any shareholder who intends to bring business before an annual meeting of
shareholders (other than nominations for directors) must provide Associated
with notice of such intention, the nature of such proposal and certain other
information regarding the shareholder bringing the proposal, not less than 60
nor more than 75 days prior to the meeting, or within 10 days from the date
notice or public disclosure of the date of such meeting is given, if such
announcement date is less than 70 days before the meeting date.
RESALE OF ASSOCIATED COMMON STOCK ISSUED PURSUANT TO THE MERGER AND THE
CONSOLIDATION
The Associated Common Stock issued pursuant to the Merger and the
Consolidation will be registered under the Securities Act and be freely
tradeable under the Securities Act except for shares issued to any shareholder
of the Company or the Bank who may be deemed to be an "affiliate" of the
Company or the Bank, respectively, for purposes of Rule 145 under the
Securities Act. Each affiliate identified by the Company or the Bank will
enter into an agreement with Associated providing that such affiliate will be
subject to Rule 145(d) of the Securities Act, shall not transfer any Associated
Common Stock received in the Merger or Consolidation except in compliance with
the Securities Act. The Company has determined that its directors are its only
affiliates. In order to comply with pooling of interests requirements, such
persons shall agree to make no disposition of any shares of the Company Common
Stock, Bank Common Stock or Associated Common Stock (or any interests therein)
during the period beginning 30 days before the Effective Time and the
Consolidation Effective Time and ending when the financial results for at least
30 days of combined operations of the Company, the Bank and Associated after
the Effective Time and the Consolidation Effective Time have been published.
This Proxy Statement/Prospectus does not cover resales of Associated Common
Stock received by any person who may be deemed to be an affiliate of the
Company or the Bank.
PRE-MERGER DIVIDEND POLICY
The Company and the Bank. Pursuant to the Merger Agreement, except for a
dividend declared by the Board of Directors of the Bank of $16 per share
payable on May 3, 1996 to shareholders of record on April 30, 1996, the Company
and the Bank are prohibited from declaring or paying any dividend on, or making
any other distribution in respect of, its outstanding shares of capital stock
without the prior written consent of Associated. The Company and the Bank do
not anticipate paying any other dividends on shares of the Company Common Stock
or Bank Common Stock prior to the Effective Time.
Associated. Associated expects to continue to declare, until the
Effective Time, its regularly scheduled dividends.
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POST-MERGER DIVIDEND POLICY
It is the current intention of the Board of Directors of Associated to
continue to declare cash dividends on the Associated Common Stock following the
Merger. The dividend is currently in the amount of $0.29 per quarter or $1.16
per year, in each case per share. Shareholders should note that no such
dividends payable following the date hereof have currently been declared and
that future dividends will be determined by the Associated Board of Directors
in light of the earnings and financial condition of Associated and its
subsidiaries and other factors, including applicable governmental regulations
and policies. In that regard, Associated is a legal entity separate and
distinct from its banking and non-banking subsidiaries, and the principal
sources of Associated's income are dividends and interest from such
subsidiaries. The payment of dividends by Associated's banking subsidiaries is
subject to certain restrictions under applicable governmental regulations. See
also "The Merger and the Consolidation - Pre-Merger Dividend Policy."
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, the Company has agreed to carry on its
business, and the business of its subsidiaries, in the usual, regular and
ordinary course in substantially the same manner as conducted prior to the
execution of the Merger Agreement, subject to certain covenants and other
agreements agreed to by the Company in the Merger Agreement. See "Certain
Provisions of the Merger Agreement - Certain Covenants."
CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES
Associated, the Company and the Bank have received an opinion of KPMG Peat
Marwick LLP that the Merger and the Consolidation will qualify as tax-free
reorganizations under Section 368(a)(1)(A) of the Code and that each of
Associated, Holding, Interim Bank, the Company and the Bank will be a party to
a reorganization within the meaning of Section 368(b) of the Code.
Accordingly, the Company, the Bank, Associated, Holding and Interim will
recognize no gain or loss for federal income tax purposes as a result of the
Merger and the Consolidation and no gain or loss will be recognized by any
holder of the Company Common Stock or the Bank Common Stock upon receipt of
Associated Common Stock pursuant to the Merger and the Consolidation (except
upon the receipt of cash in lieu of fractional shares of Associated Common
Stock). This discussion of federal income tax consequences of the Merger and
the Consolidation assumes that none of the holders of Company Common Stock or
the Bank Common Stock will exercise dissenters' rights. The Internal Revenue
Service ("Service") has not been asked to rule upon the tax consequences of the
Merger and the Consolidation and such request will not be made. The opinion of
KPMG Peat Marwick LLP is based entirely upon the Code, regulations now in
effect thereunder, current administrative rulings and practice, and judicial
authority, all of which are subject to change. Unlike a ruling from the
Service, an opinion of an advisor is not binding on the Service and there can
be no assurance, and none is hereby given, that the Service will not take a
position contrary to one or more positions reflected herein or that the opinion
will be upheld by the courts if challenged by the Service.
EACH SHAREHOLDER OF THE COMPANY AND THE BANK IS URGED TO CONSULT HIS OR HER OWN
TAX AND FINANCIAL ADVISORS AS TO THE EFFECT OF SUCH FEDERAL INCOME TAX
CONSEQUENCES ON HIS OR HER OWN PARTICULAR FACTS AND CIRCUMSTANCES AND ALSO AS
TO ANY STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES ARISING OUT OF THE
MERGER.
Based upon the opinion of KPMG Peat Marwick LLP, which in turn is based
upon various representations and subject to various assumptions and
qualifications, the following federal income tax consequences to the
shareholders of the Company will result from the Merger and the Consolidation:
(i) Provided that the Merger of the Company with and into Holding
qualifies as a statutory merger under applicable law, the Merger will
qualify as a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code, and the Company, Associated and Holding will each
be "a
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party to a reorganization" within the meaning of Section 368(b) of the Code
for purposes of this reorganization.
(ii) Provided that the Consolidation of the Bank with and into
Interim Bank qualifies as a statutory consolidation under applicable law,
the Consolidation will qualify as a reorganization within the meaning of
Sections 368(a)(1)(A) and 368 (a)(2)(D) of the Code, and the Bank,
Associated and Interim Bank will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code for purposes of this
reorganization.
(iii) No gain or loss will be recognized by the holders of the
Company Common Stock and Bank Common Stock upon the exchange of the Company
Common Stock and Bank Common Stock solely for Associated Common Stock
pursuant to the Merger and the Consolidation, respectively, except with
respect to cash received in lieu of fractional shares of Associated Common
Stock.
(iv) A Company shareholder's and a Bank shareholder's aggregate basis
in the Associated Common Stock (including any fractional share interest to
which he or she may be entitled) received in the Merger and the
Consolidation, respectively, will be the same as the aggregate basis of the
Company Common Stock or Bank Common Stock, respectively, exchanged
therefor.
(v) The holding period of the Associated Common Stock received by a
holder of Company Common Stock or Bank Common Stock pursuant to the Merger
and the Consolidation, respectively, will include the period during which
the Company Common Stock or Bank Common Stock exchanged therefor was held,
provided that the Company Common Stock or Bank Common Stock surrendered was
held as a capital asset as of the time of the Merger and the Consolidation,
respectively.
(vi) The receipt by a holder of Company Common Stock or Bank Common
Stock of cash in lieu of a fractional share of Associated Common Stock will
be treated as if he or she received such fractional share from Associated
and then had it redeemed for cash. Such receipt of cash will be treated
under Section 302(b)(1) of the Code as full payment in exchange for the
fractional share.
The foregoing is only a general description of certain material federal
income tax consequences of the Merger and the Consolidation for holders of the
Company Common Stock or Bank Common Stock who are citizens or residents of the
United States and who hold their shares as capital assets, without regard to
the particular facts and circumstances of the tax situation of each holder of
the Company Common Stock or Bank Common Stock. It does not discuss all of the
consequences that may be relevant to holders of the Company Common Stock or
Bank Common Stock entitled to special treatment under the Code (such as
insurance companies, financial institutions, dealers in securities, tax-exempt
organizations or foreign persons). The summary set forth above does not
purport to be a complete analysis of all potential tax effects of the
transactions contemplated by the Merger Agreement, the Consolidation Agreement,
or the Merger or the Consolidation itself. No information is provided herein
with respect to the application and effect of state, local and foreign tax laws
and the possible effects of changes in federal laws or other tax laws.
ANTICIPATED ACCOUNTING TREATMENT
The business combinations resulting from the Merger and the Consolidation
are expected to qualify as a "pooling of interests" for accounting and
financial reporting purposes. Under this method of accounting, the recorded
assets and liabilities of Associated, the Company and the Bank will be carried
forward to the combined corporation at their recorded amounts; income of the
combined corporation will include income of Associated, the Company and the
Bank for the entire fiscal year in which the combination occurs.
The Merger Agreement provides that a condition to the consummation of the
Merger is the receipt of the opinion of the independent public accountants of
Associated to the effect that the Merger and the Consolidation
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qualify for "pooling of interests" accounting treatment. IN THE EVENT SUCH
CONDITION IS NOT MET, THE MERGER WOULD NOT BE CONSUMMATED UNLESS THE CONDITION
WERE WAIVED BY ASSOCIATED.
DISSENTERS' RIGHTS
THE MERGER
Under the provisions of Subchapter XIII of the WBCL, a copy of which is
attached to this Proxy Statement/Prospectus as Exhibit C and which provisions
are incorporated herein by reference, any holder of record or beneficial holder
of Company Common Stock has the right to dissent from the Merger and demand
payment of the "fair value" of his or her shares in cash as determined pursuant
to Subchapter XIII of the WBCL ("Dissenters' Rights"). Set forth below is a
summary of the procedures relating to the exercise of Dissenters' Rights. This
summary does not purport to be a complete statement of the provisions of
Subchapter XIII of the WBCL. Any shareholder who wishes to assert Dissenters'
Rights must deliver a written notice of his or her intent to exercise such
right to F&M Bankshares of Reedsburg, Inc., 170 Main Street, Reedsburg,
Wisconsin 53959, Attention Ms. Laurie L. Fusch, Secretary, before the vote on
the Merger Agreement is taken at the special meeting. A PROXY OR VOTE AGAINST
THE MERGER AGREEMENT WILL NOT, BY ITSELF, BE REGARDED AS A WRITTEN NOTICE OF
INTENT TO DEMAND PAYMENT FOR PURPOSES OF ASSERTING DISSENTERS' RIGHTS.
A record holder of Company Common Stock may assert Dissenters' Rights as
to fewer than all shares registered in that shareholder's name only if the
holder dissents with respect to all shares beneficially owned by any one person
and notifies the Company in writing of the name and address of each person on
whose behalf the shareholder asserts such Dissenters' Rights.
A beneficial shareholder may assert Dissenters' Rights as to shares held
on the shareholder's behalf only if, in addition to meeting the other
requirements to dissent, the beneficial shareholder (i) submits to the Company
the record shareholder's written consent to the dissent not later than the time
the beneficial shareholder asserts Dissenters' Rights and (ii) asserts
Dissenters' Rights with respect to all shares of which the shareholder is the
beneficial shareholder or over which the beneficial shareholder has power to
direct the vote.
If the Merger Agreement is approved by the requisite vote of holders of
the Company Common Stock, the Company is required to send a notice (the
"Dissenters' Notice") to all dissenting shareholders containing payment demand
and stock certificate surrender information (the "Payment Demand") within 10
days after such approval. The return date (the "Payment Demand Date")
specified by the Company for receiving the Payment Demand from dissenting
shareholders may not be less than 30 nor more than 60 days after the date on
which the Dissenters' Notice was first sent. Upon receipt of the Dissenters'
Notice, each dissenting shareholder must return his Payment Demand and
Certificate no later than the Payment Demand Date as provided in the
Dissenters' Notice and certify whether he or she acquired beneficial ownership
of the shares prior to the first public announcement of the terms of the Merger
on August 24, 1995. A Payment Demand may not be withdrawn without the
Company's consent.
Upon effecting the Merger, within 60 days after the Payment Demand Date,
the Company will pay each dissenting shareholder who properly complied with the
statutory requirements of Subchapter XIII of the WBCL, the amount that the
Company estimates to be the fair value of such dissenting shareholder's shares,
plus accrued interest from the Effective Time; provided that, with respect to
shares acquired after the first public announcement of the Merger, the Company
may elect to withhold payment until either such shareholder accepts the
Company's offer of fair value or a court determines the fair value of such
shares.
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If the Merger is not effected within 60 days of the Payment Demand Date,
the Company will return all deposited certificates to dissenting shareholders.
If the Merger is thereafter effected, the Company will send a new Dissenters'
Notice within 10 days of effecting the Merger and repeat the payment demand
procedure described above.
If any dissenting shareholder is dissatisfied with the Company's
determination of "fair value," such dissenting shareholder may notify the
Company in writing of his or her own estimate of the fair value of his or her
shares and the amount of interest due. A dissenting shareholder must assert
this right within 30 days after the Company makes or offers payment for his or
her shares or the right is waived. The Company may either accept such
dissenting shareholder's estimate of fair value or commence a proceeding in the
Wisconsin Circuit Court of Columbia County to determine the fair value of the
shares of all dissenting shareholders whose own estimates of fair value are not
accepted by the Company.
In the event any holder of the Company Common Stock fails to perfect his
or her rights to dissent by failing to comply strictly with the applicable
statutory requirements of Subchapter XIII of the WBCL, 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 Subchapter XIII of the WBCL. ANY HOLDER OF COMPANY
COMMON STOCK WHO WISHES TO OBJECT TO THE TRANSACTION AND DEMAND PAYMENT IN CASH
FOR HIS OR HER SHARES SHOULD CONSIDER CONSULTING HIS OR HER OWN LEGAL ADVISOR.
Because an executed proxy relating to Company Common Stock on which no
voting direction is made will be voted at the Special Meetings in favor of the
Merger, a dissenting shareholder who wishes to have his or her shares of
Company Common Stock represented by proxy at the Special Meetings but preserve
his or her dissenters' rights must mark his or her proxy either to vote against
the Merger or to abstain from voting thereon, in addition to the foregoing
requirements.
THE CONSOLIDATION
Under the provisions of Section 221.25 of the Banking Code, a copy of
which is attached to this Proxy Statement/Prospectus as Exhibit E, any holder
of record or beneficial holder of Bank Common Stock has the right to dissent
from the Consolidation and demand payment of the "value" of his or her shares
in cash as determined pursuant to Section 221.25 of the Banking Code ("Bank
Dissenters' Rights"). Any shareholder who wishes to assert Bank Dissenters'
Rights must deliver a written notice of his or her intent to exercise such
rights to Farmers & Merchants Bank, 170 Main Street, Reedsburg, Wisconsin
53959, Attention Mr. J. Robert Fusch, within 20 days after the date that notice
is mailed or delivered to the shareholder notifying him or her of the
Commissioner's approval of the Consolidation. Notice of the Commissioner's
approval of the Consolidation will be sent only to those holders of Bank Common
Stock that did not vote for the Consolidation. Thus, in order to preserve your
Bank Dissenters' Rights, you must either vote against the Consolidation or
abstain from voting at the Bank Meeting. A PROXY OR VOTE AGAINST THE
CONSOLIDATION AGREEMENT WILL NOT, BY ITSELF, BE REGARDED AS A WRITTEN NOTICE OF
INTENT TO DEMAND PAYMENT FOR PURPOSES OF ASSERTING BANK DISSENTERS' RIGHTS.
If the Consolidation Agreement is approved by the requisite vote of
holders of Bank Common Stock and the Consolidation is approved by the
Commissioner, the Bank is required to send a notice to all shareholders of Bank
Common Stock who did not vote for the Consolidation, notifying them of their
right to receive the appraised value for their shares of Bank Common Stock.
Shareholders of the Bank desiring to exercise their rights of appraisal must
notify the Bank, at the address indicated above, within 20 days after the date
that notice of the Commissioner's approval of the Consolidation is mailed or
delivered to the Bank shareholder, that the shareholder dissents from the
Consolidation. If the Bank shareholder complies with these procedural
requirements, the shareholder shall be entitled to receive in cash the "value"
of the Bank Common Stock held by the shareholder. The "value" of the Bank
Common Stock shall be ascertained by an appraisal committee of three persons,
one to be selected by the shareholders, one by the directors and the third by
the two so chosen (the "Appraisal Committee"). The expense of the appraisal
conducted by the Appraisal Committee shall be borne by the Bank.
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<PAGE> 51
If the dissenting shareholder is dissatisfied with the Appraisal
Committee's determination of "value," such dissenting shareholder may appeal to
the Commissioner, who shall cause a reappraisal to be made by an appraiser or
appraisers to be named by the Commissioner (the "Reappraisal"). A dissenting
shareholder must make this appeal to the Commissioner within five days after
receiving notice of the Appraisal Committee's appraisal. If the shareholder
appeals to the Commissioner, the Reappraisal shall be final and binding. The
expense of the Reappraisal shall be borne by the shareholders if the "value" of
the Bank Common Stock as determined by the Reappraisal does not exceed the
"value" determined by the Appraisal Committee, and shall be borne by the Bank,
if the "value" determined by the Reappraisal exceeds the "value" determined by
the Appraisal Committee. The "value" so ascertained from the Reappraisal shall
be deemed to be a debt of the Bank, which shall pay said amount to the
dissenting shareholder. The dissenting shareholder shall surrender his or her
share or shares and, after such notice as the Bank's Board of Directors may
provide, said share or shares shall be sold at public auction within 30 days
after the final appraisement provided for by the foregoing.
In the event any holder of Bank Common Stock fails to perfect his or her
rights to dissent by failing to comply strictly with the applicable statutory
requirements of Section 221.25 of the Banking Code, he or she will be bound by
the terms of the Consolidation Agreement and will not be entitled to payment
for his or her shares under Section 221.25 of the Banking Code. ANY HOLDER OF
BANK COMMON STOCK WHO WISHES TO OBJECT TO THE TRANSACTION AND DEMAND PAYMENT IN
CASH FOR HIS OR HER SHARES SHOULD CONSIDER CONSULTING HIS OR HER OWN LEGAL
ADVISOR.
OTHER RELATED PARTY TRANSACTIONS
In the ordinary course of conducting their banking and financial services
businesses, each of Associated, the Company, the Bank and their respective
subsidiaries, may do business and engage in banking transactions with the other
party and its subsidiaries, which may include but not be limited to interests
or participation in loans and interbank advances.
MANAGEMENT AFTER THE MERGER
In the Merger, the Company will be merged into Holding and the separate
corporate existence of the Company will cease. In the Consolidation, the Bank
will be consolidated into Interim Bank and Associated will thereby control the
Bank and the Bank will operate under the name "Associated Bank Reedsburg."
The officers and directors of Holding prior to the Merger will continue as
officers and directors of the surviving corporation. The directors of the Bank
prior to the Consolidation Effective Time will continue as directors after the
Effective Time until their successors shall have been duly elected and
qualified.
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
The following is a brief summary of certain provisions of the Merger
Agreement, which is attached as Exhibits A and B to this Proxy
Statement/Prospectus and is incorporated herein by reference. Such summary is
qualified in its entirety by reference to the Merger Agreement.
THE MERGER
The Merger Agreement provides that, following the approval of the Merger
Agreement by the shareholders of the Company and the satisfaction or waiver of
the other conditions to the Merger, the Company will be merged with and into
Holding. If the Merger Agreement is approved by the shareholders of the
Company, the Merger will become effective upon the Effective Time.
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At the Effective Time, pursuant to the Merger Agreement, each outstanding
share of the Company Common Stock will be converted into the right to receive
173.7766 shares of Associated Common Stock. With regard to the treatment of
fractional share interests, see "The Merger and the Consolidation - Conversion
of Shares; Procedures for Exchange of Certificates; Fractional Shares."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains customary representations and warranties
relating to, among other things, (i) each of Associated's and the Company's and
their respective subsidiaries' organization and similar corporate matters; (ii)
each of Associated's and the Company's capital structure; (iii) authorization,
execution, delivery, performance and enforceability of the Merger Agreement and
other related matters; (iv) documents filed by Associated with the Commission
and each of Associated and the Company with the Federal Reserve Board and state
banking authorities and the accuracy of information contained therein; (v) the
accuracy of information supplied by each of Associated and the Company in
connection with the Registration Statement and this Proxy Statement/Prospectus;
(vi) compliance with laws including employment and lending laws; (vii) no
material pending or threatened litigation except as otherwise disclosed in
filings by Associated with the Commission and the Company in the regulatory
reports; (viii) filing of tax returns and payment of taxes; (ix) certain
material contracts and contracts relating to certain employment, consulting and
benefits matters of the Company; (x) retirement and other employee plans and
matters of the Company relating to ERISA; (xi) the absence of any burdensome
contracts, agreements or restrictions; (xii) absence of certain material
changes or events since December 31, 1994, relating to the incurrence of a
material adverse effect in the business operations, properties (including
intangible properties), condition (financial or otherwise), assets or
liabilities (including contingent liabilities) of Associated or its
subsidiaries, taken as a whole, and the Company or its subsidiaries, taken as a
whole; (xiii) maintenance of books of account and accounting controls, loan
documentation and disclosure; (xiv) no action taken that would prevent using
the "pooling of interests" method to account for the Merger and Consolidation
or which would prevent the Merger and Consolidation from qualifying as tax-free
reorganizations under the Code; (xv) certain environmental matters relating to
the properties of the Company; (xvi) good title to the properties of the
Company and its subsidiaries, free of liens except as specified; and (xvii)
certain insurance matters.
CERTAIN COVENANTS
Pursuant to the Merger Agreement, Associated and the Company have each
agreed that prior to the Effective Time (and unless the prior written consent
of the other shall have been obtained) each of them and their respective
subsidiaries will operate their respective businesses in a manner that does not
violate any law. In addition, the Company has agreed that prior to the
Effective Time, the Company will not propose or adopt any amendments to its
corporate charter or bylaws in any way materially adverse to Associated.
Pursuant to the Merger Agreement, the Company has also agreed that prior
to the Effective Time (and unless the prior written consent of Associated shall
have been obtained) the Company and its subsidiaries will (i) carry on business
in the usual, regular and ordinary course consistent with past practice; (ii)
use reasonable efforts to preserve intact their business organization and
assets (and all rights associated therewith); (iii) use reasonable efforts to
maintain and keep their properties in good repair and condition; (iv) use
reasonable efforts to keep all insurance and bonds in full force and effect;
(v) perform in all material respects all obligations under all material
contracts, leases and documents relating to or affecting the assets, properties
and business of the Company and its subsidiaries; (vi) purchase and sell
securities in accordance with Associated's guidelines; (vii) maintain as of
December 31, 1995 and until the Effective Time, a loan loss reserve of not less
than 2.45% of period ending loans; (viii) comply with capital requirements
specified by Associated; (ix) except for expenses incurred in connection with
or relating to the First Amendment to Agreement and Plan of Merger and the
Consolidation, fully expense on its calendar year 1995 financial statement all
expenses payable as a result of the consummation of the Merger; (x) obtain an
independent audit of its financial statements for the year ended December 31,
1995; (xi) obtain good and marketable title to all parcels of land used in
connection with the operation of the Bank except for a certain designated
parcel; (xii) cause the Bank to execute and deliver to Interim Bank and
Associated the Consolidation
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Agreement; and (xiii) comply with and perform in all material respects all
obligations and duties imposed by all applicable laws. The Company has also
agreed that prior to the Effective Time (and unless the prior written consent of
Associated shall have been obtained), neither the Company nor its subsidiaries
will: (i) grant any increase in compensation or bonuses (other than as specified
in the Merger Agreement) or retirement benefits to any employee or otherwise
adopt, enter into, amend or modify any employee benefit plan, or enter into or
amend any employment, severance or similar agreement with any director or
officer (other than as is consistent with the normal severance policy of the
Company); (ii) except for the dividend of $16 per share payable on May 3, 1996
to shareholders of record on April 30, 1996, declare or pay any dividend on its
outstanding shares of capital stock; (iii) redeem, purchase or otherwise acquire
any shares of the Company capital stock; (iv) merge or consolidate with or into
any other corporation or bank; (v) purchase or otherwise acquire any assets or
stock of any corporation, bank or other business; (vi) liquidate, sell, dispose
of, or encumber any assets or acquire any assets; (vii) split, combine or
reclassify any of the capital stock of the Company or issue, authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (viii) issue, deliver, award,
grant or sell, or authorize or propose the issuance, delivery, award, grant or
sale of, any shares of any class of the Company Common Stock or any rights,
warrants or options to acquire, any such shares; (ix) purchase any shares of
Associated Common Stock (except in a fiduciary capacity for the account of its
customers); (x) change any of its methods of accounting, or methods of reporting
income or deductions for federal income tax purposes, in effect at December 31,
1994, except as may be required by law or generally accepted accounting
principles; (xi) except for the required loan loss reserve, change any lending,
investment, liability management or other material policies concerning the
business or operations of the Company or any subsidiary in any material respect;
(xii) organize any new subsidiaries or enter into any new non-bank line of
business or make any material changes in its operations; (xiii) take any action
which is or is reasonably likely to adversely effect the ability of Associated
or Holding to obtain any necessary approvals of governmental authorities
required for the transactions contemplated hereby, adversely affect the
Company's ability to perform its covenants and agreements under the Merger
Agreement or result in any of the conditions to the Merger not being satisfied;
(xiv) incur or assume any material obligation or liability, or make any loan
(excluding loan renewals of a loan not then classified as "substandard,"
"doubtful," "loss," "other loans especially mentioned" or any comparable
classifications by the Company, the Bank or banking regulators) or investment in
an amount greater than $100,000; (xv) assume, guarantee, endorse or otherwise
become liable or responsible for the obligations of any other person or entity;
(xvi) mortgage, license, pledge or grant a security interest in any of its
material assets or allow to exist any material lien thereon, except (A)
liabilities and obligations incurred in the ordinary course of business
consistent with past practices and in amounts not material to the Company or its
subsidiaries taken as a whole, and (B) as may be required under existing
agreements to which the Company or any subsidiary is a party; (xvii) acquire
assets (including equipment) or securities in excess of $25,000 in the aggregate
(excluding loans to customers and investments permitted above); (xviii) enter
into any lease or other contract or agreement involving annual payments by the
Company or a subsidiary or the other party or parties thereto in excess of
$20,000; (xix) pay, discharge, or satisfy any debts or claims not in the
ordinary course of business and consistent with past practices and in no event
with a value in excess of $20,000 individually; (xx) settle any claim, action,
suit, litigation, proceeding, arbitration, investigation or controversy of any
kind, for any amount in excess of $25,000 or in any manner which would restrict
in any material respect the operations or business of the Company or its
subsidiaries; (xxi) purchase any new financial product or instrument which
involves entering into a contract with a term of six months or longer; (xxii)
take any action or fail to take any action which individually or in the
aggregate can be expected to have a material adverse effect (as defined in the
Merger Agreement) on the Company or its subsidiaries, taken as a whole; or
(xxiii) without the prior written consent of Associated, pay any expenses, fees,
obligations or liabilities except (A) interest expense on the Company's existing
indebtedness and (B) directors' fees in accordance with the Company's usual and
customary practices.
NO SOLICITATION OF TRANSACTIONS
The Merger Agreement provides that the Company and its respective
subsidiaries will not 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 Competing Transaction or negotiate with any person
in furtherance of such inquiries or to obtain a Competing Transaction, or
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<PAGE> 54
agree to or endorse any Competing Transaction, 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. The Company must promptly notify
Associated orally and in writing of all of the relevant details relating to all
inquiries and proposals which it may receive relating to any of such matters.
For purposes of the Merger Agreement, a "Competing Transaction" shall mean
any of the following involving the Company or any of the Company's
subsidiaries: (i) any merger, consolidation, share exchange, business
combination, or other similar transactions; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 10% or more of assets in a
single transaction or series of transactions, excluding from the calculation of
such percentage any such transactions undertaken in the ordinary course of
business and consistent with past practice; (iii) any sale of 10% or more of
shares of capital stock (or securities convertible or exchangeable into or
otherwise evidencing, or any agreement or instrument evidencing, the right to
acquire capital stock); (iv) any tender offer or exchange offer for 10% or more
of outstanding shares of capital stock; (v) any solicitation of proxies in
opposition to approval by the Company's shareholders of the Merger; (vi) the
filing of an acquisition application (or the giving of acquisition notice)
whether in draft or final form under the BHC Act or the Change in Bank Control
Act with respect to the Company or its subsidiaries; (vii) any person shall
have acquired beneficial ownership or the right to acquire beneficial ownership
of, or any "group" (as such term is defined under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) shall have been
formed which beneficially owns or has the right to acquire beneficial ownership
of, 10% or more of the then outstanding shares of capital stock; or (viii) any
public announcement of a proposal, plan or intention to do any of the
foregoing.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of each party to effect the Merger is subject
to various conditions which include, in addition to other customary closing
conditions, the following: (i) the Merger and the Consolidation shall have been
approved by the holders of the Company Common Stock and Bank Common Stock,
respectively; (ii) the Registration Statement shall have been declared
effective by the Commission under the Securities Act (and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued) and Associated shall also have received all other federal and state
securities permits and authorizations necessary to issue Associated Common
Stock pursuant to the Merger Agreement and the Consolidation Agreement; (iii)
the Merger shall have been approved by the Federal Reserve Board, which
approval shall not contain any condition which is not reasonably satisfactory
to Associated or the Company, and any waiting periods with respect to the
Merger shall have expired; and (iv) there shall not be any injunction or
restraining order preventing the consummation of the Merger or the
Consolidation in effect.
In addition, Associated's or the Company's respective obligation to effect
the Merger is subject to one or more of the following additional conditions
(any of which may be waived by such party): (i) the representations and
warranties of the other party to the Merger Agreement shall be true and correct
in all material respects and the other party shall have performed in all
material respects all agreements and covenants required to be performed by it
under the Merger Agreement and any agreements entered into in connection
therewith, and the other party shall have obtained all material consents and
approvals required to consummate the Merger; (ii) there shall not be any
pending action, proceeding or investigation before any court or administrative
agency or by any government agency or any other person (a) challenging or
seeking material damages in connection with the Merger, the Consolidation, the
conversion of the Company Common Stock into Associated Common Stock pursuant to
the Merger, or the conversion of the Bank Common Stock into Associated Common
Stock pursuant to the Consolidation, or (b) seeking to restrain, prohibit or
limit the exercise of full rights of ownership or operation by Associated or
its subsidiaries of all or any portion of the business or assets of the Company
or any of its subsidiaries, which in either case is reasonably likely to have a
material adverse effect on either the Company and its subsidiaries, taken as a
whole, or Associated and its subsidiaries, taken as a whole; (iii) Associated
shall have received the opinion of independent counsel to Associated
(anticipated to be from the independent public accountants of Associated) that
the Merger and Consolidation will be treated for federal income tax purposes as
"reorganizations" within the meaning of Section 368(a) of the Code (see "The
Merger and the Consolidation - Certain Material Federal Income Tax
Consequences,"
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above); (iv) Associated shall have received an opinion from KPMG Peat Marwick
LLP to the effect that the Merger and Consolidation qualify for "pooling of
interests" accounting treatment; (v) the aggregate of (a) fractional share
interests in Associated Common Stock to be paid in cash pursuant to the Merger
Agreement and the Consolidation Agreement and (b) the number of shares of
Associated Common Stock which would have been issuable pursuant to the Merger
and the Consolidation that will not be issued due to the exercise of
dissenters' rights is not more than 10% of the maximum aggregate number of
shares of Associated Common Stock which could be issuable as a result of the
Merger and Consolidation; (vi) Associated and the Company shall have received
the opinion of counsel regarding certain issues under the Securities Act and
the WBCL; (vii) Associated shall have received from each affiliate of the
Company a signed letter regarding certain restrictions on the resale of
Associated Common Stock under Rule 145 of the Securities Act; (viii) that the
Bank's consolidated monthly earnings shall average at least $135,000 between
January 1, 1996 and the end of the month prior to the month of the Effective
Time; and (ix) all conditions in the Consolidation Agreement shall have been
satisfied. The following conditions to the obligation of Associated to
consummate the Merger have been satisfied: (i) receipt by Associated of a
written environmental evaluation by Associated's environmental consultant of
the Company's real property stating that the Company's property complies with
environmental laws and that there are no material contingent liabilities; (ii)
that the Company shall have taken reasonably appropriate action in response to
any environmental condition identified by Associated's environmental
consultant; (iii) that the Company's consolidated after-tax earnings for
calendar year 1995 (with certain adjustments) shall be at least $68,000 and the
Bank's consolidated after-tax earnings for calendar year 1995 shall be at least
$388,000; (iv) that the Company shall have good and marketable title to all
parcels of land on which the Bank is located except for a certain designated
parcel; (v) that the Company shall have terminated all salary continuation
agreements and neither the Company nor any of its affiliates have liabilities
thereunder; (vi) that the Company shall have satisfied or extinguished any
rights or benefits of employees under the Company's voluntary employees
beneficiary association; (vii) that the Bank shall receive a "2" or better
rating for safety and soundness from the Commissioner examination conducted in
November 1995; and (viii) approval of the Merger by the Federal Reserve Board.
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time by the applicable Board of Directors, whether before or after approval of
the matters presented in connection with the Merger by the shareholders of the
Company: (i) by mutual consent of Associated and the Company; (ii) by either
the Company or Associated (x) if there has been a breach in any material
respect of any representation, warranty, covenant or agreement on the part of
the Company, on the one hand, or Associated, on the other hand, respectively,
set forth in the Merger Agreement, or (y) if any representation or warranty of
the Company, on the one hand, or Associated, on the other hand, respectively,
shall be discovered to have become untrue in any material respect, in either
case which breach or other condition has not been cured within 10 business days
following receipt by the non-terminating party of notice of such breach or
other condition (provided that the Merger Agreement may not be terminated by
the breaching party or party making any representation or warranty which shall
have become untrue in any material respect); (iii) by either Associated or the
Company if any permanent injunction preventing the consummation of the Merger
or the Consolidation shall have become final and nonappealable; (iv) by either
Associated or the Company if the Federal Reserve Board or the Wisconsin
Commissioner denied approval of the Merger or the Consolidation and neither
Associated nor the Company has, within 30 days after the entry of such order
denying approval, filed a petition seeking review of such order as provided by
applicable law; (v) by either Associated or the Company if the Merger has not
been consummated by July 31, 1996 for a reason other than the failure of the
terminating party to comply with its obligations under the Merger Agreement;
(vi) by Associated if the Company fails to take reasonably appropriate action
in response to any environmental condition identified by Associated's
environmental consultant; or (vii) by Associated if dissenters' rights are
exercised with respect to in excess of 10% shares of Associated Common Stock
which would otherwise have been issued pursuant to the Merger and the
Consolidation.
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In the event of termination of the Merger Agreement by either the Company
or Associated, other than as a result of a material breach by the
non-terminating party, each party will pay its own expenses and the Merger
Agreement will become void and there will be no liability or obligation on the
part of Associated or the Company other than under certain specified provisions
of the Merger Agreement dealing with confidential treatment of non-public
information. In the event of termination of the Merger Agreement by a material
breach, in addition to other remedies at law or equity for breach, the party to
have breached will reimburse the non-breaching parties their expenses under the
Merger Agreement.
AMENDMENT AND WAIVER
The Merger Agreement may be amended at any time prior to the Effective
Time by action taken or authorized by the respective Boards of Directors of
Associated and the Company (except that after the Merger Agreement shall have
been approved by the shareholders of the Company, no amendment may be entered
into which would reduce the amount or change the consideration into which each
share of the Company Common Stock shall be converted upon consummation of the
Merger without further shareholder approval). At any time prior to the
Effective Time, the parties, may extend the time for the performance of any of
the obligations or other acts of the other party hereto, waive any inaccuracies
in the representations and warranties contained in the Merger Agreement or in
any document delivered pursuant to the Merger Agreement and waive compliance
with any of the agreements or conditions contained in the Merger Agreement.
EXPENSES
Whether or not the Merger is consummated, all costs and expenses incurred
in connection with the Merger Agreement and the transactions contemplated
thereby shall be paid by the party incurring such expense (except that the
parties shall share equally in the expense of printing and reproducing for
filing the Registration Statement and this Proxy Statement/Prospectus and all
Commission and other regulatory filing fees incurred in connection with the
Merger Agreement), except if the Merger Agreement is terminated due to the
breach of the Merger Agreement by either party thereto, then, in addition to
other remedies at law or equity for breach of the Merger Agreement, the party
so found to have breached the Merger Agreement shall indemnify the other
parties for their respective expenses.
CERTAIN PROVISIONS OF THE CONSOLIDATION AGREEMENT
The following is a brief summary of certain provisions of the
Consolidation Agreement, which is attached as Exhibit C to this Proxy
Statement/Prospectus and is incorporated herein by reference. Such summary is
qualified in its entirety by reference to the Consolidation Agreement.
THE CONSOLIDATION
The Consolidation Agreement provides that, following the consummation of
the Merger pursuant to the Merger Agreement or at such other time as may
hereafter be designated by order of any regulatory authority having
jurisdiction or by resolution of the Board of Directors of Interim Bank adopted
at least 10 days prior to the date so designated (the effective date of the
Merger and the time immediately following such merger or such time as any
regulatory authority or the Interim Bank Board may designate being hereafter
called the "Consolidation Effective Time"), the Bank shall be consolidated with
and into Interim Bank (the "Consolidation") and the Bank and Interim Bank shall
become a single banking corporation (the "Consolidated Bank") which shall exist
under and by virtue of the banking laws of the State of Wisconsin.
At the Consolidation Effective Time, pursuant to the Consolidation
Agreement, each outstanding share of the Bank Common Stock (other than any
shares of the Bank Common Stock owned by the Company and other than shares of
the Bank Common Stock owned by Associated or any wholly owned subsidiary of
Associated, all of which
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will be canceled) will be converted into the right to receive that number of
shares of Associated Common Stock as determined pursuant to "The Merger and the
Consolidation - Merger and Consolidation Consideration." With regard of the
treatment of fractional share interests, see "The Merger and the Consolidation
- - Conversion of Shares; Procedures for Exchange of Certificates; Fractional
Shares."
REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company relating to the Bank and
of Associated concerning Interim Bank which pertain to the Consolidation are
contained in the Merger Agreement. See "Certain Provisions of the Merger
Agreement - Representations and Warranties."
CERTAIN COVENANTS
The covenants of the Company relating to the Bank and of Associated
concerning Interim Bank which pertain to the Consolidation are contained in the
Merger Agreement. See "Certain Provisions of the Merger Agreement - Certain
Covenants."
CONDITIONS TO THE CONSUMMATION OF THE CONSOLIDATION
Though certain of the conditions to the Consolidation are contained in the
Consolidation Agreement, most of the conditions affecting consummation of the
Consolidation are contained in the Merger Agreement. See "Certain Provisions
of the Merger Agreement - Conditions to Consummation of the Merger."
In addition to the conditions contained in the Merger Agreement, each
party's obligation to effect the Consolidation is subject to the following
additional conditions which are contained in the Consolidation Agreement and
which may be waived by such party with the written approval of Associated: (i)
the Merger shall have been consummated; (ii) the Consolidation shall have been
approved by the holders of the Bank Common Stock and the holders of the common
stock of Interim Bank; (iii) all necessary consents and approvals for the
Consolidation shall have been obtained, including that of the Commissioner and
the FDIC, and such approvals or exemptions and the transactions contemplated by
the Consolidation Agreement shall not have been contested by any governmental
authority or by any other party in any proceeding, and such approvals or
exemptions are without conditions, or with conditions acceptable to Associated,
the Bank and Interim Bank; and (iv) Associated, the Bank and Interim Bank shall
have received a waiver, consent, amendment, supplemental indenture or other
appropriate acquiescence from each landlord, creditor, trustee, note holder,
lender or other person whose consent, waiver or acquiescence is, in the
judgment of their respective managements, necessary or advisable so that the
execution of the Consolidation Agreement and the consummation of the
Consolidation does not and will not result in a breach of, or constitute a
default under, or give anyone the right to accelerate payment or performance
under, the Articles of Incorporation, Bylaws or other organizational documents
of Associated, the Bank or Interim Bank or any lease, loan agreement,
indenture, contract or other agreement or instrument to which Associated, the
Bank or Interim Bank is a party or by which any of them is bound.
As Interim Bank is a wholly-owned subsidiary of Associated, approval of
the Consolidation by Interim Bank's shareholders is assured.
TERMINATION
The Consolidation Agreement may be terminated at any time prior to the
Consolidation Effective Time, whether before or after approval of the matters
presented in connection with the Consolidation by the shareholders of the Bank
and Interim Bank by mutual consent of the Bank and Interim Bank, by either the
Bank or Interim Bank if the conditions to the Consolidation contained in the
Consolidation Agreement have not been met and such failure to meet the
conditions has not been waived in writing with the approval of Associated.
48
<PAGE> 58
In the event of termination of the Consolidation Agreement by either the
Bank or Interim Bank, the Consolidation Agreement shall become void and there
will be no liability or obligation on the part of the Company, the Bank,
Associated or Interim Bank or their respective officers, directors or
shareholders pursuant to the Consolidation Agreement or by reason of the
Consolidation contemplated therein.
WAIVER
Any provisions of the Consolidation Agreement may be waived at any time by
action of the President of the party entitled to the benefit thereof.
EXPENSES
The Consolidation Agreement contains no provisions regarding allocation of
expenses. As the Consolidation is being conducted concurrently and in
conjunction with the Merger, the expenses associated with the Consolidation
will be allocated to the Company and Associated as provided in the Merger
Agreement. See "Certain Provisions of the Merger Agreement - Expenses."
CERTAIN INFORMATION CONCERNING ASSOCIATED
Associated is a registered bank holding company pursuant to the BHC Act.
It was incorporated in Wisconsin in 1964 and was inactive until 1969, when
permission was received from the Federal Reserve Board to acquire three banks.
Associated currently owns eight commercial banks located in Wisconsin and
Illinois serving their local communities and, measured by total assets held at
December 31, 1995 was the third largest commercial bank holding company
headquartered in Wisconsin. Associated also owns all of the capital stock of
subsidiaries engaged in the following non-banking businesses: personal property
lease financing, commercial and residential mortgage banking, trust services,
reinsurance and general insurance agency activities.
Associated provides advice and specialized services to its bank and
nonbank subsidiaries (the "Associated Affiliates") in various areas of banking
policy and operations, including auditing, data processing,
marketing/advertising, investments, personnel services, trust services and
other financial services functionally related to banking. Responsibility for
the management of the Associated Affiliates remains with their respective
Boards of Directors and officers. Services rendered to the Associated
Affiliates by Associated are intended to assist the local management of these
banks to expand the scope of the banking services offered by them. At March
31, 1996 the Associated Affiliates operated a total of 95 full-service banking
offices in 55 communities throughout Wisconsin and in Chicago, Illinois.
Associated, through the Associated Affiliates, provides a complete range
of retail banking services to individuals and small-to-medium-size businesses.
These services include checking and savings accounts, NOW, Super NOW and money
market deposit accounts, business loans, personal loans, residential and
condominium mortgage loans, loans for education, MasterCard, VISA and other
consumer-oriented financial services, including IRA and Keogh accounts, safe
deposit and night depository facilities. Automated teller machines, which
provide 24 hour banking services to customers of the Associated Affiliates,
have been installed in many locations in the Associated Affiliates' service
areas. The Associated Affiliates are members of an interstate shared automated
teller machine ("ATM") network which allows their customers to perform banking
transactions from their checking, savings or credit card accounts at ATM
terminals in a multi-state environment. Among the services designed
specifically to meet the needs of small- and medium-size businesses are various
types of specialized financing, cash management services and
transfer/collection facilities.
49
<PAGE> 59
The Associated Affiliates provide lending, depository and related
financial services to commercial, industrial, financial and governmental
customers. In the lending area, these include term loans, revolving credit
arrangements, letters of credit, inventory and accounts receivable financing
and real estate construction lending.
Additional emphasis is given to non-credit services for commercial
customers, such as advice and assistance in the placement of securities,
corporate cash management and financial planning. The Associated Affiliates
make available check clearing, safekeeping, loan participation, lines of
credit, portfolio analyses, data processing and other services to over 140
correspondent banking institutions.
Five of the Associated Affiliates offer a wide variety of fiduciary,
investment management, advisory and corporate agency services to individuals,
corporations, charitable trusts, foundations and institutional investors. They
also administer (as trustee and in other fiduciary and representative
capacities) pension, profit sharing and other employee benefit plans, and
personal trusts and estates.
The Associated Affiliates also provide certain mortgage banking services
including the origination, underwriting, closing, and the temporary warehousing
of mortgage loans and the sale of loans to investors. The primary focus is on
one-to-four-family residential and multi-family properties, all of which the
mortgage loans are saleable into the secondary mortgage market.
Associated and the Associated Affiliates are not dependent upon a single
or a few customers, the loss of which would have a material adverse effect on
Associated. No material portion of Associated's or the Associated Affiliates'
business is seasonal.
At December 31, 1995 Associated and the Associated Affiliates, as a group,
employed approximately 1,763 full-time equivalent employees.
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a bank holding company incorporated under the laws of the
State of Wisconsin with its principal office in Reedsburg, Wisconsin. The
Company owns 93.64% of the issued and outstanding stock of the Bank, a
Wisconsin banking corporation. As of December 31, 1995, the Company had total
assets of approximately $138.4 million.
CERTAIN HISTORICAL FINANCIAL DATA AND MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Attached hereto as Exhibit F is certain historical financial data for the
Company and Management's Discussion and Analysis of Financial Condition and
Results of Operations for the Company for the three fiscal years ended December
31, 1995. Such information should be read in connection with the notes to the
Company's consolidated financial statements.
OWNERSHIP OF THE COMPANY COMMON STOCK
The following table sets forth information regarding the beneficial
ownership of the Company Common Stock as of the Record Date by each director,
certain executive officers, all directors and executive officers of the Company
as a group and each person who is known by the Company to be the beneficial
owner of more than 5% of the Company Common Stock. Directors and executive
officers are deemed to own all shares of Company Common Stock which may be
owned in joint tenancy, by a spouse, in the names of minor children or in
revocable trusts for which the individual has voting and investment power. The
address for each of the directors is the executive offices of the Company.
50
<PAGE> 60
<TABLE>
<CAPTION>
NAME OF NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF CLASS
--------------------- --------- --------
<S> <C> <C>
J. Robert Fusch...... 1,009 35%
Garrett E. Fusch..... 1,009 35%
Nancy J. Hanson...... 432.5 15%
Laurie L. Fusch...... 432.5 15%
All Directors and executive
officers as a group (4 persons) 2,883 100%
</TABLE>
CERTAIN INFORMATION CONCERNING THE BANK
FARMERS & MERCHANTS BANK
The Bank, a Wisconsin state chartered bank organized in 1935, is a
full-service commercial bank providing services to customers throughout Sauk
County, Wisconsin. In addition to its primary banking facility in Reedsburg,
Wisconsin, the Bank has a branch office in Loganville, Wisconsin.
Significant business activities include lending, personal banking, and
investments as described below:
Lending. The Bank targets the borrowing needs of individuals and
small to medium-sized businesses within the Reedsburg area. The Bank is a
major provider of residential mortgage loans to individuals and is heavily
involved in the secondary market. Commercial lending products include
lines and letters of credit, equipment financing, receivable and inventory
financing, construction and real estate mortgage loans to businesses. In
addition, the Bank provides all types of consumer loans, indirect
installment loans, personal lines of credit, home equity revolving credit
loans, and loans for education.
Personal Banking. The Bank provides a wide range of deposit
products, including checking accounts, NOW accounts, savings accounts,
certificates of deposit and money market instruments. IRA and Keogh
accounts, safe deposit and night depository facilities are also provided.
The Bank is a member of an interstate shared ATM network, which allows its
customers to perform banking transactions from their checking, savings or
credit card accounts at ATM terminals in a multi-state area.
At December 31, 1995, the Bank had approximately 34 full-time and 6
part-time employees.
The Bank encounters significant competition from the other commercial
banks located in Sauk County generally and in the City of Reedsburg
specifically, as well as from other banks, savings and loan associations,
credit unions and finance companies maintaining offices in the area.
Competition exists from these other institutions, as well as financial and
financial-related institutions outside of Sauk County, in obtaining new
deposits and offering both traditional and new types of services. Competition
also affects loan interest rates and interest rates on deposits as well as
other aspects of the banking business.
CERTAIN HISTORICAL FINANCIAL DATA AND MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Attached hereto as Exhibit F is Management's Discussion and Analysis of
Financial Condition and Results of Operations for the Company for the three
fiscal years ended December 31, 1995. Such information should be read in
connection with the notes to said financial statements.
51
<PAGE> 61
OWNERSHIP OF THE BANK COMMON STOCK
The following table sets forth information regarding the beneficial
ownership of the Bank Common Stock as of the Record Date by each director,
certain executive officers, all directors and officers of the Bank as a group
and each person who is known by the Bank to be the beneficial owner of more
than 5% of the Bank Common Stock. Directors and executive officers are deemed
to own all shares of Bank Common Stock which may be owned in joint tenancy, by
a spouse, in the names of minor children or in revocable trusts for which the
individual has voting and investment power. The address for each of the
directors is the executive offices of the Bank.
<TABLE>
<CAPTION>
NAME OF NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF CLASS
- ------------------------------------ --------- --------
<S> <C> <C>
F&M Bankshares of Reedsburg, Inc.
170 Main Street
Reedsburg, Wisconsin 53959......... 8,428 93.64%
J. Robert Fusch..................... 0 --
Garrett E. Fusch.................... 0 --
Nancy J. Hanson..................... 0 --
Laurie L. Fusch..................... 0 --
Donald H. Lichte.................... 100 1.11%
All Directors and executive officers
as a group (5 persons..)............ 100 1.11%
</TABLE>
EXPERTS
The consolidated financial statements of Associated as of December 31,
1995 and 1994, and for each of the years in the three-year period ended
December 31, 1995, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated herein by reference, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of the Company as of December 31,
1995 and for the year then ended have been included in this Proxy
Statement/Prospectus and in the registration statement in reliance upon the
report of Clifton, Gunderson & Co., independent certified public accountants,
and upon the authority of said firm as experts in accounting and auditing.
Associated has retained KPMG Peat Marwick LLP to render an opinion on the
federal income tax consequences of the Merger and in connection therewith, KPMG
Peat Marwick LLP has reviewed the discussion herein entitled "The Merger and
the Consolidation - Certain Material Federal Income Tax Consequences." Such
opinion has been included in the registration statement in reliance upon the
authority of said firm as experts in tax accounting.
52
<PAGE> 62
LEGAL OPINIONS
The validity of the shares issued in connection with the Merger and the
Consolidation will be passed upon for Associated by Saitlin, Patzik, Frank &
Samotny Ltd., Chicago, Illinois. Certain legal matters in connection with the
Merger and the Consolidation will be passed upon for Associated by Reinhart,
Boerner, Van Deuren, Norris & Rieselbach, s.c., Milwaukee, Wisconsin, and for
the Company by the Hoff Law Offices, Madison, Wisconsin.
SHAREHOLDER PROPOSALS
If the Merger and Consolidation are consummated, shareholders of the
Company and the Bank will become shareholders of Associated. Pursuant to Rule
14a-(8) promulgated under the Exchange Act, Associated shareholders may present
proper proposals for inclusion in Associated's proxy statement for
consideration at the next annual meeting of its shareholders by submitting
their proposals to Associated in a timely manner. Shareholders of the Company
who become shareholders of Associated may present proposals for inclusion in
Associated's proxy statement for its 1997 Annual Meeting as the date for
inclusion in the proxy statement for the 1996 Annual Meeting has already
passed.
53
<PAGE> 63
EXHIBIT A
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
ASSOCIATED BANC-CORP
ASSOCIATED BANC-SHARES, INC.
AND
F&M BANKSHARES OF REEDSBURG, INC.
JANUARY 23, 1996
<PAGE> 64
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.01. The Merger..................................... A-2
SECTION 1.02. Effective Time................................. A-2
SECTION 1.03. Effect of the Merger........................... A-2
SECTION 1.04. Articles of Incorporation and Bylaws........... A-2
SECTION 1.05. Directors and Officers......................... A-2
SECTION 1.06. Conversion of Securities....................... A-3
SECTION 1.07. Exchange of Certificates....................... A-3
SECTION 1.08. Stock Transfer Books........................... A-5
SECTION 1.09. Anti-Dilution Adjustment....................... A-5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. Organization and Qualification of the Company;
Subsidiaries................................... A-6
SECTION 2.02. Articles of Incorporation and Bylaws........... A-6
SECTION 2.03. Capitalization................................. A-6
SECTION 2.04. Authority...................................... A-7
SECTION 2.05. No Conflict; Required Filings and Consents..... A-7
SECTION 2.06. Compliance, Permits............................ A-8
SECTION 2.07. Banking Reports and Financial Statements....... A-8
SECTION 2.08. Absence of Certain Changes or Events........... A-9
SECTION 2.09. Absence of Litigation.......................... A-9
SECTION 2.10. Employee Benefit Plans......................... A-9
SECTION 2.11. Employment Contracts; Material Contracts....... A-11
SECTION 2.12. Registration Statement; Proxy Statement........ A-11
SECTION 2.13. Title to Property.............................. A-12
SECTION 2.14. Compliance with Environmental Laws............. A-12
SECTION 2.15. Absence of Agreements.......................... A-13
SECTION 2.16. Taxes.......................................... A-14
SECTION 2.17. Insurance...................................... A-14
SECTION 2.18. Absence of Adverse Agreements.................. A-14
SECTION 2.19. Internal Controls and Records.................. A-15
SECTION 2.20. Loans.......................................... A-15
SECTION 2.21. Labor Matters.................................. A-15
SECTION 2.22. Brokers........................................ A-15
SECTION 2.23. Accounting and Tax Matters..................... A-15
SECTION 2.24. Full Disclosure................................ A-15
SECTION 2.25. Vote Required.................................. A-16
A-i
<PAGE> 65
ARTICLE III
REPRESENTATIONS AND WARRANTLES OF ASSOCIATED
SECTION 3.01. Organization and Qualification...................... A-16
SECTION 3.02. Articles of Incorporation and Bylaws................ A-16
SECTION 3.03. Capitalization...................................... A-16
SECTION 3.04. Authority........................................... A-16
SECTION 3.05. No Conflict; Required Filings and Consents.......... A-17
SECTION 3.06. Compliance; Permits................................. A-17
SECTION 3.07. Securities Reports; Financial Statements............ A-17
SECTION 3.08. Absence of Certain Changes or Events................ A-18
SECTION 3.09. Absence of Litigation............................... A-18
SECTION 3.10. Registration Statement; Proxy Statement............. A-18
SECTION 3.11. Absence of Agreements............................... A-19
SECTION 3.12. Taxes............................................... A-19
SECTION 3.13. Brokers............................................. A-19
SECTION 3.14. Accounting and Tax Matters.......................... A-19
SECTION 3.15. Full Disclosure..................................... A-19
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Affirmative Covenants............................... A-20
SECTION 4.02. Negative Covenants.................................. A-20
SECTION 4.03. Company Expenses.................................... A-22
SECTION 4.04. Access and Information.............................. A-22
SECTION 4.05. Affiliates; Accounting and Tax Treatment............ A-23
SECTION 4.06. Expenses............................................ A-23
SECTION 4.07. Delivery of Shareholder List........................ A-23
ARTICLE V
COVENANTS OF ASSOCIATED
SECTION 5.01. Affirmative Covenants............................... A-24
SECTION 5.02. Access and Information.............................. A-24
SECTION 5.03. Accounting and Tax Treatment........................ A-24
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement.............................. A-24
SECTION 6.02. Meetings of Shareholders............................ A-25
SECTION 6.03. Appropriate Action; Consents; Filings............... A-25
SECTION 6.04. Notification of Certain Matters..................... A-26
SECTION 6.05. Public Announcements................................ A-26
SECTION 6.06. Environmental Matters............................... A-26
A-ii
<PAGE> 66
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.01. Conditions to Obligation of Each Party
to Effect the Merger...................................... A-26
SECTION 7.02. Additional Conditions to Obligations of Associated........ A-27
SECTION 7.03. Additional Conditions to Obligations of the Company....... A-29
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination............................................... A-29
SECTION 8.02. Effect of Termination..................................... A-30
SECTION 8.03. Amendment................................................. A-30
SECTION 8.04. Waiver.................................................... A-31
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreement................................................. A-31
SECTION 9.02. Disclosure Schedules...................................... A-31
SECTION 9.03. Notices................................................... A-31
SECTION 9.04. Certain Definitions....................................... A-32
SECTION 9.05. Headings.................................................. A-32
SECTION 9.06. Severability.............................................. A-32
SECTION 9.07. Entire Agreement.......................................... A-33
SECTION 9.08. Assignment................................................ A-33
SECTION 9.09. Parties in Interest....................................... A-33
SECTION 9.10. Governing Law............................................. A-33
SECTION 9.11. Counterparts.............................................. A-33
A-iii
<PAGE> 67
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 23, 1996 (the
"Agreement"), among ASSOCIATED BANC-CORP, a Wisconsin corporation
("Associated"), ASSOCIATED BANC-SHARES, INC., a Wisconsin corporation
("Holding") and F&M BANKSHARES OF REEDSBURG, INC., a Wisconsin corporation
("Company").
W I T N E S S E T H:
WHEREAS, the Company is a bank holding company, the wholly-owned
subsidiary of which is Farmers and Merchants Bank, a Wisconsin state chartered
bank located in Reedsburg, Wisconsin (the "Bank"); and
WHEREAS, the Bank has one wholly-owned subsidiary, Fusch Corporation,
("Fusch"). The Bank and Fusch are sometimes individually referred to herein as
a "Subsidiary" and collectively as the "Subsidiaries;" and
WHEREAS, the Company upon the terms and subject to the conditions of this
Agreement and in accordance with the Wisconsin Business Corporation Act
("Wisconsin Law"), will merge with and into Holding, a wholly-owned subsidiary
of Associated (the "Merger"); and
WHEREAS, the Company and its Board of Directors have determined that the
Merger will enhance the ability of the Bank to better serve its existing
depositors and customers in Reedsburg, Wisconsin, and increase the financial
strength of the Bank; and
WHEREAS, the Board of Directors of the Company believes that the Merger
with Holding will benefit the shareholders and the employees of the Company and
the Subsidiaries; and
WHEREAS, the respective Boards of Directors of Associated, Holding and the
Company have (i) determined that the Merger and the exchange of newly issued
shares of Associated Common Stock (as defined in Section 1.06) for shares of
the Company's Common Stock (as defined in Section 1.06) pursuant and subject to
the terms and conditions of this Agreement are fair to and in the best
interests of the respective corporations and their shareholders, and (ii)
approved and adopted this Agreement and the transactions contemplated hereby;
and
WHEREAS, the Board of Directors of the Company has, subject to its
fiduciary duties under applicable law, resolved to recommend approval of the
Merger by the shareholders of the Company; and
WHEREAS, Associated, Holding and the Company intend to effect a merger
that qualifies for pooling-of-interests accounting treatment and as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, as a condition and inducement to Associated's willingness to
enter into this Agreement, Associated and certain shareholders of the Company
are entering into concurrently with the execution and delivery hereof, a Voting
Agreement dated as of the date hereof (the "Voting Agreement"), pursuant to
which such shareholders shall make certain agreements with respect to the
voting of their shares of Company Common Stock.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Associated, Holding and the Company hereby agree as follows:
A-1
<PAGE> 68
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Wisconsin Law, at the
Effective Time (as defined in Section 1.02) the Company shall be merged with
and into Holding. As a result of the Merger, the separate corporate existence
of the Company shall cease and Holding shall continue as the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time. The parties hereto shall cause the Merger
to be consummated by filing Articles of Merger (the "Articles of Merger") with
the Secretary of State of the State of Wisconsin, in such form as required by,
and executed in accordance with the relevant provisions of Wisconsin Law (a)
after the satisfaction, or if permissible, waiver of conditions set forth in
Article VII, and (b) as promptly as possible within the sixty (60) day period
commencing with the latest of the following dates:
(i) The 30th calendar day after the date of approval of the Merger
by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board");
(ii) Such date as may be prescribed by the Federal Reserve Board or
any other agency or authority pursuant to applicable law, rules or
regulations, prior to which consummation of the transaction described and
referred to herein may not be effected;
(iii) The date of the shareholders' meeting of the Company to vote
upon the Merger pursuant to Section 6.02; or
(iv) If the transaction contemplated by this Agreement is being
contested in any legal proceeding and Associated or the Company has
elected to contest the same, the date that such legal proceeding has been
brought to a conclusion favorable, in the judgment of Associated or the
Company, to the consummation of the transaction contemplated hereby.
The date and time of the filing of the Articles of Merger is hereinafter
referred to as the "Effective Time." Anything to the contrary notwithstanding,
the Effective Time shall not under any circumstances occur prior to March 15,
1996.
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Wisconsin Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of Holding and the Company shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Holding and the
Company shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.04. Articles of Incorporation and Bylaws. At the Effective
Time, the Articles of Incorporation and the Bylaws of Holding, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the Bylaws of the Surviving Corporation.
SECTION 1.05. Directors and Officers. The directors of Holding
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Surviving Corporation, and the officers of
Holding immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors
are duly elected or appointed and qualified.
A-2
<PAGE> 69
SECTION 1.06. Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Associated, Holding, the
Company, or the holders of any of the following securities (except as provided
in Section 1.06(d)):
(a) each Share of common stock, no par value, of the Company (the
"Company Common Stock") (all issued and outstanding shares of the Company
Common Stock being hereinafter collectively referred to as the "Shares")
issued and outstanding immediately prior to the Effective Time (other
than any Shares to be cancelled pursuant to Section 1.06(b) and other
than any Dissenting Shares, as defined in Section 1.06(c)) shall be
converted, in accordance with Section 1.07, into the right to receive
173.7766 shares of common stock, par value $.01 per share, of Associated
("Associated Common Stock"). As of the Effective Time, all such shares
of the Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
certificate previously representing any such Shares shall thereafter
represent the right to receive a certificate representing shares of
Associated Common Stock into which such Company Common Stock is
convertible. Certificates previously representing shares of Company
Common Stock shall be exchanged for certificates representing whole
shares of Associated Common Stock issued in consideration therefor upon
the surrender of such certificates in accordance with the provisions of
Section 1.07, without interest. No fractional shares of Associated
Common Stock shall be issued, and, in lieu thereof, a cash payment shall
be made pursuant to Section 1.07 hereof.
(b) each Share held in the treasury of the Company and each Share
owned by Associated or any direct or indirect wholly-owned subsidiary of
Associated immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment shall be made
with respect thereto.
(c) each Share of the Company Common Stock which shall be issued and
outstanding as of the Effective Time and held by a shareholder who has
validly perfected dissenter's rights in accordance with Wisconsin Law,
shall not be converted into and shall not become Associated Common Stock
hereunder (all such shares of the Company Common Stock are hereinafter
called "Dissenting Shares"). The Company shall give Associated prompt
notice upon receipt by the Company of any written notice from any such
shareholder of the Company ("Dissenting Shareholder"). The Company
agrees that prior to the Effective Time, it will not, except with prior
written consent of Associated, voluntarily make any payment with respect
to, or settle or offer to settle, any request for withdrawal pursuant to
the exercise of dissenter's rights. Each Dissenting Shareholder who
becomes entitled, pursuant to the provisions of applicable law, to
payment for his or her shares of the Company Common Stock shall receive
payment therefor from Associated (but only after the amount thereof shall
be agreed upon or finally determined pursuant to the provisions of
applicable law). If any Dissenting Shareholder shall fail to perfect or
shall effectively withdraw or lose his or her right to receive the value
of his or her shares of Associated Common Stock, his or her shares shall
be thereupon converted into Associated Common Stock in accordance with
the provisions of Section 1.06(a) and, if applicable, cash under Section
1.07(e).
(d) each share of common stock, par value $20 per share, of the Bank
(the "Bank Common Stock") issued and outstanding immediately prior to the
Effective Time that is not owned by the Company shall be exchanged for
shares of Associated Common Stock in accordance with the terms of the
Stock Exchange Agreement attached as Exhibit 1.06 (the "Stock Exchange
Agreement").
SECTION 1.07. Exchange of Certificates.
(a) Exchange Agent As of the Effective Time, Associated shall
deposit, or shall cause to be deposited, with a bank or trust company
designated by Associated and acceptable to the Company (the "Exchange
Agent"), and such deposit shall be solely for the benefit of the holders
of Shares and Bank Common Stock, for exchange in accordance with this
Article I and the Stock Exchange Agreement through
A-3
<PAGE> 70
the Exchange Agent, certificates representing the shares of Associated
Common Stock (such certificates for shares of Associated Common Stock,
and cash in lieu of fractional shares (if any), together with any
dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section 1.06 in
exchange for outstanding Shares and in exchange for certain outstanding
shares of Bank Common Stock pursuant to the Stock Exchange Agreement.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail or personally deliver
to each holder of record (or his or her attorney-in-fact) of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (or shares of Bank Common Stock) (the
"Certificates"), whose Shares (or shares of Bank Common Stock) were
converted into the right to receive shares of Associated Common Stock
pursuant to Section 1.06 or pursuant to the Stock Exchange Agreement and
cash in lieu of fractional shares (if any), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have
such other provisions as Associated may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Associated 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 shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Associated Common
Stock which such holder has the right to receive in respect of the
Certificate surrendered pursuant to the provisions of this Article I or
the Stock Exchange Agreement (after taking into account all Shares or
shares of Bank Common Stock then held by such holder) and cash in lieu of
fractional shares (if any), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of
Shares which is not registered in the transfer records of the Company (or
a transfer of ownership of Bank Common Stock which is not registered in
the transfer records of the Bank), a certificate representing the proper
number of shares of Associated Common Stock may be issued to a transferee
if the Certificate representing such Shares (or Bank Common Stock) is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable
stock transfer taxes have been paid. Certificates surrendered for
exchange by any affiliate of the Company shall not be exchanged for
certificates representing shares of Associated Common Stock until
Associated has received a written agreement from such person as provided
in Section 4.05 hereof. Until surrendered as contemplated by this
Section 1.07, 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 Associated Common Stock and cash
in lieu of any fractional shares of Associated Common Stock as
contemplated by Section 1.07(e).
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time with
respect to Associated Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Associated Common Stock represented thereby, and
no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 1.07(e), until the holder of such Certificate
shall surrender such Certificate. Subject to the effect of applicable
laws, following surrender of any such Certificate, there shall be paid to
the holder of the certificates representing whole shares of Associated
Common Stock issued in exchange therefor, without interest, (i) promptly,
the amount of any cash payable with respect to a fractional share of
Associated Common Stock to which such holder is entitled pursuant to
Section 1.07(e) and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to
such whole shares of Associated Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a payment
date occurring after surrender, payable with respect to such whole shares
of Associated Common stock.
(d) No Further Rights in the Shares. All shares of Associated
Common Stock issued upon conversion of the Shares in accordance with the
terms hereof or exchange of Bank Common Stock pursuant
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to the Stock Exchange Agreement (including any cash paid pursuant to
Section 1.07(e)) shall be deemed to have been issued in full satisfaction
of all rights pertaining to such Shares or Bank Common Stock.
(e) No Fractional Shares No certificates or scrip representing
fractional shares of Associated Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share
interest will not entitle the owner thereof to vote or to any rights of a
shareholder of Associated. Each holder of a fractional share interest
shall be paid an amount in cash equal to the product obtained by
multiplying such fractional share interest to which such holder (after
taking into account all fractional share interests then held by such
holder) would otherwise be entitled by the "Order Date Price." For
purposes hereof, the "Order Date Price" shall mean the the closing price
of a share of Associated Common Stock as quoted on the NASDAQ National
Market on the first business day following the date the Federal Reserve
Board issues an order approving consummation of the Merger.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of the Company (or the
Bank) for six months after the Effective Time shall be delivered to
Associated, upon demand, and any shareholders of the Company (or the
Bank) who have not theretofore complied with this Article I (or the Stock
Exchange Agreement) shall thereafter look only to Associated for payment
of their claim for Associated Common Stock, any cash in lieu of
fractional shares of Associated Common Stock and any dividends or
distributions with respect to Associated Common Stock.
(g) No Liability. Neither Associated, Holding or the Company shall
be liable to any holder of Shares (or Bank Common Stock) for any such
Shares (or Bank Common Stock) (or dividends or distributions with respect
thereto) or cash delivered to a public official pursuant to any abandoned
property, escheat or similar law.
(h) Withholding Rights. Associated shall be entitled to deduct and
withhold from any cash consideration payable pursuant to this Agreement
to any holder of Shares (or Bank Common Stock) such amounts as Associated
is required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Associated, such
withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares (or Bank Common Stock) in
respect of which such deduction and withholding was made by Associated.
SECTION 1.08. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company and the Bank shall be closed and there shall be
no further registration of transfers of shares of the Company's Common Stock or
Bank Common Stock thereafter on the records of the Company or the Bank. From
and after the Effective Time, the holders of certificates evidencing ownership
of shares of the Company's Common Stock or Bank Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares (or Bank Common Stock) except as otherwise provided
herein or by law. On or after the Effective Time, any Certificates presented
to the Exchange Agent or Associated for any reason shall be converted into
shares of Associated Common Stock in accordance with this Article I and /or the
Stock Exchange Agreement.
SECTION 1.09. Anti-Dilution Adjustment. If, subsequent to the date
hereof and prior to the Effective Time, Associated shall pay a stock dividend
or make a distribution on Associated Common Stock in shares of Associated
Common Stock or any security convertible into Associated Common Stock or shall
combine or subdivide its stock, then in each such case, from and after the
record date for determining the shareholders entitled to receive such dividend
or distribution or the securities resulting from such combination or
subdivision, an appropriate adjustment shall be made to the conversion ratio
set forth in Section 1.06 above, for purposes of determining the number of
shares of Associated Common Stock into which the Company's Common Stock (or
Bank Common Stock) shall be converted. For purposes hereof, the payment of a
dividend in Associated Common Stock, or the distribution on Associated Common
Stock in securities convertible into Associated Common Stock, shall be deemed
to have effected an increase in the number of outstanding shares of Associated
Common Stock equal to the number of shares
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of Associated Common Stock into which such securities shall be initially
convertible without the payment by the holder thereof of any consideration
other than the surrender for cancellation of such convertible securities.
Notwithstanding the foregoing, this Section shall not apply to any stock
options issued under option plans of Associated existing as of the date of this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule attached hereto (the
"Company Disclosure Schedule"), the Company hereby represents and warrants to
Associated and Holding that:
SECTION 2.01. Organization and Qualification of the Company;
Subsidiaries. The Company is a corporation duly organized and validly existing
under the laws of the State of Wisconsin. The Bank is duly organized, validly
existing and in good standing under the laws of the State of Wisconsin. Fusch
is duly organized, validly existing and in good standing under the laws of
Delaware. The Bank has been the only subsidiary of the Company. Fusch has
been the only subsidiary of the Bank. The Company and Subsidiaries each has
the requisite corporate power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders ("Company Approvals") necessary to own,
lease and operate its properties and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power, authority and Company Approvals would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
below) on the Company and the Subsidiaries, taken as a whole. The term
"Material Adverse Effect" as used in this Agreement shall mean any change or
effect that is or is reasonably likely to be materially adverse to a party's
business, operations, properties (including intangible properties), condition
(financial or otherwise), assets or liabilities (including contingent
liabilities). Neither the Company nor the Subsidiary has received notice of
proceedings relating to the revocation or modification of any Company
Approvals. The Company, the Bank and Fusch are duly qualified or licensed as
foreign corporations to do business, and are in good standing, in each
jurisdiction where the character of their properties owned, leased or operated
by them or the nature of their activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on the Company or the Subsidiaries, taken as a whole.
The Company is registered with the Federal Reserve Board as a one bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHCA").
Except for the Subsidiaries, the Company holds no interest, either directly or
indirectly, in any other entity.
SECTION 2.02. Articles of Incorporation and Bylaws. The Company has
heretofore furnished to Associated a complete and correct copy of the Articles
of Incorporation and the Bylaws, as amended or restated, of the Company and the
Subsidiaries and such Articles of Incorporation and Bylaws of the Company and
the Subsidiaries are in full force and effect and neither the Company nor the
Subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or Bylaws.
SECTION 2.03. Capitalization.
(a) Capitalization of the Company. The authorized capital stock of
the Company consists of 10,000 shares of Common Stock, no par value. As
of the date of this Agreement, (i) 2,883 shares of the Company's Common
Stock are issued and outstanding, all of which are validly issued, fully
paid and non-assessable (except as provided in section 180.0622(2)(b) of
the Wisconsin Business Corporation Law), and all of which have been
issued in compliance with applicable securities laws, and (ii) except as
reflected in the Company's Disclosure Schedule at Section 2.03(a), no
shares of the Company's Common Stock are held in the Company's treasury.
Except as set forth in the Company's Disclosure Schedule at Section
2.03(a), as of the date of this Agreement, there are no options, warrants
or other rights, agreements,
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arrangements or commitments of any character relating to the issued or
unissued capital stock of the Company or obligating the Company to issue
or sell any shares of capital stock of, or other equity interests in the
Company. There are no obligations, contingent or otherwise, of the
Company to repurchase, redeem or otherwise acquire any shares of the
Company's Common Stock or to provide funds to or make any investment (in
the form of a loan, capital contribution or otherwise) in any other
entity.
(b) Capitalization of the Bank. The authorized capital stock of the
Bank consists of 9,000 shares of common stock, par value $20 per share.
As of the date of this Agreement, (i) 9,000 shares of the Bank's common
stock are issued and outstanding, all of which are validly issued, fully
paid and non-assessable, and all of which have been issued in compliance
with applicable securities laws, and (ii) except as reflected in the
Company's Disclosure Schedule at Section 2.03(b), the Company owns all of
the Bank's capital stock. Except as set forth in the Company's
Disclosure Schedule at Section 2.03(b), as of the date of this Agreement,
there are no options, warrants or other rights, agreements, arrangements
or commitments of any character relating to the issued or unissued
capital stock of the Bank or obligating the Bank to issue or sell any
shares of capital stock of, or other equity interests in the Bank. There
are no obligations, contingent or otherwise, of the Bank to repurchase,
redeem or otherwise acquire any shares of the Bank's capital stock or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity.
(c) Capitalization of Fusch. The authorized capital stock of Fusch
consists of 1,000 shares of common stock, par value $1 per share. As of
the date of this Agreement, (i) 100 shares of Fusch's common stock are
issued and outstanding, all of which are validly issued, fully paid and
non-assessable, and all of which have been issued in compliance with
applicable securities laws, and (ii) the Bank owns all of Fusch's capital
stock. Except as set forth in the Company's Disclosure Schedule at
Section 2.03(c), as of the date of this Agreement, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Fusch or
obligating Fusch to issue or sell any shares of capital stock of, or
other equity interests in Fusch. There are no obligations, contingent or
otherwise, of Fusch to repurchase, redeem or otherwise acquire any shares
of Fusch's capital stock or to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any other
entity.
SECTION 2.04. Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to
the Merger, the approval and adoption of this Agreement by the holders of a
majority of the outstanding shares of the Company's Common Stock in accordance
with Wisconsin Law and the Company's Articles of Incorporation and Bylaws).
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Associated and
Holding, constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its terms.
SECTION 2.05. No Conflict; Required Filings and Consents.
(a) To the best knowledge of the Company, after inquiry of its
executive officers, the execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company
shall not, (i) conflict with or violate the Articles of Incorporation or
Bylaws of the Company or the Subsidiaries, (ii) conflict with or violate
any domestic (federal, state or local) or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree (collectively,
"Laws") applicable to the Company or the Subsidiaries, or by which their
respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse
of time or both would become
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a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or the
Subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any Subsidiary is a party or by which
the Company or any Subsidiary or its or any of their respective
properties are bound or affected, except for any such breaches, defaults
or other occurrences that would not, individually or in the aggregate,
have a Material Adverse Effect on the Company or the Subsidiaries, taken
as a whole. The Board of Directors of the Company has taken all actions
necessary under Wisconsin Law, including approving the transactions
contemplated herein, to insure that none of the restrictions set forth in
Wisconsin Law do or will apply to the transactions contemplated herein.
(b) To the best knowledge of the Company, after inquiry of its
executive officers, the execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company
shall not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of
the Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange of 1934, as amended (the "Exchange Act"), state
securities or blue sky laws ("Blue Sky Laws"), BHCA, the banking laws and
regulations of the State of Wisconsin (the "WBL"), and the filing and
recordation of appropriate merger or other documents as required by
Wisconsin Law and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger, or
otherwise prevent the Company from performing its obligations under this
Agreement, and would not have a Material Adverse Effect on the Company or
the Subsidiaries, taken as a whole.
SECTION 2.06. Compliance; Permits. To the best knowledge of the Company
after inquiry of its executive officers, neither the Company nor any Subsidiary
is in conflict with, or in default or violation of, (a) any law applicable to
the Company or any Subsidiary or by which any of their respective properties
are bound or affected, or (b) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or
any Subsidiary or any of their respective properties are bound or affected,
except for any such conflicts, defaults or violations which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company
or the Subsidiaries, taken as a whole.
SECTION 2.07. Banking Reports and Financial Statements.
(a) The Company and the Subsidiaries have timely filed, or as
amended have timely filed, all forms, reports and documents required to
be filed with the Federal Reserve Board, the Wisconsin Commissioner and
any other applicable federal or state authorities (all such reports and
statements are collectively referred to as the "Company Reports"). The
Company Reports, including all Company Reports filed after the date of
this Agreement, (i) were or will be prepared in accordance with the
requirements of applicable law and (ii) did not at the time they were
filed, or will not at the time they are filed, contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements of the Company
(including, in each case, any related notes thereto) delivered to
Associated whether or not contained in the Company Reports (the
"Financial Statements"), including, but not limited to, any Company
Reports filed since the date of this Agreement and prior to or at the
Effective Time, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and
each fairly presents the consolidated financial position of the Company
and the Subsidiaries as of the respective dates thereof and the
consolidated results of its operations and
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changes in financial position for the periods indicated, except that any
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the Subsidiaries as of December 31,
1994, including all notes thereto (the "Company Balance Sheet"), neither
the Company nor any of the Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet, or
in the notes thereto, prepared in accordance with generally accepted
accounting principles, except (i) for liabilities or obligations incurred
in the ordinary course of business since December 31, 1994, that would
not, individually or in the aggregate have a Material Adverse Effect on
the Company or the Subsidiaries, taken as a whole, or (ii) as otherwise
reflected in the reports referred to in Section 2.07(a) hereof.
SECTION 2.08. Absence of Certain Changes or Events. Except as disclosed
in the Financial Statements since December 31, 1994, to the date of this
Agreement, the Company and the Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since December 31, 1994, there has not been (a) any change in the financial
condition, results of operations or business of the Company or the Subsidiaries
having a Material Adverse Effect on the Company or the Subsidiaries, taken as a
whole, (b) any damage, destruction or loss (whether or not covered by
insurance) with respect to any assets of the Company or the Subsidiaries having
a Material Adverse Effect on the Company or the Subsidiaries, taken as a whole,
(c) any change by the Company or the Subsidiaries in their accounting methods,
principles or practices, except for compliance with applicable new requirements
of the Financial Accounting Standards Board, (d) any revaluation by the Company
or the Subsidiaries of any of their material assets in any material respect,
(e) any entry by the Company or any Subsidiary into any commitment or
transactions material to the Company or the Subsidiaries, taken as a whole, (f)
any declaration, setting aside or payment of any dividends or distributions in
respect of shares of the Company's Common Stock or any redemption, purchase or
other acquisition of any of its securities or any of the securities of any
Subsidiary, or (g) any increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in compensation
payable or to become payable to any officers or key employees of the Company or
any of the Subsidiaries.
SECTION 2.09. Absence of Litigation. Except as disclosed in the Company
Reports filed prior to the date of this Agreement: (a) neither the Company nor
any Subsidiary is subject to any continuing order of, or written agreement or
memorandum of understanding with, or continuing material investigation by, any
federal or state banking authority or other governmental entity, or any
judgment, order, writ, injunction, decree or award of any governmental entity
or arbitrator, including, without limitation, cease-and-desist or other orders
of any bank regulatory authority, (b) there is no claim of any kind, action,
suit, litigation, proceeding, arbitration, investigation, or controversy
affecting the Company or any Subsidiary pending or, to the knowledge of the
Company, threatened, except for matters which individually seek damages not in
excess of $20,000 and which otherwise will not have, and cannot reasonably be
expected to have, a Material Adverse Effect on the Company or the Subsidiaries
taken as a whole, and (c) there are no uncured material violations, or
violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to the Company or any Subsidiary as a
result of the examination by any regulatory authority.
SECTION 2.10. Employee Benefit Plans.
(a) The Company Disclosure Schedule at Section 2.10 lists all
"employee pension benefit plans," as such term is defined in section 3(2)
of the Employee Retirement Income Security Act of 1974 ("ERISA") without
regard to any exemptions from any requirements thereunder issued by the
United States Department of Labor in regulations or otherwise,
maintained, sponsored or contributed to by the Company or any Subsidiary
(the "Pension Plans"). The term "Pension Plan" shall also include any
terminated
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"employee pension benefit plan" previously maintained, sponsored or
contributed to by the Company or any Subsidiary which, as of the
Effective Time, has not distributed all of its assets in full
satisfaction of accrued benefits and/or obligations.
(b) The Company Disclosure Schedule at Section 2.10 lists all
"employee welfare benefit plans," as defined in ERISA section 3(1)
without regard to any exemptions from any requirements thereunder issued
by the United States Department of Labor in regulations or otherwise,
maintained, sponsored or contributed to by the Company or any Subsidiary
(the "Welfare Plans"). The term "Welfare Plans" shall also include any
terminated employee welfare benefit plan previously maintained, sponsored
or contributed to by the Company or any Subsidiary which, as of the
Effective Time, has not distributed all of its assets and/or satisfied
all of its obligations.
(c) The Company has made available to Associated true and complete
copies of the documents governing each of the Pension Plans and Welfare
Plans as in effect at the Effective Time.
(d) The Company Disclosure Schedule at Section 2.10 lists all plans
or programs to provide fringe benefits to the Company's and Subsidiaries'
employees (other than Pension Plans and Welfare Plans) including, but not
limited to, vacation, sick leave, disability, medical, hospitalization,
life insurance and other insurance plans or related benefits (the "Fringe
Benefit Plans").
(e) The Company has made available to Associated true and complete
copies of the documents governing each Fringe Benefit Plan.
(f) The Company has no direct or indirect, formal or informal, plan,
fund or program to change any Pension Plan, Welfare Plan or Fringe
Benefit Plan that would affect any of the Company's or any Subsidiary's
employees. Neither the Company nor any Subsidiary has made a material
modification, within the meaning of ERISA section 102 and the regulations
thereunder, to any existing Pension Plan, Welfare Plan or Fringe Benefit
Plan which is not set forth in the Pension Plan, Welfare Plan or Fringe
Benefit Plan documents provided to Associated.
(g) For purposes of this Section 2.10, "Company" shall include the
Company, the Subsidiaries and all members of any controlled group of
corporations (within the meaning of Code section 414(b), relevant
Treasury Regulations and Pension Benefit Guaranty Corporation regulations
issued pursuant to ERISA section 4001), any group of trades or businesses
under common control (within the meaning of Code section 414(c), relevant
Treasury Regulations and Pension Benefit Guaranty Corporation regulations
issued pursuant to ERISA section 4001) and any affiliated service group
(within the meaning of Code section 414(m) and relevant Treasury
Regulations and proposed Treasury Regulations) of which the Company or
any Subsidiary is a member.
(h) Neither the Company nor any Subsidiary has ever been obligated
to contribute to any multi-employer plan within the meaning of ERISA
section 3(37).
(i) To the Company's knowledge, the Pension Plans, Welfare Plans and
Fringe Benefit Plans and the trusts and other funding vehicles related to
the Pension Plans, Welfare Plans and Fringe Benefit Plans have been
administered in all respects in compliance with the applicable
requirements of ERISA, the Code, the plan documents and all other
applicable rules, regulations and laws. The Pension Plans, Welfare Plans
and Fringe Benefit Plans and the trusts or other funding vehicles related
to the Pension Plans, Welfare Plans and Fringe Benefit Plans meet all
applicable requirements, in form and in operation, for favorable tax
treatment under the Code. All required contributions pursuant to the
Pension Plans, Welfare Plans and Fringe Benefit Plans for all periods
prior to the Effective Time have been made or will be made prior to the
Effective Time. There are no pending or, to the Company's knowledge,
threatened claims, lawsuits or arbitrations which have been asserted or
instituted against the Pension Plans, Welfare Plans or Fringe
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Benefit Plans or any fiduciaries thereof with respect to their duties to
the Pension Plans, Welfare Plans or Fringe Benefit Plans or the assets of
any of the trusts under any Pension Plans, Welfare Plans or Fringe
Benefit Plans. No representations or communications with respect to
participation, eligibility for benefits, vesting, benefit accrual or
coverage under the Pension Plans, Welfare Plans or Fringe Benefit Plans
have been made to the Company's or Subsidiaries' employees other than
those which are in accordance with the terms of such Pension Plans,
Welfare Plans or Fringe Benefit Plans in effect immediately prior to the
Effective Time.
(j) With respect to any Welfare Plan which is a "group health plan"
as defined in Code section 4980B, the Company or Subsidiary in question
has complied with the continuation coverage requirements of Code section
4980B for any periods prior to the Effective Time.
(k) The Company has furnished to Associated copies of all documents
relating to the Pension Plans, Welfare Plans or Fringe Benefit Plans,
including, but not limited to, the following: any service provider
agreements, any investment management agreements, fiduciary insurance
policies, fidelity bonds, rules, regulations or policies of the trustees
or any committee thereunder, all of which are true and complete.
(l) Since December 31, 1974, no fiduciary of the Pension Plans or
Welfare Plans has engaged in any "prohibited transaction" (as defined in
ERISA section 406 or Code section 4975) nor has any fiduciary breached
any fiduciary responsibility, as described in Part 4 of Title I of ERISA
with respect to such Pension Plans or Welfare Plans.
(m) The Company has no knowledge of the occurrence of any event with
respect to any Pension Plan which could result in a liability of the
Company, any Subsidiary or any member of the Company's controlled group
to the Pension Benefit Guaranty Corporation ("PBGC"), other than the
timely payment of premiums pursuant to section 4007 of ERISA. All
required PBGC premiums have been paid for the periods through the
Effective Time.
(n) No Welfare Plan or Fringe Benefit Plan provides any form of
post-retirement health benefits to retired employees of the Company or
any Subsidiary, other than benefits required to be provided pursuant to
Code section 4980B.
SECTION 2.11. Employment Contracts; Material Contracts. Except as set
forth in the Company Disclosure Schedule at Section 2.11, neither the Company
nor any Subsidiary is a party to or bound by (a) any salary continuation,
employment or consulting contract, (b) any contract or commitment for capital
expenditures in excess of $10,000.00 for any one (1) project, or (c) contracts
or commitments for the purchase of materials or supplies or for the performance
of services over a period of more than 60 days from the date of this Agreement.
SECTION 2.12. Registration Statement; Proxy Statement. None of the
information supplied or to be supplied by the Company for inclusion in (a) the
Registration Statement (as defined in Section 6.01), (b) the Proxy Statement/
Prospectus (as defined in Section 6.01), or (c) any other document to be filed
with the Securities and Exchange Commission (the "SEC") or other regulatory
authority in connection with the transactions contemplated hereby, at the
respective times such documents are filed and, in the case of the Registration
Statement, when it becomes effective and at the Effective Time, and with
respect to the Proxy Statement/Prospectus, when mailed, shall be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading. In the
case of the Proxy Statement/Prospectus or any amendment thereof or supplement
thereto, none of such information at the time of the Company's shareholders
meeting (pursuant to Section 6.02) (the "Meeting") shall be false or misleading
with respect to any material fact or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Meeting.
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SECTION 2.13. Title to Property. The Company Disclosure Schedule at
Section 2.13 correctly identifies all real property owned and leased by the
Company and the Subsidiaries. Except as set forth on the Company Disclosure
Schedule at Section 2.13, the Company and each of the Subsidiaries has good and
defensible title to all of their properties and assets, real and personal,
tangible and intangible free and clear of all mortgage liens, and free and
clear of all other liens, charges and encumbrances except liens for taxes not
yet due and payable, pledges to secure deposits and such minor imperfections of
title, if any, as to not materially detract from the value of or interfere with
the present use of the property affected thereby or which, individually or in
the aggregate, would not have a Material Adverse Effect on the Company or the
Subsidiaries, taken as a whole; and all leases pursuant to which the Company or
any Subsidiary leases from others real or personal property including, without
limitation, leases for branch offices are in good standing, valid and effective
in accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or event which with
notice or lapse of time, or both, would constitute a material default and in
respect of which the Company or any Subsidiary has not taken adequate steps to
prevent such a default from occurring). The Company's and each Subsidiary's
buildings and equipment in regular use have been reasonably maintained and are
in good and serviceable condition, reasonable wear and tear excepted. None of
the buildings, structures or appurtenances owned or leased by the Company or
any Subsidiary for their operation or maintenance as now operated or
maintained, contravenes any zoning ordinances or other administrative
regulations (whether or not permitted because of prior non-conforming use) or
violates any restrictive covenant or any provision of law, the effect of which
would materially interfere with or prevent the continued use of such properties
for the purposes for which they are now being used or would materially and
adversely affect the value thereof.
SECTION 2.14. Compliance with Environmental Laws.
(a) The term "Company's Property" shall mean any real property and
improvements currently owned, leased, used, operated or occupied by the
Company or any Subsidiary, including properties acquired by foreclosure,
properties which the Bank has a present right to acquire upon foreclosure
and which are owned by customers of the Bank who have received written
notification of default, or properties held or operated in a fiduciary or
managerial capacity.
(b) The term "Environmental Claims" shall mean any and all
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental
Law or Environmental Permit.
(c) The term "Environmental Laws" shall mean all federal, state and
local laws including statutes, regulations and other governmental
restrictions and requirements relating to the discharge of air
pollutants, water pollutants or process wastewater or the disposal of
solid or hazardous waste or otherwise relating to the environment or
hazardous substances or employee health and safety.
(d) The term "Environmental Permits" shall mean all permits,
approvals, identification numbers, licenses and other authorizations
required under any applicable Environmental Law.
(e) The term "Hazardous Substances" shall mean all hazardous and
toxic substances, wastes and materials; any pollutants or contaminants
(including, without limitation, petroleum products, asbestos and raw
materials which include hazardous constituents); and any other similar
substances or materials which are regulated under Environmental Laws.
(f) The Environmental Permits (if any) are in full force and effect
and, to the Company's knowledge, constitute all permits, licenses,
approvals and consents relating to Environmental Laws or Hazardous
Substances required for the conduct of the Company's and Subsidiaries'
businesses and the use of the Company's Property (as presently conducted
and used) in compliance with Environmental Laws.
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(g) The Company and the Subsidiaries have filed all reports, returns
and other filings required to be filed with respect to the Company's
Property under Environmental Laws and the Environmental Permits except
where the failure to do so would not have a Material Adverse Effect on
the Company's or Subsidiaries' businesses or financial condition, taken
as a whole. The Company and/or the Subsidiaries have made no
environmental filings after January 1, 1995.
(h) To the Company's knowledge, the business of the Company and the
Subsidiaries and the Company's Property have been and are being operated
by the Company in accordance with all Environmental Laws and
Environmental Permits. Neither the Company nor any of the Subsidiaries
has received any written notice nor does the Company or any of the
Subsidiaries have knowledge that the Company's Property is not in
material compliance with all Environmental Laws and Environmental Permits
and no proceeding for the suspension, revocation or cancellation of any
Environmental Permit is pending or, to the Company's knowledge,
threatened.
(i) There are no actions pending, or to the Company's knowledge,
threatened against the Company or any of the Subsidiaries (naming the
Company or any Subsidiary), which in any case assert or allege (i) the
Company or any Subsidiary (naming the Company or any Subsidiary) violated
any Environmental Law or Environmental Permit or are in default with
respect to any Environmental Permit or any order, writ, judgment,
variance, award or decree of any government authority; (ii) the Company
or any of the Subsidiaries is required to clean up or take remedial or
other response action due to the disposal, discharge or other release of
any Hazardous Substance on the Company's Property or elsewhere; or (iii)
the Company or any of the Subsidiaries is required to contribute to the
cost of any past, present or future cleanup or remedial or other response
action which arises out of or is related to the disposal, discharge or
other release or any Hazardous Substance by the Company, the Subsidiaries
or others. The Company, the Subsidiaries and the Company's Property are
not subject to any judgment, stipulation, order, decree or agreement
arising under Environmental Laws.
(j) With respect to the period during which the Company or any of
the Subsidiaries occupied the Company's Property (i) no Hazardous
Substances have been treated, recycled or disposed of by the Company or
any of the Subsidiaries (intentionally or unintentionally) on, under or
at the Company's Property; (ii) there has been no release or threatened
release by the Company or any of the Subsidiaries of any Hazardous
Substance from the Company's Property; and (iii) there have been no
activities on the Company's Property which would subject Associated,
Holding, the Subsidiaries, or any subsequent occupier of the Company's
Property to damages, penalties, injunctive relief or cleanup costs under
any Environmental Laws or common law theory of liability.
SECTION 2.15. Absence of Agreements. Neither the Company nor any
Subsidiary is a party to any written agreement or memorandum of understanding
with, or 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 which restricts materially the conduct of its business
(including any contract containing covenants which limit the ability of the
Company or any Subsidiary to compete in any line of business or with any person
or which involve any restriction of the geographical area in which, or method
by which, the Company or any Subsidiary may carry on its business), or in any
manner relates to its capital adequacy, its credit policies or its management
nor has the Company or any Subsidiary been advised that any federal, state or
governmental agency is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission.
SECTION 2.16. Taxes. The Company and the Subsidiaries have timely filed
all Tax Returns (as defined below) required to be filed by them, and the
Company and the Subsidiaries have timely paid and discharged all Taxes (as
defined below) due in connection with or with respect to the filing of such Tax
Returns and have timely paid all other Taxes as are due, except such as are
being contested in good faith by appropriate proceedings and with respect to
which the Company is maintaining reserves adequate for their payment. To the
best knowledge of the
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Company, the liability for Taxes set forth on each such Tax Return adequately
reflects the Taxes required to be reflected on such Tax Return. For purposes
of this Agreement, "Tax" or "Taxes" shall mean taxes, charges, fees levies, and
other governmental assessments and impositions of any kind, payable to any
federal, state, local or foreign governmental entity or taxing authority or
agency, including, without limitation, (a) income, franchise, profits, gross
receipts, estimated, ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding, disability,
employment, social security, workers compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, (b) customs duties, imposts, charges, levies
or other similar assessments of any kind, and (c) interest, penalties and
additions to tax imposed with respect thereto, and "Tax Returns" shall mean
returns, reports, and information statements with respect to Taxes required to
be filed with the United States Internal Revenue Service (the "IRS") or any
other governmental entity or taxing authority or agency, domestic or foreign,
including, without limitation, consolidated, combined and unitary tax returns.
Neither the IRS nor any other governmental entity or taxing authority or agency
is now asserting, either through audits, administrative proceedings, court
proceedings or otherwise, or, to the best of the Company's knowledge,
threatening to assert against the Company or any Subsidiary any deficiency or
claim for additional Taxes. Neither the Company nor any Subsidiary has granted
any waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax. There are no tax liens on any assets of
the Company or any Subsidiary. Neither the Company nor any Subsidiary has
received a ruling or entered into an agreement with the IRS or any other
governmental entity or taxing authority or agency that would have a Material
Adverse Effect on the Company or the Subsidiaries, taken as a whole, after the
Effective Time. The accruals and reserves for taxes reflected in the Company's
Balance Sheet are adequate to cover all Taxes accruable by the Company and the
Subsidiaries on a consolidated basis through the date thereof (including Taxes
being contested) in accordance with generally accepted accounting principles.
Except as may be set forth in the Company Disclosure Schedule at Section 2.16,
no agreements relating to allocating or sharing of Taxes exist between the
Company and the Subsidiaries.
SECTION 2.17. Insurance. Complete and correct copies of all material
policies of fire, product or other liability, workers' compensation and other
similar forms of insurance owned or held by the Company and the Subsidiaries
have been delivered to Associated. Subject to expirations and renewals of
insurance policies in the ordinary course of business, all such policies are in
full force and effect, all premiums with respect thereto covering all periods
up to and including the date as of which this representation is being made have
been paid (other than retrospective premiums which may be payable with respect
to workers' compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy. Such policies
are and shall remain valid, outstanding and enforceable policies, and will not
be terminated prior to the Effective Time. To the best knowledge of the
Company, the insurance policies to which the Company or the Subsidiaries are
parties are sufficient for compliance with all material requirements of law and
all material agreements to which the Company or the Subsidiaries are parties
and will be maintained by the Company and the Subsidiaries until the Effective
Time. Neither the Company nor any Subsidiary has been refused any insurance
with respect to any material assets or operations, nor has coverage been
limited in any respect material to their operations by any insurance carrier to
which they have applied for any such insurance or with which they have carried
insurance during the last five (5) years.
SECTION 2.18. Absence of Adverse Agreements. Neither the Company nor any
Subsidiary is a party to any agreement or instrument or any judgment, order or
decree or any rule or regulation of any court or other governmental agency or
authority which materially and adversely affects or in the future may have a
Material Adverse Effect on the financial condition, results or operations,
assets, business or prospects of the Company or the Subsidiaries, taken as a
whole.
SECTION 2.19. Internal Controls and Records. The Company and each
Subsidiary maintain books of account which accurately and validly reflect, in
all material respects, all loans, mortgages, collateral and other business
transactions and maintain accounting controls sufficient to ensure that all
such transactions are (a) in all material respects, executed in accordance with
its management's general or specific authorization, and (b) recorded in
conformity with generally accepted accounting principles. There is no
amendment to any ending agreement,
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collateral document or security which is not fully reflected in the books and
records of the Company or the Subsidiaries.
SECTION 2.20. Loans. Except as disclosed in the Company Disclosure
Schedule at Section 2.20, (a) the Bank is not a party to any written or oral
loan agreement, note or borrowing arrangement which has been classified as
"substandard," "doubtful," "loss," "other loans especially mentioned" or any
comparable classifications by the Company or the Subsidiaries or banking
regulators; (b) neither the Company nor any Subsidiary is a party to any
written or oral loan agreement, note, or borrowing arrangement, including any
loan guaranty, with any director or executive officer of the Company or any
Subsidiary, or any person, corporation or enterprise controlling, controlled by
or under common control with any of the foregoing; or (c) neither the Company
nor any Subsidiary is a party to any written or oral loan agreement, note or
borrowing arrangement in violation of any law, regulation or rule of any
governmental authority and which violation could have a Material Adverse Effect
on the Company or the Subsidiaries, taken as a whole.
SECTION 2.21. Labor Matters. Except as will not cause a Material Adverse
Effect to the Company or the Subsidiaries (a) the Company and the Subsidiaries
are in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and are not
engaged in any unfair labor practice; (b) there is no unfair labor practice
complaint against the Company or any Subsidiary pending before the National
Labor Relations Board; (c) there is no labor strike, dispute, slowdown,
representation campaign or work stoppage actually pending or threatened against
or affecting the Company or any Subsidiary; (d) no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no claim therefor has been asserted against the Company or any Subsidiary;
and (e) neither the Company nor any Subsidiary is experiencing any material
work stoppage.
SECTION 2.22. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or the Subsidiaries.
SECTION 2.23. Accounting and Tax Matters.
(a) To the best knowledge of the Company, neither the Company nor
any of its affiliates has through the date of this Agreement taken or
agreed to take any action that would prevent Associated from accounting
for the business combinations to be effected by the Merger as a
pooling-of-interests or would prevent the Merger from qualifying as a
reorganization under Section 368(a)(1)(A) of the Code.
(b) To the best knowledge of the Company, there is no plan or
intention on the part of shareholders of the Company or Bank who will
receive Associated Common Stock to sell or otherwise dispose of an amount
of Associated Common Stock to be received in the Merger or pursuant to
the Stock Exchange Agreement which would reduce their ownership of
Associated Common Stock to a number of shares having in the aggregate a
value at the time of the Merger of less than fifty percent (50%) of the
total value of the Company's Common Stock outstanding immediately prior
to the Merger.
SECTION 2.24. Full Disclosure. No statement contained in any document,
certificate, or other writing furnished or to be furnished by or at the
direction of the Company to Associated in, or pursuant to the provisions of,
this Agreement contains or shall contain any untrue statement of a material
fact or omits or shall omit to state any material fact necessary, in light of
the circumstances under which it was made, in order to make the statements
herein or therein not misleading.
SECTION 2.25. Vote Required. The affirmative vote of a majority of the
votes that holders of the outstanding shares of the Company's Common Stock are
entitled to cast is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve the Merger.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSOCIATED
Except as set forth in the Disclosure Schedule attached hereto (the
"Associated Disclosure Schedule"), Associated hereby represents and warrants to
the Company that:
SECTION 3.01. Organization and Qualification. Associated and Holding are
bank holding companies duly organized and validly existing under the laws of
the State of Wisconsin. Associated and Holding are registered with the Federal
Reserve Board as bank holding companies under the BHCA. Associated and Holding
have the requisite corporate power and authority and are in possession of all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders (the "Associated Approvals") necessary to
own, lease and operate their properties and to carry on their businesses as
they are now being conducted, including appropriate authorizations from the
Federal Reserve Board, except where the failure to be so organized and existing
or to have such power, authority and Associated Approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Associated
or Holding, taken as a whole. Associated has not received any notice of
proceedings relating to the revocation or modification of any such Associated
Approvals. Associated and Holding are duly qualified or licensed as foreign
corporations to do business, and are in good standing, in each jurisdiction
where the character of properties owned, leased or operated by them or the
nature of their activities makes such qualification or licensing necessary,
except for such failures to be so duly qualified or licensed and in good
standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on Associated or Holding taken as a whole.
SECTION 3.02. Articles of Incorporation and Bylaws. Associated and
Holding have heretofore furnished to the Company a complete and correct copy of
their respective Articles of Incorporation and the Bylaws, as amended or
restated. Such Articles of Incorporation and Bylaws are in full force and
effect. Associated and Holding are not in violation of any of the provisions
of their Articles of Incorporation or Bylaws.
SECTION 3.03. Capitalization. The outstanding capital stock of
Associated is, and the shares of Associated Common Stock to be issued pursuant
to the Merger and pursuant to the Stock Exchange Agreement, when so issued,
will be, duly authorized, validly issued, fully paid and non-assessable (except
as provided in section 180.0622(2)(b) of Wisconsin Business Corporation Law)
and have not, and will not have, been issued in violation of the preemptive
rights of any person.
SECTION 3.04. Authority. Associated and Holding have the requisite
corporate power and authority to execute and deliver this Agreement and to
perform their obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
Associated and Holding and the consummation by Associated and Holding of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Associated and Holding and no other
corporate proceedings on the part of Associated or Holding are necessary to
authorize this Agreement or to consummate the transactions so contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Associated and Holding and, assuming the due authorization, execution and
delivery by the Company, constitutes the legal, valid and binding obligation of
Associated and Holding.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) To the best knowledge of Associated, the execution and delivery
of this Agreement by Associated and Holding does not, and the performance
of this Agreement by Associated and Holding shall not, (i) conflict with
or violate the Articles of Incorporation or Bylaws of Associated or
Holding, (ii) conflict with or violate any laws applicable to Associated
or Holding or by which their properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or encumbrance on any of the
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properties or assets of Associated or Holding pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Associated or
Holding is a party or by which Associated, Holding or their properties
are bound or affected, except for any such breaches, defaults or other
occurrences that would not, individually or in the aggregate, have a
Material Adverse Effect on Associated or Holding, taken as a whole.
(b) To the best knowledge of Associated, the execution and delivery
of this Agreement by Associated and Holding do not, and the performance
of this Agreement by Associated and Holding shall not, require any
consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws, the BHCA, the WBL, and
the filing and recordation of appropriate merger or other documents as
required by Wisconsin Law, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings
or notifications, would not prevent or delay consummation of the Merger,
or otherwise prevent Associated and Holding from performing their
obligations under this Agreement, and would not have a Material Adverse
Effect on Associated or Holding, taken as a whole.
SECTION 3.06. Compliance; Permits. To the best knowledge of Associated,
neither Associated nor Holding is in conflict with, or in default or violation
of (a) any Law applicable to Associated or Holding or by which their property
is bound or affected, or (b) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Associated or Holding is a party or by which Associated or Holding or
any of their properties are bound or affected, except for any such conflicts,
defaults or violations which would not, individually or in the aggregate, have
a Material Adverse Effect on Associated or Holding, taken as a whole.
SECTION 3.07. Securities Reports; Financial Statements.
(a) As of the date of this Agreement, Associated has delivered to
the Company in the form filed with the SEC (x)(i) its Annual Reports on
Form 10-K for the fiscal years ended December 31, 1991, 1992, 1993, and
1994, respectively, (ii) its Quarterly Reports on Form 10-Q for the
periods ended March 31, 1995, and June 30, 1995, (iii) all definitive
proxy statements relating to Associated's meetings of shareholders
(whether annual or special) held since December 31, 1990, (iv) all
Reports on Form 8-K filed by Associated with the SEC since December 31,
1990, (v) all other reports or registration statements (other than
Reports on Form 10-Q not referred to in clause (ii) above and
registration statements on Form S-8 filed by Associated with the SEC
since December 31, 1990) and (vi) all amendments and supplements to all
such reports and registration statements filed by Associated with the SEC
since December 31, 1990 (collectively, the "Associated SEC Reports").
The Associated SEC Reports, including all Associated SEC Reports filed
after the date of this Agreement, (y)(i) were or will be prepared in
accordance with the requirements of applicable law and (ii) did not at
the time they were filed, or will not at the time they are filed, contain
any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Associated SEC
Reports, including any Associated SEC Reports filed since the date of
this Agreement and prior to or on the Effective Time, have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and each fairly presents the consolidated
financial position of Associated and its subsidiaries as of the
respective dates thereof and the consolidated results of its operations
and changes in financial position for the periods indicated, except that
any unaudited interim financial statements were or are subject to normal
and recurring year-end adjustments which were not or are not expected to
be material in amount.
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(c) Except as and to the extent set forth on the consolidated balance
sheet of Associated and its subsidiaries as of December 31, 1994,
including all notes thereto (the "Associated Balance Sheet"), neither
Associated nor its subsidiaries have any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that
would be required to be reflected on a balance sheet, or in the notes
thereto, prepared in accordance with generally accepted accounting
principles, except (i) for liabilities or obligations incurred in the
ordinary course of business since December 31, 1994, that would not,
individually or in the aggregate, have a Material Adverse Effect on
Associated or its subsidiaries, taken as a whole, or (ii) as otherwise
reflected in the reports referred to in clause (x)(ii) of Section 3.07(a)
hereof.
SECTION 3.08. Absence of Certain Changes or Events. Except as disclosed
in the Associated SEC Reports filed prior to the date of this Agreement, since
December 31, 1994, to the date of this Agreement, Associated and its
subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since December 31, 1994, there has
not been (a) any change in the financial condition, results of operations or
business of Associated or its subsidiaries having a Material Adverse Effect on
Associated or its subsidiaries, taken as a whole, (b) any damage, destruction
or loss (whether or not covered by insurance) with respect to any assets of
Associated or its subsidiaries having a Material Adverse Effect on Associated
or its subsidiaries, taken as a whole, (c) any change by Associated in its
accounting methods, principles or practices, (d) any revaluation by Associated
of any of its material assets in any material respect, or (e) to the date of
this Agreement, any entry by Associated or any of its subsidiaries into any
commitment or transactions material to Associated or its subsidiaries, taken as
a whole.
SECTION 3.09. Absence of Litigation. Except as disclosed in the
Associated Disclosure Schedule at Section 3.09 and in the Associated SEC
Reports filed prior to the date of this Agreement, there is no claim, action,
suit, litigation, proceeding, arbitration, investigation, or controversy of any
kind affecting Associated or any of Associated's subsidiaries pending or, to
the knowledge of Associated, threatened, except for matters which individually
seek damages not in excess of $100,000 and which otherwise will not have, and
cannot reasonably be expected to have, a Material Adverse Effect on Associated
or its subsidiaries taken as a whole, and there are no uncured material
violations, or violations with respect to which material refunds or
restitutions may be required, cited in any compliance report to Associated or
any of Associated's subsidiaries as a result of an examination by any bank
regulatory authority.
SECTION 3.10. Registration Statement; Proxy Statement. None of the
information supplied or to be supplied by Associated for inclusion in (a) the
Registration Statement (as defined in Section 6.01) (b) the Proxy Statement/
Prospectus (as defined in Section 6.01), or (c) any other document to be filed
with the SEC or other regulatory authority in connection with the transactions
contemplated hereby, at the respective time such documents are filed and, in
the case of the Registration Statement, when it becomes effective and at the
Effective Time, and with respect to the Proxy Statement/Prospectus, when
mailed, shall be false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements therein
not misleading. In the case of the Proxy Statement/Prospectus or any amendment
thereof or supplement thereto, none of such information at the time of the
Meeting (as provided for in Section 6.02) shall be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Meeting. All documents filed with the SEC or
other regulatory authority by Associated in connection with the Merger shall
comply as to form in all material respects with the provisions of applicable
law.
SECTION 3.11. Absence of Agreements. Neither Associated nor Holding is a
party to any written agreement or memorandum of understanding with, or 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
which restricts materially the conduct of its business (including any contract
containing covenants which limit the ability of Associated or Holding to
compete in any line of business or with any person or which involve any
restriction of the geographical area in which, or any method by which,
Associated or Holding may carry on its business (other than as may be required
by Law or applicable regulatory authorities)), or in any manner relates to its
capital adequacy,
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its credit policies or its management, except for those the existence of which
has been disclosed to the Company prior to the date of this Agreement, nor has
Associated or Holding been advised that any federal, state or governmental
agency is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment
letter or similar submission, except as may be disclosed by Associated in the
Associated Disclosure Schedule at Section 3.11.
SECTION 3.12. Taxes. Associated and its subsidiaries have timely filed
all Tax Returns required to be filed by them, and Associated and its
subsidiaries have timely paid and discharged all Taxes due in connection with
or with respect to the filing of such Tax Returns and have timely paid all
other Taxes as are due, except such as are being contested in good faith by
appropriate proceedings and with respect to which Associated is maintaining
reserves adequate for their payment. To the best knowledge of Associated, the
liability for Taxes set forth on each such Tax Return adequately reflects the
Taxes required to be reflected on such Tax Return. For purposes of this
Section 3.12, references to Associated and its subsidiaries include former
subsidiaries of Associated for the periods during which any such corporations
were owned, directly or indirectly, by Associated. Neither the IRS nor any
other governmental entity or taxing authority or agency is now asserting,
either through audits or administrative proceedings, court proceedings or
otherwise, or, to the best of Associated's knowledge, threatening to assert
against Associated or any of its subsidiaries any deficiency or claim for
additional Taxes. Neither Associated nor any of its subsidiaries has granted
any waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax. There are no tax liens on any assets of
Associated or any of its subsidiaries. Neither Associated nor any of its
subsidiaries has received a ruling or entered into an agreement with the IRS or
any other governmental entity or taxing authority or agency that would have a
Material Adverse Effect on Associated or its subsidiaries, taken as a whole,
after the Effective Time. The accruals and reserves for taxes reflected in the
Associated Balance Sheet are adequate to cover all Taxes accruable through the
date thereof (including Taxes being contested) in accordance with generally
accepted accounting principles. No agreements relating to allocating or
sharing of Taxes exist among Associated and its subsidiaries and no tax
indemnities given by Associated or its subsidiaries in connection with a sale
of stock or assets remain in effect. Neither Associated nor any of its
subsidiaries is required to include in income either (i) any amount in respect
of any adjustment under Section 481 of the Code, or (ii) any installment sale
gain. Neither Associated nor any of its subsidiaries has made an election
under Section 341(f) of the Code.
SECTION 3.13. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Associated.
SECTION 3.14. Accounting and Tax Matters. To the best knowledge of
Associated, neither Associated nor any of its affiliates has through the date
of this Agreement taken or agreed to take any action that would prevent
Associated from accounting for the business combinations to be effected by the
Merger as a pooling-of-interests or would prevent the Merger from qualifying as
a reorganization under Section 368(a)(1)(A) of the Code.
SECTION 3.15. Full Disclosure. No statement contained in any document,
certificate, or other writing furnished or to be furnished by or at the
direction of Associated to the Company, in or pursuant to the provisions of,
this Agreement contains or shall contain any untrue statement of a material
fact or omits or shall omit to state any material fact necessary, in the light
of the circumstances under which it has been made, in order to make the
statements herein or therein not misleading.
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ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Affirmative Covenants. The Company hereby covenants and
agrees with Associated and Holding that prior to the Effective Time, unless the
prior written consent of Associated shall have been obtained and except as
otherwise contemplated herein, it will and/or it will cause each Subsidiary to:
(a) operate its business only in the usual, regular and ordinary
course consistent with past practices;
(b) use reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the
services of its officers and key employees and maintain its relationships
with customers;
(c) use reasonable efforts to maintain and keep its properties in as
good repair and condition as at present, ordinary wear and tear excepted;
(d) use reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that
now maintained by it;
(e) perform in all material respects all obligations required to be
performed by it under all material contracts, leases, and documents
relating to or affecting its assets, properties, and business;
(f) purchase and sell securities in accordance with the guidelines
set forth in Exhibit 4.01;
(g) with respect to the Bank, maintain as of December 31, 1995 and
thereafter a loan loss reserve of not less than 2.45 percent of period
ending loans;
(h) comply with and perform in all material respects all obligations
and duties imposed upon it by all applicable laws;
(i) obtain an independent audit of its financial statements for the
year ended December 31, 1995;
(j) comply with the capital requirements set forth in Exhibit 4.01;
(k) fully expense in 1995 all expenses (including fees) incurred in
connection with the consummation of the transaction contemplated hereby;
(l) correct all matters identified by Associated on Exhibit 4.01 and
provide all documentation requested by Associated with respect thereto;
and
(m) obtain good and marketable title to all parcels of land used in
connection with the operation of the Bank except for the parcel described
as Lot Four (4), Block Twenty (20), Original Plat, City of Reedsburg,
Sauk County, Wisconsin, with the building thereon erected.
SECTION 4.02. Negative Covenants. Except as specifically contemplated by
this Agreement, from the date of this Agreement until the Effective Time, the
Company shall not do, or permit the Subsidiaries to do, without the prior
written consent of Associated, any of the following:
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(a) (i) grant any increase in compensation or grant any bonuses
(incentive or special) to its employees as a class, or to its officers or
directors, (ii) effect any change in retirement benefits to any class of
employees or officers (unless any such change shall be required by
applicable law) which would increase its retirement benefit liabilities,
(iii) adopt, enter into, amend or modify any employee benefit plan or
make any adjustments pursuant to any employee benefit plan, or (iv) enter
into or amend any employment, severance or similar agreements or
arrangements with any directors or officers, other than as is consistent
with the normal severance policies of the Company and the Subsidiaries in
effect on the date of this Agreement;
(b) declare or pay any dividend on, or make any other distribution
in respect of, its outstanding shares of capital stock.
(c) (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, 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 assets or stock of any corporation, bank or other business; (iv)
liquidate, sell, dispose of, or encumber any assets or acquire any
assets; or (v) 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;
(d) issue, deliver, award, grant or sell, or authorize or propose
the issuance, delivery, award, grant or sale of, any shares of any class
of its capital stock (including shares held in treasury) or any rights,
warrants or options to acquire, any such shares;
(e) 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 Competing Transaction (as such
term is defined below), or negotiate with any person in furtherance of
such inquiries or to obtain a Competing Transaction, or agree to or
endorse any Competing Transaction, 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 Subsidiary to take any such action, and the Company shall promptly
notify Associated orally and in writing of all of the relevant details
relating to all inquiries and proposals which it may receive relating to
any of such matters. For purposes of this Agreement, "Competing
Transaction" shall mean any of the following involving the Company or any
Subsidiary: (i) any merger, consolidation, share exchange, business
combination, or other similar transactions; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of ten percent
or more of assets in a single transaction or series of transactions,
excluding from the calculation of the percentage hereunder any such
transactions undertaken in the ordinary course of business and consistent
with past practice; (iii) any sale of ten percent or more of shares of
capital stock (or securities convertible or exchangeable into or
otherwise evidencing, or any agreement or instrument evidencing, the
right to acquire capital stock); (iv) any tender offer or exchange offer
for ten percent or more of outstanding shares of capital stock; (v) any
solicitation of proxies in opposition to approval by the Company's
shareholders of the Merger; (vi) the filing of an acquisition application
(or the giving of acquisition notice) whether in draft or final form
under the BHCA or the Change in Bank Control Act with respect to the
Company or the Subsidiaries; (vii) any person shall have acquired
beneficial ownership or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of capital
stock; or (viii) any public announcement of a proposal, plan or intention
to do any of the foregoing;
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(f) propose or adopt any amendments to the corporate charter or
Bylaws in any way materially adverse to Associated;
(g) except in their fiduciary capacities for the account of
customers, purchase any shares of Associated Common Stock;
(h) change any of its methods of accounting in effect at December
31, 1994, or change any of its methods of reporting income or deductions
for federal income tax purposes from those employed in the preparation of
the federal income tax returns for the taxable year ending December 31,
1994, except as may be required by law or generally accepted accounting
principles;
(i) subject to Section 4.01(f), change any lending, investment,
liability management or other material policies concerning the business
or operations of the Company or any Subsidiary in any material respect;
organize any new subsidiaries or enter into any new non-banking line of
business whether or not permissible under applicable Federal or state
law, or make any material changes in its operations;
(j) (i) incur or assume any material obligation or liability,
including without limitation any obligation for borrowed money, whether
or not evidenced by a note, bond, debenture or similar instrument and
whether or not being incurred to reduce other existing liabilities, or
make any loan (not including any loan renewal of a loan not then
classified as "substandard," "doubtful," "loss," "other loans especially
mentioned" or any comparable classifications by the Company, the
Subsidiaries or banking regulators) or investment (including U.S.
Treasury Securities) in an amount greater than $100,000.00, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingent or otherwise) for the obligations of any other
person or entity; (iii) mortgage, license, pledge or grant a security
interest in any of its material assets or allow to exist any material
lien thereon; except (A) for liabilities and obligations (including
corporate debt issuances) incurred in the ordinary course of business
consistent with past practices and in amounts not material to the Company
or the Subsidiaries; and (B) as may be required under existing agreements
to which the Company or any Subsidiary is a party; (iv) acquire assets
(including equipment) or securities in excess of $25,000 in the aggregate
(excluding loans to customers and investments permitted in (i) above);
(v) enter into any lease or enter into any other contract or agreement
involving annual payments by the Company or any Subsidiary or the other
party or parties thereto in excess of $20,000; (vi) pay, discharge, or
satisfy any debts or claims not in the ordinary course of business and
consistent with past practices and in no event with a value in excess of
$20,000.00 individually; (vii) settle any claim, action, suit,
litigation, proceeding, arbitration, investigation or controversy of any
kind, for any amount in excess of $25,000.00 or in any manner which would
restrict in any material respect the operations or business of the
Company or the Subsidiaries; (viii) purchase any new financial product or
instrument which involves entering into a contract with a term of six
months or longer; or (ix) take any action or fail to take any action
which individually or in the aggregate can be expected to have a Material
Adverse Effect on the Company or the Subsidiaries, taken as a whole; or
(k) agree in writing or otherwise to do any of the foregoing.
SECTION 4.03. Company Expenses. Anything to the contrary
notwithstanding, the Company shall not, from the date of this Agreement to the
Effective Time, without the prior written consent of Associated, pay any
expenses, fees, obligations or liabilities except (a) interest expense on the
Company's existing indebtedness and (b) directors' fees in accordance with the
Company's usual and customary practices.
SECTION 4.04. Access and Information.
(a) Upon reasonable notice, and without unreasonable disruption to
the business carried on by the Company or the Subsidiaries, the Company
shall (and shall cause the Subsidiaries to) afford to Associated's
officers, employees, accountants, legal counsel and other representatives
access, during normal
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business hours, to all its properties, books, contracts, commitments and
records. Prior to the Effective Time, the Company shall (and shall cause
each Subsidiary to) furnish promptly to Associated (i) a copy of each
Company Report filed by it (to the extent permitted by Law) after the
date of this Agreement and prior to the Effective Time pursuant to the
requirements of federal or state securities laws, the BHCA, any other
federal or state banking laws or any other applicable laws promptly after
such documents are available, (ii) the monthly consolidated financial
statements of the Company and the Subsidiaries; (iii) the audited
consolidated financial statements of the Company and the Subsidiaries for
the year ended December 31, 1995; (iv) a summary of any action taken by
the Board of Directors, or any committee thereof, of the Company and the
Subsidiaries; and (v) all other information concerning the business,
properties and personnel of the Company or the Subsidiaries as Associated
may reasonably request.
(b) Any information provided to Associated by the Company or the
Subsidiaries, whether prior to or subsequent to the date of this
Agreement, shall be kept confidential by the representatives of
Associated (and shall be used by them only in connection with this
Agreement and the transactions contemplated hereby) except to the extent
that (i) it was already known to such representatives when received, (ii)
it hereafter becomes lawfully obtainable from other sources, or (iii) it
is required to be disclosed by Associated in any document required to be
filed with any government agency. Upon any termination of this Agreement
pursuant to Section 8 hereof, Associated agrees to promptly return all
information and documents that it has obtained from the Company in
connection herewith.
SECTION 4.05. Affiliates; Accounting and Tax Treatment. Within thirty
(30) days after the date of this Agreement, (a) the Company shall deliver to
Associated a letter identifying all persons who are then "affiliates" of the
Company, including, without limitation, all directors and executive officers of
the Company for purposes of Rule 145 promulgated under the Securities Act and
(b) the Company shall advise the persons identified in such letter of the
resale restrictions imposed by applicable securities laws and required to cause
the Merger to qualify for pooling-of-interests accounting treatment, and shall
use reasonable efforts to obtain from each person identified in such letter a
written agreement, substantially in the form attached hereto as Exhibit 4.05.
The Company shall use reasonable efforts to obtain from 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 Effective Time, a written agreement
substantially in the form attached hereto as Exhibit 4.05 as soon as
practicable after attaining such status. The Company will use its best efforts
to cause the Merger to qualify for pooling-of-interests accounting treatment
and as a reorganization under Section 368(a)(1)(A) of the Code.
SECTION 4.06. Expenses.
(a) Except as provided in Section 8.02, below, all Expenses (as
described below) incurred by Associated and the Company shall be borne
solely and entirely by the party which has incurred the same, except that
the parties shall share equally in the expense of printing and filing the
Registration Statement and the Proxy Statement/Prospectus and all SEC and
other regulatory filing fees incurred in connection herewith.
(b) "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including without limitation, all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to the party and its affiliates) incurred by a party or on
its behalf in connection with or related to the authorization,
preparation and execution of this Agreement, the solicitation of
shareholder approvals and all other matters related to the closing of the
transactions contemplated hereby.
SECTION 4.07. Delivery of Shareholder List. The Company shall arrange to
have its transfer agent deliver to Associated or its designee, from time to
time prior to the Effective Time, a true and complete list setting forth the
names and addresses of the shareholders of the Company and Bank, their holdings
of stock as of the latest practicable date, and such other shareholder
information as Associated may reasonably request.
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ARTICLE V
COVENANTS OF ASSOCIATED
SECTION 5.01. Affirmative Covenants. Associated hereby covenants and
agrees with the Company that prior to the Effective Time, unless the prior
written consent of the Company shall have been obtained, and except as
otherwise contemplated herein it will and will cause Holding to:
(a) maintain its corporate existence in good standing and maintain
all books and records in accordance with accounting principles and
practices as utilized in Associated's financial Statements applied on
consistent basis;
(b) conduct its business in a manner that does not violate any law,
except for possible violations which individually or in the aggregate do
not, and insofar as reasonably can be foreseen, in the future will not,
have a Material Adverse Effect on Associated or its subsidiaries, taken
as a whole; and
(c) will, to the best of its ability and in all material respects,
(i) comply with applicable Blue Sky Laws and regulations, the Securities
Act, and the Exchange Act, and (ii) remain qualified under the Exchange
Act and the rules and regulations thereunder.
SECTION 5.02. Access and Information.
(a) After the date of this Agreement and prior to the Effective
Time, upon reasonable notice, Associated shall (and shall cause each of
its subsidiaries to) furnish promptly to the Company (i) a copy of each
Associated SEC Report filed by it or received by it (to the extent
permitted by law) after the date of this Agreement and prior to the
Effective Time pursuant to the requirements of federal or state
securities laws, the BHCA, any other federal or state banking laws or any
other applicable laws promptly after such documents are available, and
(ii) all other information concerning the business, properties and
personnel of Associated or its subsidiaries as the Company may reasonably
request.
(b) Any information provided to the Company by Associated whether
prior to or subsequent to the date of this Agreement shall be kept
confidential by the representatives of the Company (and shall be used by
them only in connection with this Agreement and the transactions
contemplated hereby) except to the extent that (i) it was already known
to such representatives when received, (ii) it hereafter becomes lawfully
obtainable from other sources, or (iii) it is required to be disclosed by
the Company in any document required to be filed with the Company or any
government authority or agency.
SECTION 5.03. Accounting and Tax Treatment. Associated will use its best
efforts to cause the Merger to qualify for pooling-of-interests accounting
treatment and as a reorganization under Section 368(a)(1)(A) of the Code.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement. As promptly as practicable after
the execution of this Agreement, Associated shall prepare and file a
registration statement on Form S-4 (the registration statement together with
the amendments thereto are defined as the "Registration Statement" and the
prospectus and proxy materials contained therein are defined as the "Proxy
Statement/Prospectus") with the SEC covering the Associated Common Stock to be
issued in the Merger (subject to the immediately following sentence), with a
view toward permitting the Registration Statement to become effective as soon
as reasonably practicable. Associated does not undertake to file
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post-effective amendments to Form S-4 or to file a separate registration
statement to register the sale of Associated Common Stock by affiliates of the
Company pursuant to Rule 145 promulgated under the Securities Act. The Company
will furnish to Associated all information concerning the Company and the
Subsidiaries required to be set forth in the Registration Statement and
Associated will provide the Company and its counsel the opportunity to review
and approve such information as set forth in the Registration Statement and
Proxy Statement/Prospectus. Associated and the Company will each render to the
other its full cooperation in preparing, filing, prosecuting the filing of, and
amending the Registration Statement such that it comports at all times with the
requirements of the Securities Act and the Exchange Act. Specifically, but
without limitation, each will promptly advise the other if at any time before
the Effective Time any information provided by it for inclusion in the
Registration Statement appears to have been, or shall have become, incorrect or
incomplete and will furnish the information necessary to correct such
misstatements or omissions. As promptly as practicable after the effective
date of the Registration Statement, the Company and the Bank will mail to their
shareholders (a) the Proxy Statement/Prospectus, and (b) as promptly as
practicable after approval thereof by Associated, such other supplementary
proxy materials as may be necessary to make the Proxy Statement/Prospectus
comply with the requirements of the Securities Act and the Exchange Act.
Except as provided above and except with the prior written consent of
Associated, the Company will not mail and will cause the Bank not to mail or
otherwise furnish or publish to shareholders of the Company or the Bank any
proxy solicitation material or other material relating to the Merger that
constitutes a "prospectus" within the meaning of the Securities Act.
Associated shall also take any action required to be taken under any applicable
Blue Sky Laws in connection with the issuance of the shares of Associated
Common Stock to be issued as set forth in this Agreement and the Stock Exchange
Agreement and the Company and the Subsidiaries shall furnish all information
concerning the Company and the Subsidiaries, and the holders of the Company's
Common Stock and Bank's Common Stock and other assistance as Associated may
reasonably request in connection with such action.
SECTION 6.02. Meeting of Shareholders. The Company and its officers and
directors shall: (a) cause the Company's shareholders Meeting to be duly
called and held as soon as practicable to consider and vote upon the Merger and
any related matters in accordance with the applicable provisions of applicable
law, (b) submit this Agreement to the Company's shareholders together with a
unanimous recommendation for approval by the Board of Directors of the Company,
(c) solicit the approval thereof by the Company's shareholders by mailing or
delivering to each shareholder a combined Prospectus/Proxy Statement, and (d)
use their best efforts to obtain the approval and adoption of the Merger by the
requisite percentage of the Company's shareholders.
SECTION 6.03. Appropriate Action; Consents; Filings. The Company and
Associated and Holding shall use all reasonable efforts to (a) take, or cause
to be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable law to consummate and make
effective the transactions contemplated by this Agreement; (b) obtain all
consents, licenses, permits, waivers, approvals, authorizations or orders
required under Law (including, without limitation, all foreign and domestic
(federal, state and local) governmental and regulatory rulings and approvals
and parties to contracts) in connection with the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby and thereby, including, without limitation, the Merger; and
(c) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement, the Merger and the Stock Exchange
Agreement required under (i) the Securities Act and the Exchange Act and the
rules and regulations thereunder, and any other applicable federal or state
securities laws, (ii) any applicable federal or state banking laws and (iii)
any other applicable law; provided that Associated and the Company shall
cooperate with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party and
its advisors prior to filing and, if requested, to accept all reasonable
additions, deletions or changes suggested in connection therewith. The Company
and Associated shall furnish all information required for any application or
other filing to be made pursuant to the rules and regulations of any applicable
law (including all information required to be included in the Proxy
Statement/Prospectus and the Registration statement) in connection with the
transactions contemplated by this Agreement. 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 use all reasonable efforts to take all such necessary
action.
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SECTION 6.04. Notification of Certain Matters. The Company shall give
prompt notice to Associated, and Associated shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate, and (b) any
failure of the Company or Associated, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.04 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.05. Public Announcements. Associated and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and Stock Exchange Agreement
and shall not issue any such press release or make any such public statement
prior to such consultation and with mutual consent of both parties, except as
may be required by law or any listing agreement with the National Association
of Securities Dealers.
SECTION 6.06. Environmental Matters. In the event Ramaker & Associates,
Inc. (the "Environmental Consultant") discovers or determines the existence of
any environmental condition (including, without limitation, a spill, discharge,
or contamination) the result of which may require investigative or remedial
action pursuant to any federal, state, or local law, statute or regulation or
may be the basis for the assertion of any third-party claims, including the
claims of governmental entities, Associated shall promptly notify the Company
thereof and the Company shall, at its sole cost and expense, proceed with due
diligence to take reasonably appropriate action in response thereto.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.01. Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no
proceedings for that purpose shall, on or prior to the Effective Time,
have been initiated or, to the knowledge of Associated or the Company,
threatened by the SEC. Associated shall have received all other federal
or state securities permits and other authorizations necessary to issue
Associated Common Stock in exchange for the Company Common Stock and to
consummate the Merger.
(b) Shareholder Approvals. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the shareholders of
the Company.
(c) Regulatory Approvals. The Merger shall have been approved by
the Federal Reserve Board, which approval shall not contain any condition
which is not reasonably satisfactory to Associated or the Company, all
conditions required to be satisfied prior to the Effective Time imposed
by the terms of such approvals shall have been satisfied and all waiting
periods relating to such approvals shall have expired.
(d) No Order. No federal or state governmental or regulatory
authority or other agency or commission, or federal or state court of
competent jurisdiction, shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether
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temporary, preliminary or permanent) which is in effect restricting,
preventing or prohibiting consummation of the transactions contemplated
by this Agreement.
SECTION 7.02. Additional Conditions to Obligations of Associated. The
obligations of Associated to effect the Merger are also subject to the
following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be complete
and correct in all material respects (except that where any statement in
a representation or warranty expressly includes a standard of
materiality, such statement shall be true and correct in all respects) as
of the Effective Time as though made at the Effective Time with the same
force and effect as if made on and as of the Effective Time. Associated
shall have received a certificate of the Chief Executive Officer of the
Company to that effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings
required to be made by the Company for the authorization, execution and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by the Company.
(d) No Challenge. There shall not be pending any action, proceeding
or investigation before any court or administrative agency or by any
government agency or any other person (i) challenging or seeking material
damages in connection with the Merger, the conversion of the Company
Common Stock into Associated Common Stock pursuant to the Merger or the
exchange of Bank Common Stock for Associated Common Stock pursuant to the
Stock Exchange Agreement, or (ii) seeking to restrain, prohibit or limit
the exercise of full rights of ownership or operation by Associated or
its subsidiaries of all or any portion of the business or assets of the
Company or any of the Subsidiaries, which in either case is reasonably
likely to have a Material Adverse Effect on either the Company or the
Subsidiaries, taken as a whole, or Associated or its subsidiaries, taken
as a whole.
(e) Opinion of Counsel. Associated shall have received from David
B. Hoff or other independent counsel for the Company reasonably
satisfactory to Associated, an opinion dated the Effective Time, in form
and substance reasonably satisfactory to Associated, covering the matters
set forth in Annex B hereto, which opinion shall be based on such
assumptions and containing such qualifications and limitations as are
appropriate and reasonably satisfactory to Associated.
(f) Tax Opinion. An opinion of independent counsel for Associated,
to the effect that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code, and that Associated, Holding and the Company will each be a party
to that reorganization within the meaning of Section 368(b) of the Code,
dated on or about the date that is two business days prior to the date
the Proxy Statement/Prospectus is first mailed to shareholders of the
Company, shall have been delivered and shall not have been withdrawn or
modified in any material respect.
(g) Intentionally left blank.
(h) Pooling Opinions. Associated shall have received an opinion
from KPMG Peat Marwick LLP to the effect that the Merger qualifies for
pooling-of-interests accounting treatment if consummated in accordance
with this Agreement.
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(i) Affiliate Agreements. Associated shall have received from each
person who is identified in the affiliate letter as an "affiliate" of the
Company a signed affiliate agreement in the form attached hereto as
Exhibit 4.05.
(j) Burdensome Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, by any federal or state governmental
entity which, in connection with the grant of any regulatory approval,
imposes any condition or restriction upon the Company, the Bank or
Associated or their respective subsidiaries (or the Surviving Corporation
or its subsidiaries after the Effective Time), including, without
limitation, any requirement to raise additional capital, which would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(k) Fractional Shares; Dissenters. The aggregate of (i) the
fractional share interests in Associated Common Stock to be paid in cash
pursuant to Section 1.07 of this Agreement and (ii) the shares of
Associated Common Stock that would be issuable by virtue of the Merger
with respect to shares of the Company's Common Stock outstanding on the
record date for the meeting of the Company's shareholders to consider the
Merger that will not be converted into Associated Common Stock due,
directly or indirectly, to the exercise of dissenters' rights, if
available under Wisconsin Law, shall not be more than 10% of the maximum
aggregate number of shares of Associated Common Stock which could be
issued as a result of the Merger.
(l) Voting Agreement. Concurrently with the execution and delivery
of this Agreement, Associated and certain shareholders of the Company
shall have executed and delivered the Voting Agreement in the form of
Annex C.
(m) Environmental Report. Associated shall have received from the
Environmental Consultant a written environmental evaluation of the
Company's Property evidencing that:
(i) the Company's Property complies with all Environmental Laws;
(ii) no capital improvements should be reasonably required to
maintain compliance with all Environmental Laws; and
(iii) there are no material contingent liabilities affecting the
Company's Property arising under Environmental Laws or under
Environmental Permits;
or the Company shall have complied with all of its obligations under
Section 6.06.
(n) Earnings. The Company's consolidated after-tax earnings for
calendar year 1995 shall be at least $___________ and the Bank's
consolidated after tax earnings for calendar year 1995 shall be at least
$________.
(o) Bank Rating. The Bank shall receive a "2" or better rating for
safety and soundness from the State Commissioner of Banking examination
conducted in and about November 1995.
(p) Stock Exchange Agreement. The Company shall have delivered to
Associated the Stock Exchange Agreement, duly executed by all
shareholders of the Bank other than the Company.
(q) Title to Bank Property. The Company shall have good and
marketable title to all parcels of land on which the Bank is located
except for the parcel described as Lot Four (4), Block Twenty (20),
Original Plat, City of Reedsburg, Sauk County, Wisconsin, with the
building thereon erected.
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(r) 1996 Earnings. Between January 1, 1996 and the end of the month
prior to the month in which the Effective Time is to occur, the Bank's
consolidated monthly earnings shall average at least $135,000.
(s) Salary Continuation Agreements. The Company shall have
delivered to Associated evidence reasonably satisfactory to Associated
that (i) all salary continuation agreements to which the Company is a
party have been terminated by all of the parties to such agreements and
(ii) neither the Company nor any affiliate of the Company has any
liability thereunder.
(t) VEBA. The Company shall have delivered to Associated evidence
reasonably satisfactory to Associated that no participants or
beneficiaries under the Company's voluntary employees beneficiary
association (as described under section 501(c)(9) of the Code) have any
rights or benefits thereunder which have not been satisfied or
extinguished.
SECTION 7.03. Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Associated contained in this Agreement shall be complete
and correct in all material respects (except that where any statement in
a representation or warranty expressly includes a statement of
materiality, such statement shall be true and correct in all respects) as
of the Effective Time as though made on and as of the Effective Time with
the same force and effect as if made on and as of the Effective Time.
The Company shall have received a certificate of the President of
Associated to that effect.
(b) Agreements and Covenants. Associated and Holding shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings
required to be made by Associated and Holding for the authorization,
execution and delivery of this Agreement and the consummation by it of
the transactions contemplated hereby shall have been obtained and made by
Associated.
(d) Opinion of Counsel. The Company shall have received from
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c. or other
independent counsel for Associated reasonably satisfactory to the
Company, an opinion dated the Effective Time, in form and substance
reasonably satisfactory to the Company, covering the matters set forth in
Annex D, which opinions shall be based on such assumptions and contain
such qualifications and limitations as are appropriate and reasonably
satisfactory to the Company.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination.
(a) This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented
in connection with the Merger by the shareholders of the Company:
(i) by mutual written consent of Associated and the Company;
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(ii) by the Company or Associated (A) if there has been a
breach in any material respect (except that where any statement in
a representation or warranty expressly includes a standard of
materiality, such statement shall have been breached in any
respect) of any representation, warranty, covenant or agreement on
the part of the Company, on the one hand, or Associated, on the
other hand, respectively, set forth in this Agreement, or (B) if
any representation or warranty of the Company, on the one hand, or
Associated, on the other hand, respectively, shall be discovered to
have become untrue in any material respect (except that where any
statement in a representation or warranty expressly includes a
standard of materiality, such statement shall have become untrue in
any respect), in either case which breach or other condition has
not been cured within 10 business days following receipt by the
nonterminating party of notice of such breach or other condition;
provided, however, this Agreement may not be terminated pursuant to
this clause (ii) by the breaching party or party making any
representation or warranty which shall have become untrue in any
material respect;
(iii) by either Associated or the Company if any permanent
injunction preventing the consummation of the Merger shall have
become final and nonappealable;
(iv) by either Associated or the Company if the Merger shall
not have been consummated before June 30, 1996, for a reason other
than the failure of the terminating party to comply with its
obligations under this Agreement;
(v) by either Associated or the Company if the Federal Reserve
Board or the Wisconsin Commissioner has denied approval of the
Merger and neither Associated nor the Company has, within thirty
(30) days after the entry of such order denying approval, filed a
petition seeking review of such order as provided by applicable
law;
(vi) by Associated if the Company fails to perform all of its
obligations under Section 6.06;
(vii) by Associated, if the Dissenting Shares exceed ten
percent (10%) of the Shares.
(b) In the event of termination and abandonment by any party as
provided above, written notice shall forthwith be given to the other
parties, which notice shall specifically describe the basis for such
termination.
SECTION 8.02. Effect of Termination.
(a) If the Merger is not consummated as the result of termination of
this Agreement caused otherwise than by breach of a party hereto, the
Company and Associated each shall pay its own Expenses (as defined in
Section 4.06 above) and this Agreement shall immediately terminate,
except as set forth in Section 9.01 hereof, and neither the Company nor
Associated shall have any liability under this Agreement for damages or
otherwise.
(b) If termination of this Agreement shall have been caused by
breach of this Agreement by any party hereto, then, in addition to other
remedies at law or equity for breach of this Agreement, the party so
found to have breached this Agreement shall indemnify and reimburse the
other parties for their respective expenses.
SECTION 8.03. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after
approval of the Merger by the shareholders of the Company, no amendment may be
made which would reduce the amount or change the type of consideration into
which each Share shall be converted pursuant to this Agreement
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upon consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or parties to be
bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article VIII, except that the agreements set forth in Article I
shall survive the Effective Time indefinitely and those set forth in Sections
4.04(b), 4.06, 5.02(b), 8.02 and Article IX hereof shall survive termination
indefinitely.
SECTION 9.02. Disclosure Schedules. The schedules and information set
forth in the Disclosure Schedules specifically refer to the Section (and
paragraph, if applicable) of this Agreement to which such schedule and
information is responsive. The Disclosure Schedules shall not vary, change or
alter the literal meaning of the representations and warranties of the parties
contained in this Agreement, other than creating exceptions thereto which are
directly responsive to the language of the representations and warranties
contained in this Agreement.
SECTION 9.03. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such Other address
for a party as shall be specified by like changes of address) and shall be
effective upon receipt:
(a) If to Associated or Holding:
Associated Banc-Corp
112 North Adams Street
P.O. Box 13307
Green Bay, WI 54307-3307
Telecopier: (414) 433-3261
Attention: H. B. Conlon
With a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street, Suite 2100
Milwaukee, WI 53202
Telecopier: (414) 298-8097
Attention: Richard W. Graber
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(b) If to Company:
F&M Bankshares of Reedsburg, Inc.
170 Main Street
Reedsburg, WI 53959
Telecopier: 608-524-8438
Attention: J. Robert Fusch
With a copy to:
Hoff Law Offices
6413 Hammersly Road
Madison, WI 53711
Telecopier: 608-271-4531
Attn: David B. Hoff, Esq.
SECTION 9.04. 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, the first mentioned person; including, without
limitation, any partnership or joint venture in which the Company (either
alone, or through or together with any subsidiary) has, directly or
indirectly, an interest of 5% or more;
(b) "beneficial owner" with respect to any Shares, means a person
who shall be deemed to be the beneficial owner of such Shares (i) which
such person or any of its affiliates or associates beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates
or associates (as such term defined in Rule 12b-2 of the Exchange Act)
has, directly or indirectly, (A) the right to acquire (whether such right
is exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warranties or options,
or otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding, (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such person or any
of its affiliates or associates has any agreement, arrangement or
understanding for the purposes of requiring, holding, voting or disposing
of any Shares or (iv) pursuant to Section 13(d) of the Exchange Act and
any rules or regulations promulgated thereunder;
(c) "business day" means any day other than a day on which banks in
Wisconsin are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of
stock or as trustee or executor, by contract or credit arrangement or
otherwise; and
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d) of the "Exchange Act"); and
SECTION 9.05. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions
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contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 9.07. Entire Agreement. This Agreement together with the
Disclosure Schedules and Exhibits hereto constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other person any rights or remedies hereunder.
SECTION 9.08. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that Associated may assign all or any of
its rights hereunder to any affiliate provided that no such assignment shall
relieve the assigning party of its obligations hereunder, and the assignee
agrees to be bound by the terms and conditions of this Agreement including the
requirement of conversion and delivery of shares of Associated Common Stock
pursuant to Section 1.06 hereof.
SECTION 9.09. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 9.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law.
SECTION 9.11. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Associated, Holding and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ASSOCIATED BANC-CORP
By: /s/ H. B. Conlon
-----------------------------
Name: H. B. Conlon
Title: Chairman, President and Chief
Executive Officer
ASSOCIATED BANC-SHARES, INC.
By: /s/ H. B. Conlon
-----------------------------
Name: H. B. Conlon
Title: Chairman, President and Chief
Executive Officer
F&M BANKSHARES OF REEDSBURG, INC.
By: /s/ J. Robert Fusch
-----------------------------
Name: J. Robert Fusch
Title: President
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EXHIBIT B
FORM OF
FIRST AMENDMENT TO AGREEMENT AND
PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the "First
Amendment") is made as of this __ day of ___________, 1996 between ASSOCIATED
BANC-CORP ("Associated"), ASSOCIATED BANC-SHARES, INC. ("Holding") and F&M
BANKSHARES OF REEDSBURG, INC. (the "Company").
RECITALS
A. The parties entered into an Agreement and Plan of Merger dated January 23,
1996 (the "Merger Agreement").
B. The parties desire to amend the Merger Agreement in accordance with the
terms of this First Amendment.
AGREEMENTS
In consideration of the recitals and the mutual covenants contained herein
and in the Merger Agreement, the parties agree as follows:
1. The first recital of the Merger Agreement is hereby amended
to read as follows:
WHEREAS, the Company is a bank holding company which owns 93.64% of
the common stock of Farmers & Merchants Bank, a Wisconsin state
chartered bank located in Reedsburg, Wisconsin (the "Bank");
and
2. The final recital of the Merger Agreement is hereby deleted.
3. The Merger Agreement is hereby amended to add the following
recitals after the eighth recital of the Merger Agreement:
WHEREAS, Associated has, as of ___________,
1996, formed a wholly owned subsidiary,
Associated Interim Bank, a Wisconsin state
chartered bank ("Interim"); and
WHEREAS, the Bank, immediately following the
Merger and upon the terms and subject to the
conditions of the Agreement and Plan of
Consolidation attached as Exhibit 4.01(n) and
in accordance with Wisconsin law, will
consolidate into Interim (the "Consolidation").
4. Section 1.06(d) of the Merger Agreement and Exhibit 1.06
thereto are hereby deleted.
5. Section 1.07(a) of the Merger Agreement is hereby amended to
read as follows:
(a) Exchange Agent. As of the Effective Time,
Associated shall deposit, or shall cause to be
deposited, with a bank or trust company
designated by Associated and acceptable to the
Company (the "Exchange Agent"), and such
deposit shall be solely for the benefit of the
holders of Shares, for exchange in accordance
with this
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Article I through the Exchange Agent, certificates
representing the shares of Associated Common Stock
(such certificates for shares of Associated Common
Stock, and cash in lieu of fractional shares (if any)
together with any dividends or distributions with
respect thereto, being hereinafter referred to as
the "Exchange Fund") issuable pursuant to Section 1.06
in exchange for outstanding Shares.
6. Section 1.07(b) of the Merger Agreement is hereby amended to
read as follows:
(b) Exchange Procedures. As soon as
reasonably practicable after the Effective
Time, the Exchange Agent shall mail or
personally deliver to each holder of record (or
his or her attorney-in-fact) of a certificate
or certificates which immediately prior to the
Effective Time represented outstanding Shares
(the "Certificates"), whose Shares were
converted into the right to receive shares of
Associated Common Stock pursuant to Section
1.06 and cash in lieu of fractional shares (if
any), (i) a letter of transmittal (which shall
specify that delivery shall be effected, and
risk of loss and title to the Certificates
shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be
in such form and have such other provisions as
Associated may reasonably specify) and (ii)
instructions for use in effecting the surrender
of the Certificates in exchange for
certificates representing shares of Associated
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 shall
be entitled to receive in exchange therefor a
certificate representing that number of whole
shares of Associated Common Stock which such
holder has the right to receive in respect of
the Certificate surrendered pursuant to the
provisions of this Article I (after taking into
account all Shares then held by such holder)
and cash in lieu of fractional shares (if any),
and the Certificate so surrendered shall
forthwith be cancelled. In the event of a
transfer of ownership of Shares which is not
registered in the transfer records of the
Company, a certificate representing the proper
number of shares of Associated Common Stock may
be issued to a transferee if the Certificate
representing such Shares is presented to the
Exchange Agent, accompanied by all documents
required to evidence and effect such transfer
and by evidence that any applicable stock
transfer taxes have been paid. Certificates
surrendered for exchange by any affiliate of
the Company shall not be exchanged for
certificates representing shares of Associated
Common Stock until Associated has received a
written agreement from such person as provided
in Section 4.05 hereof. Until surrendered as
contemplated by this Section 1.07, 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 Associated Common Stock
and cash in lieu of any fractional shares of
Associated Common Stock as contemplated by
Section 1.07(e).
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7. Section 1.07(d) of the Merger Agreement is hereby amended to
read as follows:
(d) No Further Rights in the Shares. All
shares of Associated Common Stock issued upon
conversion of the Shares in accordance with the
terms hereof (including any cash paid pursuant
to Section 1.07(e)) shall be deemed to have
been issued in full satisfaction of all rights
pertaining to such Shares.
8. Section 1.07(f) of the Merger Agreement is hereby amended to
read as follows:
(f) Termination of Exchange Fund. Any
portion of the Exchange Fund which remains
undistributed to the shareholders of the
Company for six months after the Effective Time
shall be delivered to Associated, upon demand,
and any shareholders of the Company who have
not theretofore complied with this Article I
shall thereafter look only to Associated for
payment of their claim for Associated Common
Stock, any cash in lieu of fractional shares of
Associated Common Stock and any dividends or
distributions with respect to Associated Common
Stock.
9. Section 1.07(g) of the Merger Agreement is hereby amended to
read as follows:
(g) No Liability. Neither Associated,
Holding or the Company shall be liable to any
holder of Shares for any such Shares (or
dividends or distributions with respect
thereto) or cash delivered to a public official
pursuant to any abandoned property, escheat or
similar law.
10. Section 1.07(h) of the Merger Agreement is hereby amended to
read as follows:
(h) Withholding Rights. Associated shall
be entitled to deduct and withhold from any
cash consideration payable pursuant to this
Agreement to any holder of Shares such amounts
as Associated is required to deduct and
withhold with respect to the making of such
payment under the Code, or any provision of
state, local or foreign tax law. To the extent
that amounts are so withheld by Associated,
such withheld amounts shall be treated for all
purposes of this Agreement as having been paid
to the holder of the Shares in respect of which
such deduction and withholding was made by
Associated.
11. Section 1.08 of the Merger Agreement is hereby amended to read
as follows:
SECTION 1.08. Stock Transfer Books. At
the Effective Time, the stock transfer books of
the Company shall be closed and there shall be
no further registration of transfers of shares
of the Company's Common Stock thereafter on the
records of the Company. From and after the
Effective Time, the holders of certificates
evidencing ownership of shares of the Company's
Common Stock outstanding immediately prior to
the Effective Time shall cease to have any
rights with respect to such Shares except as
otherwise provided herein or by law. On or
after the Effective Time, any Certificates
presented to the
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Exchange Agent or Associated for any reason
shall be converted into shares of Associated
Common Stock in accordance with this Article I.
12. Section 1.09 of the Merger Agreement is hereby amended to read
as follows:
Section 1.09. Anti-Dilution Adjustment.
If, subsequent to the date hereof and prior to
the Effective Time, Associated shall pay a
stock dividend or make a distribution on
Associated Common Stock in shares of Associated
Common Stock or any security convertible into
Associated Common Stock or shall combine or
subdivide its stock, then in each such case,
from and after the record date for determining
the shareholders entitled to receive such
dividend or distribution or the securities
resulting from such combination or subdivision,
an appropriate adjustment shall be made to the
conversion ratio set forth in Section 1.06
above, for purposes of determining the number
of shares of Associated Common Stock into which
the Company's Common Stock shall be converted.
For purposes hereof, the payment of a dividend
in Associated Common Stock, or the distribution
on Associated Common Stock in securities
convertible into Associated Common Stock, shall
be deemed to have effected an increase in the
number of outstanding shares of Associated
Common Stock equal to the number of shares of
Associated Common Stock into which such
securities shall be initially convertible
without the payment by the holder thereof of
any consideration other than the surrender for
cancellation of such convertible securities.
Notwithstanding the foregoing, this Section
shall not apply to any stock options issued
under option plans of Associated existing as of
the date of this Agreement.
13. Section 2.23(a) of the Merger Agreement is hereby amended to
read as follows:
(a) To the best knowledge of the Company,
neither the Company, the Bank nor any of their
affiliates has through the date of this
Agreement taken or agreed to take any action
that would prevent Associated from accounting
for the business combinations to be effected by
the Merger and Consolidation as a pooling of
interests or would prevent the Merger or
Consolidation from qualifying as a
reorganization under section 368(a)(1)(A) of
the Code.
14. Section 2.23(b) of the Merger Agreement is hereby amended to
read as follows:
(b) To the best knowledge of the Company,
there is no plan or intention on the part of
shareholders of the Company or Bank who will
receive Associated Common Stock to sell or
otherwise dispose of an amount of Associated
Common Stock to be received in the Merger or
pursuant to the Consolidation which would
reduce their ownership of Associated Common
Stock to a number of shares having in the
aggregate a value at the time of the Merger and
Consolidation of less than fifty percent (50%)
of the total value of the Company's Common
Stock outstanding immediately prior to the
Merger and Consolidation.
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15. Section 2.25 of the Merger Agreement is hereby amended to read
as follows:
SECTION 2.25. Votes Required. The
affirmative vote of a majority of the votes
that holders of the outstanding shares of the
Company's Common Stock are entitled to cast is
the only vote of the holders of any class or
series of the Company's capital stock necessary
to approve the Merger. The affirmative vote of
two-thirds of the votes that holders of the
outstanding shares of common stock of the Bank
are entitled to cast is the only vote of the
holders of any class or series of the Bank's
capital stock necessary to approve the
Consolidation.
16. Section 3.03 of the Merger Agreement is hereby amended to read
as follows:
SECTION 3.03. Capitalization. The outstanding
capital stock of Associated is, and the shares of
Associated Common Stock to be issued pursuant to the
Merger and pursuant to the Consolidation, when so
issued, will be, duly authorized, validly issued,
fully paid and non-assessable (except as provided in
section 180.0622(2)(b) of Wisconsin Business
Corporation Law) and have not, and will not have,
been issued in violation of the preemptive rights of
any person.
17. Section 3.14 of the Merger Agreement is hereby amended to read
as follows:
SECTION 3.14. Accounting and Tax Matters.
To the best knowledge of Associated, neither
Associated nor any of its affiliates has
through the date of this Agreement taken or
agreed to take any action that would prevent
Associated from accounting for the business
combinations to be effected by the Merger and
the Consolidation as a pooling of interests or
would prevent the Merger or the Consolidation
from qualifying as a reorganization under
section 368(a)(1)(A) of the Code.
18. Section 4.01(k) of the Merger Agreement is hereby amended to
read as follows:
(k) Except for expenses incurred in
connection with or relating to the First
Amendment to Agreement and Plan of Merger and
the Consolidation (which expenses will be paid
in 1996), fully expense in 1995 all expenses
(including fees) incurred in connection with
the consummation of the transaction
contemplated thereby;
19. Section 4.01 of the Merger Agreement is hereby amended to add
the following after subsection (m):
(n) with respect to the Bank, cause the
Bank to execute and deliver to Interim and
Associated, the Agreement and Plan of
Consolidation in the form of Exhibit 4.01(n)
(the "Plan of Consolidation").
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20. Section 4.02(b) of the Merger Agreement is hereby amended to
read as follows:
(b) except for the payment by the Bank of
a dividend of $16 per share on or about May 3,
1996, declare, or pay any dividend on, or make
any other distribution in respect of, its
outstanding shares of capital stock.
21. Section 4.05 of the Merger Agreement is hereby amended to read
as follows:
SECTION 4.05. Affiliates; Accounting and
Tax Treatment. Within thirty (30) days after
the date of this Agreement, (a) the Company
shall deliver to Associated a letter
identifying all persons who are then
"affiliates" of the Company, including, without
limitation, all directors and executive
officers of the Company for purposes of Rule
145 promulgated under the Securities Act and
(b) the Company shall advise the persons
identified in such letter of the resale
restrictions imposed by applicable securities
laws and required to cause the Merger and
Consolidation to qualify for
pooling-of-interests accounting treatment, and
shall use reasonable efforts to obtain from
each person identified in such letter a written
agreement, substantially in the form attached
hereto as Exhibit 4.05. The Company shall use
reasonable efforts to obtain from 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 Effective
Time, a written agreement substantially in the
form attached hereto as Exhibit 4.05 as soon as
practicable after attaining such status. The
Company will use its best efforts to cause the
Merger and the Consolidation to qualify for
pooling-of-interests accounting treatment and
as reorganizations under section 368(a)(1)(A)
of the Code.
22. Section 5.01 of the Merger Agreement is hereby amended to add
the following after subsection (c):
(d) with respect to Interim, cause Interim
to execute and deliver to the Bank and the
Company, the Plan of Consolidation.
23. Section 5.03 of the Merger Agreement is hereby amended to read
as follows:
SECTION 5.03. Accounting and Tax
Treatment. Associated will use its best
efforts to cause the Merger and the
Consolidation to qualify for
pooling-of-interests accounting treatment and
as reorganizations under section 368(a)(1)(A)
of the Code.
24. Section 6.01 of the Merger Agreement is hereby amended to read
as follows:
SECTION 6.01. Registration Statement. As
promptly as practicable after the execution of
this Agreement, Associated shall prepare and
file a registration statement on Form S-4
and/or such other registration form as counsel
to Associated advises is available to register
Associated Common Stock (the registration
statement together with the amendments thereto
are defined as the "Registration Statement,"
the prospectus and proxy materials contained
therein are defined as the
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"Proxy Statement/Prospectus" and the prospectus without proxy
materials contained therein is defined as the "Prospectus")
with the SEC covering the Associated Common Stock to be issued
in the Merger and Consolidation (subject to the immediately
following sentence), with a view toward permitting the
Registration Statement to become effective as soon as
reasonably practicable. Associated does not undertake to file
post-effective amendments to Form S-4 or to file a separate
registration statement to register the sale of Associated
Common Stock by affiliates of the Company pursuant to Rule 145
promulgated under the Securities Act but will file
post-effective amendments or a separate registration statement
where required by federal securities laws to permit other
resales. The Company will furnish to Associated all
information concerning the Company and the Subsidiaries
required to be set forth in the Registration Statement and
Associated will provide the Company and its counsel the
opportunity to review and approve such information as set forth
in the Registration Statement, Proxy Statement/Prospectus and
the Prospectus. Associated and the Company will each render to
the other its full cooperation in preparing, filing,
prosecuting the filing of, and amending the Registration
Statement such that it comports at all times with the
requirements of the Securities Act and the Exchange Act.
Specifically, but without limitation, each will promptly advise
the other if at any time before the Effective Time any
information provided by it for inclusion in the Registration
Statement appears to have been, or shall have become, incorrect
or incomplete and will furnish the information necessary to
correct such misstatements or omissions. As promptly as
practicable after the effective date of the Registration
Statement, the Company and the Bank will mail to their
shareholders (a) the Proxy Statement/Prospectus, and (b) as
promptly as practicable after approval thereof by Associated,
such other supplementary proxy materials as may be necessary to
make the Proxy Statement/Prospectus comply with the
requirements of the Securities Act and the Exchange Act.
Except as provided above and except with the prior written
consent of Associated, the Company will not mail and will cause
the Bank not to mail or otherwise furnish or publish to
shareholders of the Company or the Bank any proxy solicitation
material or other material relating to the Merger and
Consolidation that constitutes a "prospectus" within the
meaning of the Securities Act. Associated shall also take any
action required to be taken under any applicable Blue Sky Laws
in connection with the issuance of the shares of Associated
Common Stock to be issued as set forth in this Agreement and
the Plan of Consolidation and the Company and the Subsidiaries
shall furnish all information concerning the Company and the
Subsidiaries, and the holders of the Company's Common Stock and
Bank's Common Stock and other assistance as Associated may
reasonably request in connection with such action.
25. Section 6.02 of the Merger Agreement is hereby amended to read
as follows:
SECTION 6.02. Meetings of Shareholders.
The Company and its officers and directors
shall and shall cause the Bank to, as the case
may be: (a) cause the Company's shareholders
Meeting and the
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Bank's shareholders meeting to be duly called and held as soon
as practicable to consider and vote upon the Merger and the
Consolidation, as the case may be, and any related matters in
accordance with the applicable provisions of applicable law,
(b) submit this Agreement and the Plan of Consolidation to the
Company's shareholders and to the Bank's shareholders, as the
case may be, together with a unanimous recommendation for
approval by the Board of Directors of the Company and the Bank,
as the case may be, (c) solicit the approval thereof by the
Company's shareholders and the Bank's shareholders, as the case
may be, by mailing or delivering to each shareholder a combined
Prospectus/Proxy Statement, and (d) use their best efforts to
obtain the approval and adoption of the Merger and the
Consolidation by the requisite percentage of the Company's
shareholders and the Bank's shareholders, as the case may be.
26. Section 6.03 of the Merger Agreement is hereby amended to read
as follows:
SECTION 6.03. Appropriate Action;
Consents; Filings. The Company and Associated
and Holding shall use all reasonable efforts to
(a) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things
necessary, proper or advisable under applicable
law to consummate and make effective the
transactions contemplated by this Agreement and
the Plan of Consolidation; (b) obtain all
consents, licenses, permits, waivers,
approvals, authorizations or orders required
under Law (including, without limitation, all
foreign and domestic (federal, state and local)
governmental and regulatory rulings and
approvals and parties to contracts) in
connection with the authorization, execution
and delivery of this Agreement and the Plan of
Consolidation and the consummation by them of
the transactions contemplated hereby and
thereby, including, without limitation, the
Merger and the Consolidation; and (c) make all
necessary filings, and thereafter make any
other required submissions, with respect to
this Agreement, the Merger and the
Consolidation required under (i) the Securities
Act and the Exchange Act and the rules and
regulations thereunder, and any other
applicable federal or state securities laws,
(ii) any applicable federal or state banking
laws and (iii) any other applicable law;
provided that Associated and the Company shall
cooperate with each other in connection with
the making of all such filings, including
providing copies of all such documents to the
non-filing party and its advisors prior to
filing and, if requested, to accept all
reasonable additions, deletions or changes
suggested in connection therewith. The Company
and Associated shall furnish all information
required for any application or other filing to
be made pursuant to the rules and regulations
of any applicable law (including all
information required to be included in the
Proxy Statement/Prospectus and the Registration
Statement) in connection with the transactions
contemplated by this
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Agreement. 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 use all reasonable
efforts to take all such necessary action.
27. Section 6.05 of the Merger Agreement is hereby amended to read
as follows:
SECTION 6.05. Public Announcements.
Associated and the Company shall consult with
each other before issuing any press release or
otherwise making any public statements with
respect to the Merger and the Consolidation and
shall not issue any such press release or make
any such public statement prior to such
consultation and with mutual consent of both
parties, except as may be required by law or
any listing agreement with the National
Association of Securities Dealers.
28. Section 7.01(a) of the Merger Agreement is hereby amended to
read as follows:
(a) Effectiveness of the Registration
Statement. The Registration Statement shall
have been declared effective by the SEC under
the Securities Act. No stop order suspending
the effectiveness of the Registration Statement
shall have been issued by the SEC and no
proceedings for that purpose shall, on or prior
to the Effective Time, have been initiated or,
to the knowledge of Associated or the Company,
threatened by the SEC. Associated shall have
received all other federal or state securities
permits and other authorizations necessary to
issue Associated Common Stock in exchange for
the Company Common Stock and the Bank's common
stock and to consummate the Merger and
Consolidation.
29. Section 7.01(b) of the Merger Agreement is hereby amended to
read as follows:
(b) Shareholder Approvals. This Agreement
and the Merger shall have been approved and
adopted by the requisite vote of the
shareholders of the Company and the Plan of
Consolidation and the Consolidation shall have
been approved and adopted by the requisite vote
of the Bank shareholders.
30. Section 7.01(c) of the Merger Agreement is hereby amended to
read as follows:
(c) Regulatory Approvals. The Merger
shall have been approved by the Federal Reserve
Board, which approval shall not contain any
condition which is not reasonably satisfactory
to Associated or the Company, all conditions
required to be satisfied prior to the Effective
Time imposed by the terms of such approvals
shall have been satisfied and all waiting
periods relating to such approvals shall have
expired. All regulatory approvals with respect
to the Consolidation shall have been received.
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31. Section 7.02(d) of the Merger Agreement is hereby amended to
read as follows:
(d) No Challenge. There shall not be
pending any action, proceeding or investigation
before any court or administrative agency or by
any government agency or any other person (i)
challenging or seeking material damages in
connection with the Merger, the Consolidation,
the conversion of the Company Common Stock into
Associated Common Stock pursuant to the Merger
or the conversion of the Bank's common stock
into Associated Common Stock pursuant to the
Consolidation, or (ii) seeking to restrain,
prohibit or limit the exercise of full rights
of ownership or operation by the Company or any
of the Subsidiaries, which in either case is
reasonably likely to have a Material Adverse
Effect on either the Company or the
Subsidiaries, taken as a whole, or Associated
or its subsidiaries, taken as a whole.
32. Annex B pursuant to Section 7.02(e) of the Merger Agreement is
amended to read in the form attached hereto.
33. Section 7.02(f) of the Merger Agreement is hereby amended to
read as follows:
(f) Tax Opinion. An opinion of
independent counsel for Associated, to the
effect that the Merger and the Consolidation
will be treated for federal income tax purposes
as reorganizations within the meaning of
section 368(a) of the Code, that Associated,
Holding and the Company will each be a party to
a reorganization within the meaning of section
368(b) of the Code and that Interim and the
Bank will each be a party to a reorganization,
dated on or about the date that is two business
days prior to the date the Proxy
Statement/Prospectus is first mailed to
shareholders of the Company and the Bank, shall
have been delivered and shall not have been
withdrawn or modified in any material respect.
34. Section 7.02(h) of the Merger Agreement is hereby amended to
read as follows:
(h) Pooling Opinions. Associated shall
have received an opinion from KPMG Peat Marwick
LLP to the effect that the Merger and
Consolidation qualifies for
pooling-of-interests accounting treatment if
consummated in accordance with this Agreement.
35. Section 7.02(k) of the Merger Agreement is hereby amended to
read as follows:
(k) Fractional Shares; Dissenters. The
aggregate of (i) the fractional share interests
in Associated Common Stock to be paid in cash
pursuant to Section 1.07 of this Agreement and
Section 2.01(d) of the Plan of Consolidation,
(ii) the shares of Associated Common Stock that
would be issuable by virtue of the Merger with
respect to shares of the Company's Common Stock
outstanding on the record date for the meeting
of the Company's shareholders to consider the
Merger that will not be converted into
Associated Common Stock due, directly or
indirectly, to the exercise of dissenters'
rights, if available
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under Wisconsin Law and (iii) the shares of Associated Common
Stock that would be issuable by virtue of the Consolidation
with respect to shares of the Bank's common stock held by
Unaffiliated Shareholders (as defined in the Plan of
Consolidation) on the record date for the meeting of the Bank's
shareholders to consider the Consolidation that will not be
converted into Associated Common Stock due, directly or
indirectly, to the exercise of dissenters' rights, if available
under Wisconsin Law, shall not be more than 10% of the maximum
aggregate number of shares of Associated Common Stock which
could be issued as a result of the Merger and Consolidation.
36. Section 7.02(l) and Annex C thereto are hereby deleted.
37. Section 7.02(n) of the Merger Agreement is hereby amended to
read as follows:
(n) Earnings. The Company's consolidated
after-tax earnings for calendar year 1995 shall
be at least $68,000 and the Bank's consolidated
after-tax earnings for calendar year 1995 shall
be at least $388,000.
38. Section 7.02(p) of the Merger Agreement is hereby amended to
read as follows:
(p) Consolidation. All conditions set
forth in the Plan of Consolidation shall have
been satisfied as of the Effective Time.
39. Annex D pursuant to Section 7.03(d) of the Merger Agreement is
amended to read in the form attached hereto.
40. Section 8.01(a)(iii) of the Merger Agreement is hereby amended
to read as follows:
(iii) by either Associated or the Company
if any permanent injunction preventing the
consummation of the Merger or the Consolidation
shall have become final and nonappealable;
41. Section 8.01(a)(iv) of the Merger Agreement is hereby amended
to read as follows:
(iv) by either Associated or the Company
if the Merger and Consolidation shall not have
been consummated before July 31, 1996, for a
reason other than the failure of the
terminating party to comply with its
obligations under this Agreement;
42. Section 8.01(a)(v) of the Merger Agreement is hereby amended to
read as follows:
(v) by either Associated or the Company if
the Federal Reserve Board or the Wisconsin
Commissioner has denied approval of the Merger
or the Consolidation and neither Associated nor
the Company has, within thirty (30) days after
the entry of such order denying approval, filed
a petition seeking review of such order as
provided by applicable law.
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43. Section 8.01(a)(vii) of the Merger Agreement is hereby amended
to read as follows:
(viii) by Associated, if as a result of
the exercise of dissenters' rights, the
condition set forth in Section 7.02(k) hereof
is not satisfied.
44. All other provisions of the Merger Agreement remain in full
force and effect.
ASSOCIATED BANC-CORP
By:
_________________________
Name: H.B. Conlon
Title: Chairman, President and Chief Executive Officer
ASSOCIATED BANC-SHARES, INC.
By:
________________________
Name: H.B. Conlon
Title: Chairman, President and Chief Executive Officer
F&M BANKSHARES OF
REEDSBURG, INC.
By:
________________________
Name: J. Robert Fusch
Title: President
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EXHIBIT C
FORM OF
AGREEMENT AND PLAN OF CONSOLIDATION
THIS AGREEMENT AND PLAN OF CONSOLIDATION (the "Consolidation Agreement")
dated as of _______ __, 1996, between ASSOCIATED INTERIM BANK, a Wisconsin
banking corporation ("Interim") and FARMERS & MERCHANTS BANK (the "Bank"), a
Wisconsin banking corporation (hereinafter collectively or separately called
the "Consolidating Banks").
RECITAL
This Agreement provides for the consolidation of the Bank with and into
Interim pursuant to the provisions of Wisconsin Statutes section 221.25. As of
the date hereof, Interim has outstanding ________ shares of common stock, par
value $____ per share, all of which shares are owned by Associated Banc-Corp, a
Wisconsin corporation (the "Corporation"). The Bank has issued and outstanding
9,000 shares of common stock, par value $20 per share, of which 8,428 shares
are owned by F&M Bankshares of Reedsburg, Inc. ("F&M") and 572 shares are owned
by various other shareholders. For purposes of this Agreement, shareholders of
the Bank other than F&M shall be collectively referred to as the "Unaffiliated
Shareholders." This Agreement has been entered into in connection with the
proposed merger of F&M with and into Associated Banc-Shares, Inc. ("ABS"), a
wholly-owned subsidiary of the Corporation, and has been approved by the Boards
of Directors of each Consolidating Bank and will become effective at the time
set forth herein and upon satisfaction of certain other conditions as
hereinafter set forth.
AGREEMENTS
In consideration of the mutual promises and agreements hereafter set
forth, the parties hereto agree as follows:
1. Consolidation of the Bank Into Interim.
1.01 Consolidation. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as hereinafter defined), the Bank shall
be consolidated with and into Interim (the "Consolidation") and the Bank and
Interim shall become a single banking corporation (the "Consolidated Bank")
under the name of Associated Bank Reedsburg and which shall exist under and by
virtue of the banking laws of the State of Wisconsin.
1.02 Effective Time of Consolidation. The Consolidation shall become
effective immediately following the consummation of the merger (the "Holding
Company Merger") of F&M with and into ABS pursuant to that certain Agreement
and Plan of Merger dated as January 23, 1996, among the Corporation, F&M and
ABS as amended by the First Amendment to Agreement and Plan of Merger dated as
of ___________, 1996 (the "Agreement and Plan of Merger") or at any such other
time as may hereafter be designated by order of any regulatory authority having
jurisdiction or by resolution of the Board of Directors of Interim adopted at
least ten (10) days prior to the date so designated (the effective date of the
Holding Company Merger and the time immediately following such merger or such
other time as any regulatory authority or the Interim Board may designate being
hereafter called the "Effective Date" or the "Effective Time," as the case may
be). If any regulatory authority or Interim's Board of Directors establishes
an Effective Time for the Consolidation other than the effective date of the
Holding Company Merger, the Cashier of Interim shall give written notice of the
Effective Time so established to the President of the Bank and to the
Unaffiliated Shareholders at their addresses appearing in the stock records of
the Bank and shall place a copy of such notice, together with an affidavit of
mailing thereof, in the minute book of Interim. Any person shall be entitled
to conclusively rely upon the notice so placed in the minute book as
establishing the Effective Time of the Consolidation for all purposes.
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1.03 Consequences of Consolidation. At and as of the Effective Time
and as a result of the Consolidation:
(a) Continued Existence of Interim. The corporate identity,
existence, purposes, powers, franchises, rights and immunities of Interim shall
continue and be unaffected and unimpaired.
(b) Effect on the Bank. The corporate identity, existence,
purposes, powers, franchises, rights and immunities of the Bank shall be merged
with and into Interim and the Consolidated Bank shall be fully vested
therewith. The separate legal existence of the Bank, except as it may be
continued by reason of the Wisconsin banking laws, shall cease and the
assets and liabilities of the Bank shall thereafter be reported by the
Consolidated Bank. The rights, interests and franchises of the Bank in and to
every species of property, real, personal and mixed and choses in action
thereto belonging, shall be deemed transferred to and vested in the
Consolidated Bank without any deed, endorsement or other instrument of transfer
and the Consolidated Bank shall take, hold and enjoy the same and all rights of
property, franchises and interests in the same manner and to the same extent as
were held and enjoyed by the Bank at the time of the Consolidation.
(c) Effect on Trust Powers. To the extent that either of the
Consolidating Banks is then authorized under the laws of Wisconsin to perform
fiduciary services, the Consolidated Bank shall, at the Effective Time, succeed
to all rights, obligations, relations and trusts and the duties and liabilities
connected therewith, held by either of the Consolidating Banks and without
further appointment shall act as trustee, executor, administrator or in any
other fiduciary capacity in which either of the Consolidating Banks was acting
at the Effective Time and shall execute and perform each and every trust or
relation in the same manner as if the Consolidated Bank itself had assumed the
trust or relation, including the obligations and liabilities connected
therewith. The Consolidated Bank shall be entitled to be appointed or to act
as trustee or executor or other fiduciary to the same extent and with the same
effect as would either Consolidating Bank which, prior to the Effective Time,
had been designated as trustee or any other fiduciary in any trust deed or
other writing or had been nominated as executor in any will.
(d) Offices. Until changed by the Board of Directors of the
Consolidated Bank, the home office of the Consolidated Bank shall be at 170
Main Street, Reedsburg, Wisconsin 53959, being the home office of the Bank
immediately prior to the Effective Time. All branch offices, remote paying and
receiving facilities, transit facilities, customer bank communications
terminals or other facilities operated by either of the Consolidated Banks at
and prior to the Effective Date, shall continue as facilities of the
Consolidated Bank at and after the Effective Date.
(e) Charter. From and after the Effective Date, the Charter of
Interim, as in effect immediately prior to the Effective Date, shall continue
as the charter of the Consolidated Bank, unless and until further amended or
repealed as provided therein or by law.
(f) By-Laws. From and after the Effective Date, the By-Laws of
Interim, as in effect immediately prior to the Effective Date, shall continue
as the By-Laws of the Consolidated Bank, unless and until further amended or
repealed as provided therein or by law.
(g) Directors and Officers. The directors and officers of
Interim holding office immediately prior to the Effective Date shall continue
from and after the Effective Date, as directors and officers of the
Consolidated Bank until the election of their respective successors or until
their resignation or removal as provided by law or in the Charter or By-Laws
of the Consolidated Bank. If, on the Effective Date, any vacancy shall exist
on the Board of Directors or in the officers of Interim, such vacancy may be
filled in the manner provided by the By-Laws of the Consolidated Bank.
(h) Name of Consolidated Bank. From and after the Effective Date,
the name of the Consolidated Bank shall be "Associated Bank Reedsburg."
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1.04 Further Assurances. If at any time after the Effective Date, the
Consolidated Bank shall consider or be advised that any further assignments or
assurances in law or any other things are necessary or desirable to carry out
the provisions of this Agreement, or to vest, perfect or confirm of record or
otherwise, in the Consolidated Bank or its transferees, the title to any
property or right of either Consolidating Bank acquired or to be acquired by
reason of the Consolidation, the officers and directors of either Consolidating
Bank in office immediately prior to the Effective Date shall in the name and on
behalf of each Consolidating Bank execute and deliver all such property deeds,
assignments and assurances or other documents and do all things necessary and
proper to vest, perfect or confirm in the Consolidated Bank or its transferees
title to and possession of the properties, rights, privileges, immunities,
powers or purposes of each of the Consolidating Banks or to otherwise carry out
the purposes of this Agreement and the proper officers and directors of each of
the Consolidating Banks are hereby authorized, in the name of either
Consolidating Bank or otherwise, to take any and all such action.
2. Conversion and Exchange of Securities.
2.01 Manner of Conversion. On and after the Effective Date, the manner
of converting the outstanding shares of the Consolidating Banks shall be as
follows:
(a) Capital Stock of Interim Owned by the Corporation. Each
outstanding share of common stock of Interim which immediately prior to the
Effective Time is owned by the Corporation shall remain outstanding as shares
of the Consolidated Bank.
(b) Capital Stock of the Bank Owned by ABS. Each share of
outstanding common stock of the Bank which immediately prior to the Effective
Time and following consummation of the Holding Company Merger is owned by ABS
shall be deemed to be cancelled.
(c) Capital Stock of the Bank Owned by the Unaffiliated
Shareholders. At and as of the Effective Time, each outstanding share of
common stock of the Bank which, immediately prior to the Effective Time, is
owned by an Unaffiliated Shareholder who has not exercised rights as a
dissenting shareholder pursuant to section 221.25, Wisconsin statutes, shall
thereupon be exchanged for and converted into the right to receive 59.4441
shares of the common stock, $.01 par value, of the Corporation ("Associated
Common Stock").
(d) No Fractional Shares. No certificates or scrip representing
fractional shares of Associated Common Stock shall be issued upon the surrender
for exchange of the Bank Certificates (as defined in section 2.02, below) and
such fractional share interest will not entitle the owner thereof to vote or to
any rights of a shareholder of the Corporation. Each holder of a fractional
share interest shall be paid an amount in cash equal to the product obtained by
multiplying such fractional share interest to which such holder (after taking
into account all fractional share interests then held by such holder) would
otherwise be entitled by the Order Date Price. The "Order Date Price" shall,
for purposes of this transaction, be the closing price of a share of Associated
Common Stock as quoted on the Nasdaq Stock Market on the first business day
following the date the Federal Reserve Board issues an order approving
consummation of the Holding Company Merger.
2.02 Status and Exchange of the Bank Certificates After the Effective
Date. Harris Trust & Savings Bank, Chicago, Illinois, shall serve as Exchange
Agent (the "Exchange Agent") for the purpose of exchanging share certificates
by reason of the Consolidation. From and after the Effective Date, the shares
of common stock of the Bank outstanding immediately prior thereto held by
Unaffiliated Shareholders (the "Bank Shares") shall cease to be shares of stock
of any corporation or have any rights with respect to such stock, and the
certificates therefor (the "Bank Certificates") shall evidence only the right
to receive shares from Associated or to exercise such dissenters' rights, if
any, as the holders thereof may have under Wisconsin Statutes section 221.25.
After the Effective Date, each Unaffiliated Shareholder shall, upon surrender
of the Bank Certificates to the Exchange Agent or as otherwise provided herein,
be entitled to receive in exchange therefor and upon conversion thereof shares
from the Corporation as provided in section 2.01(c) hereof. No shares shall be
delivered to any Unaffiliated Shareholder unless his certificate therefor is so
surrendered; provided, however, that the Consolidated Bank may, in
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its discretion, permit the delivery of shares by Associated to Unaffiliated
Shareholders whose certificates for such shares have been lost, stolen or are
otherwise unavailable upon receipt of proof of loss and indemnification
acceptable to the Consolidated Bank in its sole discretion. If any shares are
to be delivered to any person other than to a person in whose name a Bank
Certificate surrendered for exchange is registered, it shall be a condition of
such exchange that the certificates so surrendered shall be properly endorsed
or otherwise be in proper form for transfer. The shares to be exchanged by the
Corporation upon the surrender of the Bank Shares shall be delivered by the
Exchange Agent against receipt of certificates for the Bank Shares surrendered
as provided herein as soon as practicable but in any event within five business
days after the Effective Date or the receipt of such certificates, whichever is
the last to occur.
2.03 Termination of Exchange Agent. Following termination of the
appointment of the Exchange Agent by the Corporation, any Bank Certificate not
previously surrendered to the Exchange Agent shall be exchanged and converted
into shares of the Corporation as provided in this Agreement only upon
surrender of such certificate to the Consolidated Bank at its office in
Reedsburg, Wisconsin or at such other place as the Board of Directors of the
Consolidated Bank may designate.
2.04 Nonpayment of Interest, Etc. No interest shall accrue or be
payable on any shares or other assets held by the Consolidated Bank or the
Exchange Agent for the benefit of holders of the Bank Certificates or with
respect to the rights evidenced by such certificates as provided in this
Agreement.
2.05 Further Powers. The Board of Directors of the Corporation shall
have the right, either before or after the Effective Date, to adopt additional
rules and regulations with respect to the surrender of the Bank Certificates
and exchange of the Associated Common Stock with respect thereto not
inconsistent with the provisions of this Agreement.
2.06 No Additional Shares Issued. No shares of capital stock of the
Consolidated Bank shall be issued in connection with the Consolidation.
3. Conditions.
3.01 Conditions to Consolidation. The consummation of the
Consolidation provided for herein is subject to the satisfaction prior to the
Effective Time of the following conditions, any or all of which may be waived
by consent of the Consolidating Banks with the written approval of the
Corporation:
(a) Shareholder Approval and Other Proceedings. The holders of
not less than ninety-five percent (95%) of the outstanding shares of the
capital stock of each Consolidating Bank shall have approved, ratified and
confirmed this Agreement and the consummation of the transactions contemplated
hereby, and the shareholders of each of the Consolidating Banks shall have
taken such other action as their respective managements may consider necessary
or advisable to effect the transactions contemplated hereby.
(b) Governmental Approvals. Each of the Consolidating Banks shall
have received approvals or exemptions relating to the transactions contemplated
by this Agreement from all governmental agencies and authorities whose
approval or exemption is, in the judgment of their respective managements,
necessary or advisable, including, without limitation, the Wisconsin
Commissioner of Banking, the Wisconsin Banking Review Board and the Federal
Deposit Insurance Corporation and (i) such approvals or exemptions and the
transactions contemplated hereby shall not have been contested or threatened to
be contested by any governmental authority or by any other party in any
proceeding and (ii) such approvals or exemptions are without conditions or with
conditions acceptable to the Corporation and Interim.
(c) Third Party Consents. The Corporation and each of the
Consolidating Banks shall have received a waiver, consent, amendment,
supplemental indenture or other appropriate acquiescence from each landlord,
creditor, trustee, note holder, lender or other person whose consent, waiver or
acquiescence is, in the
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judgment of their respective managements, necessary or advisable so that the
execution of this Agreement and the consummation of the transactions
contemplated hereby does not and will not result in a breach of or constitute a
default under or give anyone the right to accelerate payment or performance
under, the Articles of Incorporation, By-Laws or other organizational documents
of the Corporation or either of the Consolidating Banks or any lease, loan
agreement, indenture, contract or other agreement or instruments to which the
Corporation or either of the Consolidating Banks is a party or by which any of
them is bound.
(d) Holding Company Merger. The Holding Company Merger shall have
been consummated.
4. Termination, Amendment, Waiver.
4.01 Termination. This Agreement may be terminated and abandoned
before the Effective Date notwithstanding its approval and adoption by the
shareholders of the Consolidating Banks without liability or restriction of
either party:
(a) By mutual written consent of the Boards of Directors of both
of the Consolidating Banks; or
(b) By either Consolidating Bank by written notice to the other if
any condition set forth in section 3.01 hereof has not been met and has not
been waived in writing with the approval of the Corporation.
4.02 Waiver and Amendment. Any of the provisions of this Agreement may
be waived at any time by a party entitled to the benefit thereof upon authority
of the president of such party.
4.03 Notices, Effect of Termination. Written notice of any termination
and abandonment hereof as provided in section 4.01 or of any waiver or
amendment hereof pursuant to section 4.02 shall be given to the Corporation and
each of the Consolidating Banks. In the event of termination and abandonment
pursuant to section 4.01, this Agreement shall forthwith become void and have
no effect and there shall be no further liability of the parties hereto or
their respective officers, directors or shareholders hereunder or by reason of
the transactions contemplated hereby.
5. Miscellaneous.
5.01 Necessary Action; Best Efforts. From and after the date hereof,
each of the parties hereto covenants and agrees to use its best efforts to
consummate the transactions contemplated hereby and to obtain all requisite
third party consents and approvals.
5.02 Notices. All notices or other communications required or
permitted to be given under this Agreement shall be in writing and personally
delivered in a manner sufficient for the service of legal process under the
laws of Wisconsin or sent by first class mail, postage prepaid, to the parties
hereto at their respective addresses as set forth on the signature pages hereof
or to such changed address as a party may designate by notice duly given.
Copies of all such notices shall be delivered or mailed to Associated
Banc-Corp, 112 North Adams Street, P.O. Box 13307, Green Bay, WI 54307-3307,
Attention: H.B. Conlon, Chairman and Chief Executive Officer or to such other
address as the Corporation may hereafter designate by notice given to both of
the Consolidating Banks.
5.03 Binding Effect; No Third Party Action. This Agreement shall be
binding upon and inure to the benefit of the Consolidating Banks and no
shareholder or creditor of a party or any other person shall have any right to
enforce or maintain any action under this Agreement or by reason hereof.
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IN WITNESS WHEREOF, Interim and the Bank have caused this Agreement and
Plan of Consolidation to be executed by their duly authorized officers and
their corporate seals to be hereunto affixed as of the date first above
written.
ASSOCIATED INTERIM BANK
BY:______________________________
H.B. Conlon, President
Attest:
_________________________________
Brian R. Bodager, Secretary
FARMERS & MERCHANTS BANK
BY:______________________________
J. Robert Fusch, President
Attest:
_________________________________
STATE OF WISCONSIN)
: ss
COUNTY OF BROWN )
On this ____ day of ___________, 1996, before me, a notary public for this
state and county, personally came H.B. Conlon, President, and Brian R. Bodager,
Corporate Secretary, of Associated Interim Bank, and each in his capacity
acknowledged this instrument to be the act and deed of the association and the
seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
_________________________________
[SEAL] (Lori A. Flanagan)
Notary Public, Brown County
My commission expires
February 23, 1997
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STATE OF WISCONSIN )
: ss.
COUNTY OF _________ )
On this ____ day of ______________, 1996, before me, a notary public for
this state and county, personally came J. Robert Fusch, President, and
____________, _____________, of Farmers & Merchants Bank and each in his
capacity acknowledged this instrument to be the act and deed of the association
and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
_________________________________
[SEAL] (__________)
Notary Public, ____________County
My commission____________________
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EXHIBIT D
SUBCHAPTER XIII OF THE WISCONSIN BUSINESS CORPORATION LAW
DISSENTERS' RIGHTS
180.1301 DEFINITIONS.
In Section Section 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.
(lm) "Business combination" has the meaning given in Section 180.1130(3).
(2) "Corporation" means the issuer corporation or, if the corporate action
giving rise to dissenters' rights under Section 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 Section 180.1302 and who
exercises that right when and in the manner required by Section Section
180.1320 to 180.1328.
(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 Section
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
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all of 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 Section 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 Section
180.1103 or by the articles of incorporation.
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2. The issuer corporation is a subsidiary that is merged with its parent
under Section 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.
(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 Section 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 Section 180.0604.
(3) Notwithstanding sub. (1)(a) to (c), if the issuer corporation is a
statutory close corporation under Section Section 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 Section 180.1803, 180.1813(1)(d) or
(2)(b), 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.
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(5) Except as provided in Section 180.1833, a shareholder or beneficial
shareholder entitled to dissent and obtain payment for his or her shares under
Section Section 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 corporation the shareholder's written consent to
the dissent not later than the time that the beneficial shareholder
asserts 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 Section
180.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders and beneficial shareholders are or may be
entitled to dissenters' rights under Section Section 180.1301 to 180.1331 and
shall be accompanied by a copy of those sections.
(2) If corporate action creating dissenters' rights under Section 180.1302
is authorized without a vote of shareholders, the corporation shall notify, in
writing and in accordance with Section 180.0141, all shareholders entitled to
assert dissenters' rights that the action was authorized and send them the
dissenters' notice described in Section 180.1322.
180.1321 NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If proposed corporate action creating dissenters' rights under Section
180.1302 is submitted to a vote at a shareholders' 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 Section 180.0141 of the shareholder's
or 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 Section Section 180.1301
to 180.1331.
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180.1322 DISSENTERS' NOTICE.
(1) If proposed corporate action creating dissenters' rights under Section
180.1302 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders and beneficial
shareholders who satisfied Section 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 Section 180.0141 and shall include or have attached all of the following:
(a) A statement indicating where the shareholder or beneficial
shareholder must send the payment demand and 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 requires the shareholder or beneficial
shareholder asserting dissenters' rights to certify 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 is delivered.
(e) A copy of Section Section 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 Section 180.1322, or a beneficial shareholder whose shares
are held by a nominee who is sent a dissenters' notice described in Section
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 Section 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 Section Section 180.1301 to 180.1331.
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
Section 180.1326.
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(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 Section 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 Section 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
Section 180.1328 if the dissenter is dissatisfied with the payment.
(e) A copy of Section 180.1301 to Section 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 Section 180.1322 for demanding payment,
the issuer corporation shall return the deposited certificates and release the
transfer restrictions imposed on uncertificated 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 Section 180.1322 and
repeat the payment demand procedure.
180.1327 AFTER-ACQUIRED SHARES.
(1) A corporation may elect to withhold 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 dissenters' notice under Section
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 Section
180.1328 if the dissenter is dissatisfied with the offer.
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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 Section 180.1325, or reject the offer under Section
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 Section
180.1325 or offered under Section 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 Section 180.1325
within 60 days after the date set under Section 180.1322 for demanding
payment.
(c) The issuer corporation, having failed to effectuate the
corporate action, does not return the deposited certificates or release
the transfer restrictions imposed of uncertificated shares within 60 days
after the date set under Section 180.1322 for demanding payment.
(2) A dissenter waives his or her right 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 Section 180.0141.
180.1330 COURT ACTION.
(1) If a demand for payment under Section 180.1328 remains unsettled, the
corporation shall bring a special proceeding within 60 days after receiving the
payment demand under Section 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 this 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 Section 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.
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(b) The fair value, plus accrued interest, of his or her shares acquired
on or after the date specified in the dissenters' notice under Section
180.1322(2)(c), for which the corporation elected to withhold payment under
Section 180.1327.
180.1331 COURT COSTS AND COUNSEL FEES.
(1) (a) Notwithstanding Section Section 814.01 to 814.04, the court
in a special proceeding brought under Section 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 Section Section 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 Section 180.1328.
(2) The parties shall bear their own expenses of the proceeding, except
that, notwithstanding Section Section 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
Sections 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.
(3) Notwithstanding Section Section 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.
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EXHIBIT E
WISCONSIN STATUTES SECTION 221.25
221.25 CONSOLIDATION OF BANKS. (1) Any 2 or more banks may, with the
approval of the commissioner of banking, consolidate into one bank under the
charter of either existing bank on such terms and conditions as may be lawfully
agreed upon by a majority of the board of directors of each bank proposing to
consolidate and be ratified and confirmed by the affirmative vote of the
stockholders of each such bank owning at least two-thirds of its capital stock
outstanding and at least two-thirds of any outstanding preferred stock having
voting rights, at a meeting to be held on call of the directors, after sending
notice of the time, place and object of the meeting to each shareholder of
record by registered mail at least 30 days prior to said meeting; provided that
the capital stock of such consolidated bank shall not be less than that
required under existing law for the organization of a state bank in the place
in which it is located. When such consolidation is approved by the
commissioner, any shareholder of either of the banks so consolidated who has
not voted for such consolidation shall be given notice of the approval by the
bank in which the shareholder holds an interest and of the shareholder's right
to receive the appraised value for the shareholder's shares. If within 20 days
after the date that notice of approval is mailed or delivered to a shareholder,
the shareholder notifies the directors of the bank in which the shareholder is
interested that the shareholder dissents from the plan of consolidation as
adopted and approved and desires to withdraw from such bank, the shareholder
shall be entitled to receive in cash the value of the shares so held by the
shareholder, to be ascertained by an appraisal made by a committee of 3
persons, one to be selected by the shareholders, one by the directors, and the
3rd by the 2 so chosen; the expense of such appraisal shall be borne by the
bank; and in case the value so fixed shall not be satisfactory to the
shareholder he or she may within 5 days after being notified of the appraisal
appeal to the commissioner, who shall cause a reappraisal to be made by an
appraiser or appraisers to be named by said commissioner, which appraisal shall
be final and binding, and if said reappraisal shall exceed the value fixed by
said committee the bank shall pay the expense of reappraisal, otherwise the
shareholder shall pay said expense, and the value so ascertained and determined
shall be deemed to be a debt due and be forthwith paid to said shareholder from
said bank, and the share or shares so paid shall be surrendered and after such
notice as the board of directors may provide, be sold at public auction within
30 days after the final appraisement provided for by this section.
(2) The bank or banks consolidating with another bank under sub.(1) shall
not be required to go into liquidation but their assets and liabilities shall
be reported by the bank with which they have consolidated; and all the rights,
franchises and interests of said banks so consolidated in and to every species
of property, personal and mixed, and choses in action thereto belonging, shall
be deemed to be transferred to and vested in such bank into which it is
consolidated without any deed or other transfer, and the said consolidated bank
shall hold and enjoy the same and all rights of property, franchises and
interests in the same manner and to the same extent as was held and enjoyed by
the bank or banks so consolidated therewith.
(3) The commissioner may after consultation with the banking review board
make recommendations to any bank or trust company within this state as to
advisability of consolidation with other banks and may make recommendations as
to terms for consolidation or merger of banks in order to avoid a condition of
oversupply of banks in any community or area of the state. The commissioner
may also, if requested so to do, act as mediator or arbitrator to fix any of
the terms of any such consolidation or merger. It shall be within the power of
the board of directors of any bank or trust company organized under the laws of
this state to appropriate a reasonable amount from the assets of the bank
toward assisting in bringing about a consolidation or merger of banks or to aid
in reorganization or in avoiding the closing of a bank where such action is
deemed to be in the interests of safe banking and the maintenance of credit and
banking facilities in the county in which such bank is located.
(4) Application for approval of a consolidation under sub.(1) shall be made
on a form prescribed by the commissioner. The application shall be accompanied
by a fee of $5,000, except that if more than 3 banks are to be consolidated the
fee is $5,000 plus $1,000 for each bank after the 3rd bank.
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EXHIBIT F
F&M BANKSHARES OF REEDSBURG, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following commentary presents additional information pertaining to the
financial condition and results of operations for F&M Bankshares of Reedsburg,
Inc. ("F&M" or "Company"). This discussion and analysis should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto included herein. Selected financial data for the years ended December
31, 1994 and 1993 are derived from the Company's unaudited consolidated
financial statements.
SELECTED FINANCIAL DATA
(Amounts in thousands, except share and ratio data)
<TABLE>
<CAPTION>
As of and for the year ended December 31,
----------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income $ 10,418 $ 9,145 $ 8,984
Interest expense 6,342 5,173 4,922
-------- -------- --------
Net interest income 4,076 3,972 4,062
Provision for credit losses 1,685 46 87
Other income 372 370 447
Other expenses 3,058 2,781 2,614
-------- -------- --------
Income (loss) before income taxes and
minority interest (295) 1,515 1,808
Income tax expense (benefit) (388) 385 402
-------- -------- --------
Income before minority interest 93 1,130 1,406
Minority interest 24 80 99
-------- -------- --------
Net income $ 69 $ 1,050 $ 1,307
-------- -------- --------
PER COMMON SHARE DATA:
Net income per share:
Income before minority interest $ 32.40 $ 392.09 $ 487.86
Minority interest 8.57 28.01 34.35
-------- -------- --------
Net income per share $ 23.83 $ 364.08 $ 453.51
-------- -------- --------
Cash dividends per share -- -- --
Weighted average shares outstanding 2,883 2,883 2,883
BALANCE SHEET DATA:
Total assets $138,351 $133,403 $122,210
Loans, net of unearned interest 102,986 97,084 89,287
Allowance for credit losses 2,533 900 860
Total deposits 118,418 115,943 105,953
Stockholders' equity 8,073 7,916 6,997
FINANCIAL RATIOS:
Return on beginning assets .05% .86% 1.12%
Return on beginning equity .87% 15.00% 22.97%
Equity to total assets (year end) 5.84% 5.93% 5.73%
Book value per share $ 2,800 $ 2,746 $ 2,427
Dividend payout ratio -- -- --
</TABLE>
F-1
<PAGE> 128
CHANGES IN FINANCIAL CONDITION
During 1995, the Company experienced net asset growth of $4,950,000, or 3.7%.
Gross loans grew by $5,900,000, or 6.1%, as a result of continuing management
efforts to expand its loan portfolio during 1995. This loan growth was lower
than 1994's loan growth of $7,800,000, or 8.7%, from year end 1993. As
indicated in Note 3 to the consolidated financial statements, loan growth was
attributable primarily to the real estate mortgage portfolio (approximately
$10,000,000) while F&M's commercial portfolio decreased $5,300,000. Such
change in the mix of F&M's loan portfolio is a result of management's
continuing effort to meet demand for loans on second homes in vacation areas in
the Bank's market area. The increase in real estate mortgages was partially
funded by an increase in advances ($2,000,000 above year end 1994 levels) from
the Federal Home Loan Bank. Virtually all of the loan growth came from within
the Bank's trade area. At year end 1995, F&M's ratio of net loans to total
assets was 72.6%.
As a result of the proposed business combination with Associated Banc-Corp (as
further discussed in Note 1), the continued growth in the loan portfolio, and a
routine state bank regulatory examination, F&M management and the Board of
Directors adopted a change in the methodology of estimating the allowance for
credit losses' adequacy at year-end 1995. Among the conditions contained in
the Agreement and Plan of Merger between F&M and Associated is a requirement
that Reedsburg's allowance for credit losses will be maintained at a minimum of
2.45% of total loans outstanding. This minimum allowance amount was derived by
due diligence performed by Associated as a result of the proposed merger. It
represents an estimate of credit losses on F&M's loan portfolio, and related
off-balance sheet arrangements, considering the methodology used by Associated
in estimating such allowances. This analysis also reflected current credit
quality and portfolio administration risks that were present in the Company's
loan portfolio. The methodology used by F&M at year end 1995, and the
methodology to be utilized subsequent to consummation of the proposed business
combination, is utilized by Associated Banc-Corp in determining its banking
affiliates' allowance for credit losses. The result of such change in estimate
was an increase in the allowance for credit losses as a percent of gross loans
from .93% at year end 1994 to 2.46% at year end 1995.
Total investment securities increased by $566,000, or 2.0% in 1995. The mix
between available for sale and held to maturity securities was changed as
proceeds from maturities and sales were reinvested. As a result, F&M's
investment in available for sale securities in 1995 declined by approximately
$1,900,000.
Deposits grew by approximately $2,500,000, or 2.1%, with the bulk of the
increase coming in time deposit accounts. Virtually all of the deposit growth
came from the Bank's local trade area.
Due to the change in methodology related to the allowance for loan losses and
the related provision for credit losses at year end, the Company's total
stockholders' equity increased a modest $158,000, including the $89,000 net
unrealized gain on available for sale securities, for 1995. This compares to a
$918,000 increase in total stockholders' equity for 1994. Management
anticipates a return to the income levels of 1994 and 1993 in 1996.
Management knows of no trend or uncertainty that would cause it to believe that
the pattern of asset and deposit growth will not continue in 1996 and beyond.
RESULTS OF OPERATIONS
As discussed above under changes in financial condition, the net income of F&M
was adversely impacted in 1995 by management's decision to change its
methodology in estimating the allowance for credit losses as discussed in Note
1. The additional provision for credit losses at year end 1995 had the effect
of reducing net income by approximately $970,000. Management anticipates the
provision for credit losses for 1996 to return to 1994 and 1993 levels.
F-2
<PAGE> 129
Net interest income increased by 2.6% in 1995 compared to 1994 versus the 2.2%
decline in 1994 compared to 1993. Management has strived to manage interest
rate risk, such that unforeseen increases or decreases in those rates will not
have a significant unfavorable impact on bank earnings. By managing its
earning assets and liabilities, it can be assured that if, for example, as
rising national rates increase costs of deposits, a similar increase in yield
on earning assets, such as loans and investments, will also occur. Management
believes that it has managed its interest rate risk in a prudent and acceptable
manner, as demonstrated by the bank's consistent net interest income levels.
In managing net interest income, management has attempted to maximize income by
investing funds in the highest yielding assets, yet maintaining a balance of
credit and interest rate risk that is prudent. Accordingly, management has
strived to increase the Bank's loan portfolio over the last several years. By
maintaining good credit standards, the Bank will benefit from higher interest
income than it would if the funds were invested in investment securities.
Other income for F&M has remained relatively flat over the period 1993 through
1995. Continuing competition in the local market area puts downward pressure
on the bank's service charge revenue.
Other expenses increased $278,000, or 10%, in 1995 over 1994 levels which were
up $167,000, or 6.4% over 1993 levels. Salaries and employee benefits for 1995
were up $193,000, or 11.1%, over 1994. Such salary and employee benefit costs
have trended upward since 1993 due to the increase in loan activity and the
Bank's need to provide adequate compensation to its staff to adequately
underwrite and monitor the larger loan portfolio. Due to the rebate from the
FDIC on the Bank's deposit premium, deposit insurance costs went down $88,000
in 1995. Offsetting this decrease was an increase of $68,000 in legal and
accounting fees in 1995. This increase is primarily attributable to costs
associated with the proposed business combination with Associated as described
further in Note 1 to the consolidated financial statements which were required
to be expensed by the Company in 1995 pursuant to the provisions of the merger
agreement.
The bank knows of no major trends or uncertainties, other than those discussed
in this report, that are expected to significantly impact 1996 operating
results.
LIQUIDITY AND CAPITAL RESOURCES
The concept of liquidity comprises the ability of an enterprise to maintain
sufficient cash flow to meet its needs and obligations on a timely basis. Bank
liquidity must thus be considered in terms of the nature and mix of the
institution's sources and uses of funds.
Bank liquidity is provided from several asset categories. The asset side of
the balance sheet provides liquidity through regular maturities of investment
securities and loans. Cash, investment securities held to maturity with
maturities of one year or less and investment securities available for sale,
deposits with banks and federal funds sold are primary sources of asset
liquidity. At December 31, 1995, these categories totaled $13,400,000.
The Company has no current plans for major capital expenditures in 1996.
EFFECTS OF INFLATION
Banks are affected differently than other commercial enterprises by the effects
of inflation. Some reasons for these disparate effects are a) premises and
equipment for banks represent a relatively small proportion of total assets; b)
a bank's asset and liability structure is substantially monetary in nature,
which can be converted into a fixed number of dollars regardless of changes in
prices, such as loans and deposits; and c) the majority of a bank's income is
generated through net interest income and not from goods sold or services
rendered.
F-3
<PAGE> 130
ACCOUNTING AND REGULATORY CAPITAL REQUIREMENTS
The Federal Reserve Board, the Company's primary regulator, has adopted
risk-based capital regulations which require the Company to maintain a
risk-based capital/assets ratio of at least 8%. The Company's capital ratios
and those of the Bank are significantly in excess of minimum ratios required by
their respective regulators. For detailed information on the Bank's ratios,
see Note 11 to the consolidated financial statements. The Company believes
that its strong capital/assets ratio enables it to maintain at least the
minimum required capital even in the unlikely event that it must absorb
significant losses in the future. The FDIC and Commissioner of Banking for the
State of Wisconsin examine and regulate the Bank.
Current risk-based capital regulations are being expanded to incorporate the
effects of interest rate risk upon capital adequacy. Although final guidelines
have not yet been established, initial calculations indicate that the effects
of interest rate risk upon Bank capital will result in the Bank capital to
continue to be well within acceptable limits.
Management is not aware of any other pending regulatory requirements or
recommendations that, if enacted, would have an adverse impact on the Company's
capital, liquidity, or results of operations.
F-4
<PAGE> 131
ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES
For each period ended shown, the allowance for credit losses has been allocated
to the following categories in amounts deemed reasonably necessary to provide
for the possibility of losses being incurred within each category of loans at
the dates indicated.
<TABLE>
<CAPTION>
(Amounts in thousands, except percents)
December 31, 1995 December 31, 1994 December 31, 1993
--------------------- --------------------- ---------------------
Percent of Percent of Percent of
loans in loans in loans in
Balance at end of each category each category each category
period applicable to: Amount to total loans Amount to total loans Amount total loans
- --------------------- ------ -------------- ------ -------------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Commercial loans $ 500 11.7% $ 180 17.9% $ 180 20.9%
Real estate - mortgages 1,780 77.5% 630 71.2% 590 69.8%
Consumer and other loans 253 10.8% 90 10.9% 90 9.3%
------ ----- ----- ----- ----- ------
Total $2,533 100.0% $ 900 100.0% $ 860 100.0%
====== ===== ===== ===== ===== ======
</TABLE>
F-5
<PAGE> 132
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the loan balance at the end of each period;
changes in the allowance for credit losses arising from loans charged off and
recoveries on loans previously charged off, by loan category; and additions to
the allowance which have been charged to operating expenses.
<TABLE>
<CAPTION>
(Amounts in thousands, except ratios)
As of and for the year ended December 31,
---------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Loan balance at year end $ 102,986 $ 97,084 $ 89,287
========== ========= =========
Balance of allowance for credit losses at
beginning of period $ 900 $ 860 $ 819
Loans charged off:
Commercial loans 35 5 8
Real estate - mortgage loans 3 -- 41
Consumer and other loans 15 1 3
---------- --------- ---------
Total loans charged off 53 6 52
Recoveries of loans previously charged off:
Commercial loans -- -- 1
Real estate - mortgage loans -- -- --
Consumer and other loans 1 -- 5
---------- --------- ---------
Total recoveries 1 0 6
Net loans charged off 52 6 46
Additions to allowance for credit losses
charged to operating expense 1,685 46 87
---------- --------- ---------
Balance of allowance for credit losses at
end of period $ 2,533 $ 900 $ 860
========== ========= =========
Ratio of net charge-offs during period to
loans outstanding at period end .05% .01% .05%
</TABLE>
F-6
<PAGE> 133
PAST DUE AND NONPERFORMING LOANS
The following table reflects as of the periods ended the aggregate amounts of
loans which are nonaccrual or troubled with debt restructurings. There were no
accruing loans past due 90 days or longer as to principal or interest payments
for any of the periods shown.
<TABLE>
<CAPTION>
(Amounts in thousands)
December 31
--------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Nonaccrual (impaired) loans $ 338 $ 104 $ 151
Troubled debt restructurings -- -- --
----- ----- -----
Total $ 338 $ 104 $ 151
===== ===== =====
</TABLE>
In light of the nominal amount of nonaccrual loans that the Company has
experienced prior to year end 1995, the Company has not maintained records for
the periods presented as to the interest income recorded and foregone on the
loans identified above. From the total loan amounts indicated, management
believes that the amounts of such interest are clearly immaterial to the
reader's analysis of the Company's past due and nonperforming loans.
Loans are normally placed on non-accrual status when they become contractually
past due 90 days or more as to interest or principal payments. Additionally,
whenever management becomes aware of facts or circumstances that may adversely
impact on the collectibility of principal or interest on loans, it is
management's practice to place such loans on non-accrual status immediately,
rather than delaying such action until the loans become 90 days past due.
Previously accrued and uncollected interest on such loans is reversed,
amortization of related loan fees is suspended, and income is recorded only to
the extent that interest payments are subsequently received in cash and a
determination has been made that the principal balance of the loan is
collectible. If collectibility of the principal is in doubt, payments received
are applied to loan principal. As of December 31, 1995, management believes
that there are no potential problem loans which would require disclosure.
Loan concentrations exceeding 10% of the total loan portfolio consist of real
estate mortgages and commercial loans which approximate 77.5% and 11.7%,
respectively, of total loans as of December 31, 1995.
F-7
<PAGE> 134
F&M BANKSHARES OF REEDSBURG, INC.
REEDSBURG, WISCONSIN
CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION WITH RESPECT TO 1994 AND 1993 IS UNAUDITED)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1995, 1994 & 1993
<S> <C>
INDEPENDENT AUDITOR'S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11
Consolidated Statements of Changes in Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . F-12
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-13
Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18
</TABLE>
F-8
<PAGE> 135
Board of Directors
F&M Bankshares of Reedsburg, Inc.
and Subsidiaries
Reedsburg, Wisconsin
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying consolidated balance sheet of F&M Bankshares
of Reedsburg, Inc. and Subsidiaries as of December 31, 1995, and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, based on our audit, the consolidated financial statements of
F&M Bankshares of Reedsburg, Inc. referred to above present fairly, in all
material respects, the financial position of F&M Bankshares of Reedsburg, Inc.
and Subsidiaries as of December 31, 1995, and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.
As discussed in the Summary of Significant Accounting Policies and Note 2 to
the consolidated financial statements, the Company changed its method of
accounting for investments in debt and marketable equity securities to adopt
the provisions of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," at January 1, 1994.
CLIFTON, GUNDERSON & CO.
Madison, Wisconsin
January 15, 1996, except for note 1,
as to which the date is April 30, 1996
F-9
<PAGE> 136
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,288,996 $ 2,231,295
Federal funds sold 2,704,000 3,315,000
------------- -------------
Cash and cash equivalents 4,992,996 5,546,295
Investment securities:
Held to maturity (fair value of $23,596,099 and
$20,140,266 at December 31, 1995 and 1994,
respectively) 23,256,716 20,833,233
Available for sale, stated at fair value 5,897,570 7,755,338
------------- -------------
Total investment securities 29,154,286 28,588,571
------------- -------------
Loans 102,985,715 97,084,116
Less allowance for credit losses (2,533,096) (900,000)
------------- -------------
Net loans 100,452,619 96,184,116
------------- -------------
Bank premises and equipment 415,413 445,276
Accrued interest receivable 1,181,610 1,075,591
Deferred tax asset 785,291 167,312
Other assets 1,369,063 1,395,490
------------- -------------
TOTAL ASSETS $ 138,351,278 $ 133,402,651
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand $ 10,277,614 $ 9,988,575
Interest-bearing demand 23,883,566 23,837,539
Savings 8,019,055 7,922,753
Time 76,237,507 74,194,239
------------- -------------
Total deposits 118,417,742 115,943,106
Accrued interest payable 628,458 461,528
Short-term borrowings 1,400,000 1,400,000
Long-term debt 9,000,000 7,000,000
Other liabilities 183,692 35,958
------------- -------------
Total liabilities 129,629,892 124,840,592
------------- -------------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 647,923 646,380
------------- -------------
STOCKHOLDERS' EQUITY
Common stock, no stated value; authorized 10,000
shares;
7,016 issued; 2,883 shares outstanding 151,215 151,215
Surplus 3,638,725 3,638,725
Undivided profits 5,689,657 5,620,953
Net unrealized loss on available-for-sale investment
securities, net of income taxes of ($27,158) and
($84,425) in 1995 and 1994, respectively (42,244) (131,324)
------------- -------------
9,437,353 9,279,569
Less 4,133 shares of treasury stock at cost (1,363,890) (1,363,890)
------------- -------------
Total stockholders' equity 8,073,463 7,915,679
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 138,351,278 $ 133,402,651
============= =============
</TABLE>
These consolidated financial statements should be read only in connection
with the accompanying summary of significant accounting policies and notes
to consolidated financial statements.
F-10
<PAGE> 137
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $8,372,289 $7,321,882 $7,104,144
Interest on investment securities:
Taxable 1,199,739 1,108,307 1,312,319
Exempt from Federal income taxes 727,136 619,681 505,145
Interest on Federal funds sold 118,869 95,297 62,224
---------- ---------- ----------
Total interest income 10,418,033 9,145,167 8,983,832
---------- ---------- ----------
INTEREST EXPENSE
Interest on deposits 5,628,920 4,612,291 4,391,686
Interest on short-term borrowings 116,820 111,376 108,948
Interest on long-term debt 596,010 449,626 421,693
---------- ---------- ----------
Total interest expense 6,341,750 5,173,293 4,922,327
---------- ---------- ----------
Net interest income 4,076,283 3,971,874 4,061,505
PROVISION FOR CREDIT LOSSES 1,685,000 46,034 86,665
---------- ---------- ----------
Net interest income after provision
for credit losses 2,391,283 3,925,840 3,974,840
---------- ---------- ----------
OTHER INCOME
Service charges on deposit accounts 81,051 80,121 84,366
Other service charges and fees 127,725 152,191 147,952
Net realized gains (losses) on
investments 9,471 (7,783) 41,010
Other operating income 153,477 145,460 173,529
---------- ---------- ----------
Total other income 371,724 369,989 446,857
---------- ---------- ----------
OTHER EXPENSES
Salaries and employee benefits 1,931,069 1,738,235 1,681,820
Net occupancy expense of bank premises 150,755 132,542 136,468
FDIC premium, net of rebate 154,034 242,380 205,605
Data processing fees 180,870 176,027 169,358
Legal and accounting 146,682 78,284 62,818
Directors' fees 34,600 32,400 16,200
Stationery and supplies 47,334 47,500 54,043
Net cost of operation of other
real estate - 14,193 20,727
Other operating expense 412,953 318,755 266,756
---------- ---------- ----------
Total other expenses 3,058,297 2,780,316 2,613,795
---------- ---------- ----------
Income (loss) before income taxes
and minority interest (295,290) 1,515,513 1,807,902
INCOME TAX EXPENSE (BENEFIT) (388,709) 385,113 401,411
---------- ---------- ----------
Income before minority interest 93,419 1,130,400 1,406,491
MINORITY INTEREST 24,715 80,743 99,027
---------- ---------- ----------
NET INCOME $ 68,704 $1,049,657 $1,307,464
========== ========== ==========
NET INCOME PER SHARE
Income before minority interest $ 32.40 $ 392.09 $ 487.86
Minority interest 8.57 28.01 34.35
---------- ---------- ----------
NET INCOME PER SHARE $ 23.83 $ 364.08 $ 453.51
========== ========== ==========
</TABLE>
These consolidated financial statements should be read only in
connection with the summary of significant accounting
policies and notes to consolidated financial statements.
F-11
<PAGE> 138
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 1995, 1994 and 1993
(1994 and 1993 Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Gain (Loss) on
Available-
Common Undivided For-Sale Treasury
Stock Surplus Profits Securities Stock Total
----- ------- --------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1993 $151,215 $3,638,725 $3,263,832 $ - $(1,363,890) $5,689,882
Net income - - 1,307,464 - - 1,307,464
-------- ---------- ---------- --------- ----------- ----------
BALANCE, DECEMBER 31, 1993 151,215 3,638,725 4,571,296 - (1,363,890) 6,997,346
Net income - - 1,049,657 - - 1,049,657
Implementation of change in accounting for
marketable debt and equity securities, net
of tax effect of $10,929 - - - 29,942 - 29,942
Change in net unrealized gain (loss) on
available-for-sale securities, net of
tax benefit of ($95,354) - - - (161,266) - (161,266)
-------- ---------- ---------- --------- ----------- ----------
BALANCE, DECEMBER 31, 1994 151,215 3,638,725 5,620,953 (131,324) (1,363,890) 7,915,679
Net income - - 68,704 - - 68,704
Change in net unrealized gain on available-
for-sale securities, net of tax effect
of $57,267 - - - 89,080 - 89,080
-------- ---------- ---------- --------- ----------- ----------
-
BALANCE, DECEMBER 31, 1995 $151,215 $3,638,725 $5,689,657 $ (42,244) $(1,363,890) $8,073,463
======== ========== ========== ========= =========== ==========
</TABLE>
These consolidated financial statements should be read only in connection
with the accompanying summary of significant accounting policies and notes
to consolidated financial statements.
F-12
<PAGE> 139
F&M BANKSHARES OF REEDSBURG, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 68,704 $1,049,657 $1,307,464
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for credit losses 1,685,000 46,034 86,665
Depreciation and amortization 72,138 70,054 80,236
Deferred income taxes (617,979) (101,867) (65,445)
Net amortization (accretion) of premiums and discounts (6,353) 147,729 203,547
Loss (gain) on sales of securities, net (9,471) 7,783 (41,010)
(Increase) decrease in interest receivable and other assets (79,591) 43,585 (3,437)
Increase (decrease) in interest payable and other liabilities 314,664 (20,018) (163,238)
Increase in minority interest in consolidated subsidiary 1,543 19,915 69,327
----------- ---------- ----------
Net cash provided by operating activities 1,428,655 1,262,872 1,474,109
----------- ---------- ----------
INVESTING ACTIVITIES
Net increase in securities sold under agreements to repurchase - - (2,697,159)
Purchases of securities - - (15,181,683)
Purchases of held-to-maturity securities (4,806,739) (8,264,782) -
Purchase of available-for-sale securities (2,007,500) (2,370,844) -
Proceeds from sales of securities - - 2,625,500
Proceeds from sales of available-for-sale securities 3,009,219 2,995,625 -
Proceeds from maturities of securities - - 11,423,586
Maturities of held-to-maturity securities 2,375,496 5,681,800 -
Maturities of available-for-sale securities 1,028,438 209,589 -
Net increase in loans (5,953,503) (7,802,973) (12,291,302)
Purchases of premises and equipment, net of disposals (102,001) (13,232) (284,407)
Net increase (decrease) in federal funds purchased - (487,000) 487,000
----------- ---------- ----------
Net cash used by investing activities (6,456,590) (10,051,817) (15,918,465)
----------- ---------- ----------
FINANCING ACTIVITIES
Net increase in deposits 2,474,636 9,990,580 8,427,687
Proceeds from long-term debt 3,000,000 1,000,000 5,800,000
Repayment of long-term debt (1,000,000) - -
Net decrease in short-term borrowings - (230,000) -
----------- ---------- ----------
Net cash provided by financing activities 4,474,636 10,760,580 14,227,687
----------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (553,299) 1,971,635 (216,669)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 5,546,295 3,574,660 3,791,329
----------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 4,992,996 $5,546,295 $3,574,660
=========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 6,174,820 $5,097,523 $4,934,912
Income taxes 315,200 403,938 683,421
Supplemental schedule of non-cash investing activities:
Loans transferred to other real estate - - 32,847
Loans made in connection with the disposition of
other real estate - 105,000
Securities initially classified as available-for-sale
from investment securities upon adoption of FAS 115 - 6,822,121 -
</TABLE>
These consolidated financial statements should be read only in connection with
the accompanying summary of significant accounting policies and notes to
consolidated financial statements.
F-13
<PAGE> 140
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
The accounting and reporting policies of F&M Bankshares of Reedsburg, Inc., and
its subsidiaries (the "Company") conform to generally accepted accounting
principles and to general practice within the banking industry. The following
is a description of the more significant of those policies.
NATURE OF BUSINESS
The Company, through its subsidiary bank, provides a full range of banking and
related financial services to individual and corporate customers located in
southwest and central Wisconsin. The Company's primary source of revenue is
providing loans to customers, who are predominantly small and middle market
businesses and middle market individuals. The other major source of revenue is
provided by interest income from investment securities. The Company is subject
to competition from other financial institutions and is regulated by federal
and state banking agencies and undergoes periodic examinations by those
agencies.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements include the accounts of the Company and
subsidiaries, the 93.64%-owned (at December 31, 1995 and 1994) Farmers &
Merchants Bank (the "Bank") and its wholly-owned subsidiary, Fusch Corp.
("Fusch"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
The preparation of consolidated 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 consolidated
financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
Estimates that are particularly susceptible to significant change relate to the
determination of the allowance for credit losses.
CASH EQUIVALENTS
For purposes of reporting cash flows, cash equivalents include amounts due from
banks and federal funds sold. Generally, federal funds are sold for one-day
periods.
INVESTMENT SECURITIES
At January 1, 1994, the Company and its subsidiaries adopted Financial
Accounting Standards Board's SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." The statement addresses the accounting and
reporting for investments in equity securities that have readily determinable
fair values, and all investments in debt securities. Accordingly, the Company
was required to classify its debt securities into one of three categories:
held-to-maturity, available-for-sale, or trading. Held-to-maturity securities
are those which management has the positive intent and ability to hold to
maturity. Available-for-sale securities are those securities which management
may sell prior to maturity as a result of changes in interest rates, prepayment
factors, or as part of the Company's overall asset and liability strategy.
Trading securities are those securities bought and held principally for the
purpose of selling them in the near term. The Company currently has no
securities designated as trading.
Held-to-maturity securities are recorded at cost adjusted for amortization of
premium and accretion of discount to the earlier of the call date or maturity
date using the level yield method. A decline in the market value of a security
classified as either held-to-maturity or available-for-sale that is expected to
be permanent is written down to its market value through a charge to income
resulting in the establishment of a new cost basis for the security.
Subsequent increases, if any, in the market value of such securities are not
recognized until such securities mature or are sold.
F-14
<PAGE> 141
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
INVESTMENT SECURITIES (Continued)
Available-for-sale securities are recorded at fair value, which is based on
quoted market prices. Unrealized gains and losses, net of the related income
tax effect, are excluded from income and reported as a separate component of
stockholders' equity until realized.
For available-for-sale securities, gains or losses are realized and included in
noninterest income upon sale, based on the amortized cost of the individual
security sold. All previous fair value adjustments included in the separate
component of stockholder's equity are reversed upon sale.
Prior to December 31, 1993, investments in debt and equity securities were
stated at cost, adjusted for amortization of premium to the call date or
maturity and accretion of discount to maturity using methods which approximate
the interest method. Gains or losses on disposition were based upon the
adjusted cost of the specific security.
LOANS
Loans are stated at the principal amount outstanding net of any unearned
income. Unearned income on certain installment loans is recognized on a basis
that generally approximates a level yield on the outstanding balances
receivable. Interest on all other loans is based upon the principal amount
outstanding.
Effective January 1, 1995, the Company concurrently adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," and SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures." SFAS No. 114 requires that impaired loans be measured based on
the present value of expected future cash flows discounted at the loan's
effective interest rate or the market price or fair value of the collateral if
the loan is collateral dependent. SFAS No. 118 amends SFAS No. 114 to allow a
creditor to use existing methods for recognizing interest income on an impaired
loan and amends certain disclosure requirements. The adoption of SFAS No. 114
and No. 118 had no significant effect on the Company's consolidated financial
statements.
Loans are normally placed on non-accrual status when contractually past due 90
days or more as to interest or principal payments. Additionally, whenever
management becomes aware of facts or circumstances that may adversely impact on
the collectibility of principal or interest on loans, it is management's
practice to place such loans on non-accrual status immediately, rather than
delaying such action until the loans become 90 days past due. Previously
accrued and uncollected interest on such loans is reversed, amortization of
related loan fees is suspended, and income is recorded only to the extent that
interest payments are subsequently received in cash and a determination has
been made that the principal balance of the loan is collectible. If
collectibility of the principal is in doubt, payments received are applied to
loan principal.
Loan origination fees, non-refundable fees and direct loan origination costs on
real estate and commercial loans are, in the opinion of management,
insignificant and are not accounted for as an adjustment of yield of the
related loan categories.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses is a reserve for estimated credit losses.
Credit losses arise primarily from the loan portfolio, but may also be derived
from other sources, including commitments to extend credit, guarantees and
standby letters of credit. Actual credit losses, net of recoveries, are
deducted from the allowance for credit losses. A provision for credit losses,
which is a charge against earnings, is added to bring the allowance to a level
that, in management's judgment, is adequate to absorb losses inherent in the
loan portfolio. Management performs an ongoing assessment of the loan
portfolio to determine the appropriate level of the allowance. The factors
considered in the evaluation include, but are not necessarily limited to,
estimated losses from loan and off-balance sheet arrangements, general economic
conditions, deterioration in credit concentration or pledged collateral,
historical loss experience, and trends in portfolio volume, maturity,
composition, delinquencies and non-accruals.
F-15
<PAGE> 142
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
ALLOWANCE FOR CREDIT LOSSES (Continued)
Management believes that the allowance for credit losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance for
credit losses. Such agencies may require the Company to recognize additions to
the allowance based on their judgments about information available to them at
the time of their examinations.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed on the straight-line method over the estimated useful
lives of the related assets. Maintenance and repairs are charged to expense as
incurred while additions or major improvements are capitalized and depreciated
over their estimated useful lives. Estimated useful lives for premises include
periods up to 50 years and for equipment include periods up to 10 years.
OTHER REAL ESTATE OWNED
Other real estate owned, which is included in other assets, represents property
acquired through foreclosure or deeded to the Company in lieu of foreclosure.
Reductions in the balance of other real estate owned at the date of acquisition
are charged to the allowance for credit losses. Other real estate owned, after
foreclosure, is carried at the lower of cost or the property's fair value minus
estimated costs to sell (fair value). Declines in the fair value below cost are
recognized as a valuation allowance. If the fair value subsequently increases
above its carrying value, the valuation allowance is reduced, but not below
zero. Increases or decreases in the valuation allowance are charged or
credited to operations.
The valuation of other real estate owned is subjective in nature and may be
adjusted in the near term because of changes in economic conditions or review
by regulatory examiners.
INCOME TAXES
Amounts provided for income tax expense are based on income reported for
financial statement purposes and do not necessarily represent amounts currently
payable under tax laws. Deferred income taxes, which arise principally from
temporary differences between the period in which certain income and expenses
are recognized for financial accounting purposes and the period in which they
affect taxable income, are included in the amounts provided for income taxes.
The Company files a consolidated federal income tax return and individual
subsidiary state income tax returns. Accordingly, amounts equal to tax
benefits of those subsidiaries having taxable federal losses or credits are
reimbursed by other subsidiaries that incur federal tax liabilities.
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
(Statement 109). Under the asset and liability method of Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases (temporary differences) and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
The cumulative effect of the change in accounting for income taxes was not
significant and has therefore not been separately stated in the 1993
consolidated statement of income.
F-16
<PAGE> 143
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
TRUST DEPARTMENT ASSETS
Property held for customers in fiduciary or agency capacities is not included
in the accompanying consolidated balance sheets, since such items are not
assets of the Company or its subsidiaries.
NET INCOME PER SHARE COMPUTATIONS
Net income per share is based upon the weighted average number of common shares
outstanding during each year which were 2,883 shares.
OFF BALANCE SHEET FINANCIAL INSTRUMENTS
In the ordinary course of business, the Bank has entered into off balance sheet
financial instruments consisting of commitments to extend credit and standby
letters of credit. Such financial instruments are recorded in the financial
statements when they become funded.
This information is an integral part of the accompanying consolidated
financial statements.
F-17
<PAGE> 144
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 1 - SUBSEQUENT EVENT - PROPOSED BUSINESS COMBINATION
On January 23, 1996, the Company entered into an Agreement and Plan of Merger
("Merger Agreement") with a wholly-owned subsidiary of Associated Banc-Corp
("Associated") wherein shareholders of the Company would receive shares of
Associated in exchange for their shares of the Company. The proposed merger is
subject to the appropriate regulatory and shareholder approvals and compliance
with the terms of the Merger Agreement by the Company and Associated. The terms
of the proposed transaction, which is expected to be consummated in 1996,
require that the transaction be accounted for as a pooling of interests. Under
the terms of the Merger Agreement, each issued and outstanding share of common
stock of the Company shall be converted into the right to receive 173.7766
shares of common stock of Associated. Pursuant to the Merger Agreement, a cash
payment will be made in lieu of issuance of any fractional shares.
In connection with the proposed merger, it was determined on April 30, 1996
that the Bank will enter into an Agreement and Plan of Consolidation
("Consolidation Agreement") with a newly-formed bank which is a wholly-owned
subsidiary of Associated wherein shareholders of the Bank would receive shares
of Associated in exchange for their shares of the Bank. The proposed
consolidation is subject to appropriate regulatory and shareholder approvals,
compliance with the Consolidation Agreement by Associated and the Bank, and is
subject to consummation of the proposed merger. Under the terms of the
proposed Consolidation Agreement, each issued and outstanding share of common
stock of the Bank shall be converted into the right to receive 59.4441 shares
of common stock of Associated. Pursuant to the proposed Consolidation
Agreement, a cash payment will be made in lieu of issuance of any fractional
shares.
Among the conditions contained in the Merger Agreement is a requirement that
the Company's allowance for credit losses will be maintained at December 31,
1995 and through the date of closing at a minimum of 2.45% of total loans
outstanding. This minimum allowance amount was derived by due diligence
performed by Associated as a result of the proposed merger. It represents an
estimate of credit losses on the Company's loan portfolio, and related
off-balance sheet arrangements, based upon the methodology used by Associated
in estimating such allowances. The Company recorded an additional provision
for credit losses of $1,600,000 at December 31, 1995 as a result of this change
in estimate.
NOTE 2 - INVESTMENT SECURITIES
The amortized cost and fair values of securities held to maturity at December
31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ --------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury and federal agency
securities $ 4,512,496 $ 12,184 $ 8,361 $ 4,516,319
Obligations of states and political
subdivisions 13,104,844 308,509 45,670 13,367,683
Corporate debt securities 4,488,734 79,246 6,525 4,561,455
Mortgage-backed securities 1,044,700 - - 1,044,700
Other securities 105,942 - - 105,942
------------ --------- --------- -----------
TOTAL $ 23,256,716 $ 399,939 $ 60,556 $23,596,099
============ ========= ========= ===========
<CAPTION>
1994
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ --------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury and federal agency
securities $ 3,563,286 $ 3,986 $ 86,397 $ 3,480,875
Obligations of states and political
subdivisions 12,334,913 96,156 558,375 11,872,694
Corporate debt securities 4,222,762 1,200 149,537 4,074,425
Mortgage-backed securities 608,700 - - 608,700
Other securities 103,572 - - 103,572
------------ --------- --------- -----------
TOTAL $ 20,833,233 $ 101,342 $ 794,309 $20,140,266
============ ========= ========= ===========
</TABLE>
F-18
<PAGE> 145
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 2 - INVESTMENT SECURITIES (Continued)
The amortized cost and fair values of securities available for sale at December
31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
U.S. Treasury and federal agency
securities $ 5,966,972 $ 30,798 $ 100,200 $ 5,897,570
----------- -------- --------- -----------
TOTAL $ 5,966,972 $ 30,798 $ 100,200 $ 5,897,570
=========== ======== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
1994
------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
U.S. Treasury and federal agency
securities $ 7,971,087 $ 3,400 $ 219,149 $ 7,755,338
----------- ------- --------- -----------
TOTAL $ 7,971,087 $ 3,400 $ 219,149 $ 7,755,338
=========== ======= ========= ===========
</TABLE>
The amortized cost and fair values of securities held to maturity and
securities available for sale at December 31, 1995, by contractual maturity are
shown below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or repay obligations with or
without call of prepayment penalties.
SECURITIES HELD TO MATURITY
<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
-------------- ----------
<S> <C> <C>
Due in one year or less $ 2,461,400 $ 2,461,754
Due after one year through five years 9,230,272 9,406,014
Due after five years through ten years 9,507,518 9,670,542
Due after ten years 1,012,826 1,013,089
------------ ------------
Subtotal 22,212,016 22,551,399
Mortgage-backed securities 1,044,700 1,044,700
------------ ------------
TOTAL $ 23,256,716 $ 23,596,099
============ ============
</TABLE>
F-19
<PAGE> 146
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 2 - INVESTMENT SECURITIES (Continued)
SECURITIES AVAILABLE FOR SALE
<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
------------- ----------
<S> <C> <C>
Due in one year or less $ 3,003,771 $ 2,999,900
Due after one year through five years 1,597,751 1,552,340
Due after five years through ten years - -
Due after ten years 756,750 736,630
----------- -----------
Subtotal 5,358,272 5,288,870
Mortgage-backed securities 608,700 608,700
----------- -----------
TOTAL $ 5,966,972 $ 5,897,570
=========== ===========
</TABLE>
Proceeds from sales of available-for-sale securities during 1995, excluding
securities that have been called prior to maturity, were $3,009,219. Proceeds
from sales of available-for-sale securities during 1994, excluding securities
that have been called prior to maturity, were $2,995,625. Proceeds from sales
of securities during 1993, excluding securities that have been called prior to
maturity, were $2,625,500. Gross gains of $11,094, $-0-, and $41,010 and
gross losses of $1,623, $7,783, and $-0- for 1995, 1994, and 1993,
respectively, were realized on those sales.
Securities with an amortized cost of $2,603,251 at December 31, 1995 and
$2,598,164 at December 31, 1994, were pledged to secure certain deposits or for
other purposes as required or permitted by law.
NOTE 3 - LOANS
Loans at December 31 are summarized below:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Commercial $ 12,061,466 $ 17,392,987
Real estate - mortgage 79,804,376 69,820,226
Municipal loans 2,140,768 1,743,586
Installment loans to individuals 6,703,468 5,711,710
Student loans 1,869,228 1,853,947
Industrial revenue bonds 348,000 535,000
Overdrafts 58,409 26,660
------------ ------------
TOTAL $102,985,715 $ 97,084,116
============ ============
</TABLE>
F-20
<PAGE> 147
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 3 - LOANS (Continued)
A summary of the changes in the allowance for credit losses for the years
indicated is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ 900,000 $ 860,000 $ 819,130
Provision charged to expense 1,685,000 46,034 86,665
Loan losses, net of recoveries of
$603, $4, and $6,630, respectively (51,904) (6,034) (45,795)
----------- --------- ---------
BALANCE AT END OF YEAR $ 2,533,096 $ 900,000 $ 860,000
=========== ========= =========
</TABLE>
Impairment of loans having a recorded value of $338,416 at December 31, 1995,
have been recognized in conformity with Statement No. 114 as amended by
Statement No. 118. The average investment in impaired loans during 1995 was
$221,373. The total allowance for credit losses related to those loans was
$50,792 at December 31, 1995. Interest income on impaired loans recognized as
cash payments received in 1995 was immaterial to the consolidated financial
statements. Loans on which the accrual of interest has been discontinued or
reduced totaled $104,330 as of December 31, 1994. Differences in interest
income on non-accruing loans for 1994 and 1993, which is recorded only when
received, and the amounts that would have been recorded if interest on such
non-accruing loans had been accrued, was not material to the consolidated
financial statements.
The Bank grants commercial, residential, consumer, and other loans to customers
in the Bank's immediate geographic lending areas in southwestern and central
Wisconsin. The Bank has a diversified loan portfolio, with no particular
concentration of credit in any one sector in this service area other than real
estate mortgages which is concentrated in and secured by real estate from the
Bank's market areas. The ability of the Bank's borrowers to honor their
contractual obligations is dependent upon the local economy and its effect on
the real estate market.
The Bank has loans outstanding to executive officers, directors, and to parties
which have the ability to significantly influence the Bank or the Company's
management or operating policies. These loans were made in the ordinary course
of business on the same terms and conditions, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other customers and did not involve more than the normal risk of
collectibility. Activity in 1995 associated with loans made to related parties
was as follows:
<TABLE>
<CAPTION>
1995
----
<S> <C>
Balance at beginning of year $ 1,435,152
New loans 441,689
Repayments (430,377)
Other changes (39,799)
-----------
BALANCE AT END OF YEAR $ 1,406,665
===========
</TABLE>
F-21
<PAGE> 148
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 4 - PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31 is as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Land and land improvements $ 152,500 $ 115,159
Premises 624,009 677,672
Furniture and equipment 386,077 386,584
----------- -----------
1,162,586 1,179,415
Less: Accumulated depreciation and amortization 747,173 734,139
----------- -----------
TOTAL $ 415,413 $ 445,276
=========== ===========
</TABLE>
Depreciation expense charged to operations totaled $72,000 in 1995, $69,915 in
1994 and $73,000 in 1993.
A third party provides data processing and management information system
services to the Company pursuant to a contract. As of December 31, 1995, this
contract is in effect through January 31, 2001. The contract may be terminated
by either party upon a 180 day prior written notice with substantial penalties
to be paid by the Company. The contract calls for fixed monthly fees with
additional fees for pass through and communication charges.
The Bank also leases a portion of its facility for a minimum of $1,050 per
month through April 30, 1996. Rents are adjusted annually for increases in the
Consumer Price Index. The Bank has the option to purchase the facility for
$100,000 upon the death of the lessor. The lease requires the Bank to pay
taxes, insurance and maintenance related to the facility.
NOTE 5 - DEPOSITS
Time deposits of $100,000 or more were $17,086,627 and $14,540,475 at December
31, 1995 and 1994, respectively. Interest expense on time deposits of $100,000
or more was $656,513, $424,966, and $275,891 for the years ended December 31,
1995, 1994, and 1993, respectively.
The following is a maturity distribution of time deposits in denominations of
$100,000 or more at December 31:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
3 months or less $ 4,685,950 $ 3,708,717
Over 3 months through 6 months 903,432 1,987,806
Over 6 months through 12 months 871,678 1,383,622
Over 12 months 10,625,567 7,460,330
----------- -----------
TOTAL $17,086,627 $14,540,475
=========== ===========
</TABLE>
F-22
<PAGE> 149
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 6 - SHORT-TERM BORROWINGS
Short-term borrowings at December 31, 1995 and 1994, were by the Company and
consisted of bank loans.
The maximum amount outstanding at any month end during 1995 was $1,400,000 and
during 1994 was $1,630,000.
The average outstanding balance of short-term borrowings amounted to $1,400,000
in 1995 and $1,515,000 in 1994. The weighted average interest rate on these
borrowings was 8.3% for 1995 and 7.4% for 1994. The average outstanding
balance is determined on a daily average basis and the weighted average
interest rate is calculated by dividing the actual interest paid on all
short-term borrowings by the average balance for the year.
NOTE 7 - LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt at December 31 is as follows:
1995 1994
---- ----
<S> <C> <C>
Federal Home Loan Bank advances; principal due in various
installments ranging from $500,000 to $1,000,000 through
final maturity, interest at 4.85 - 7.63%, due monthly, final
payment due August 19, 2001, secured by all qualifying first
mortgage loans and the Bank's stock in FHLB. $ 9,000,000 $ 7,000,000
============= ===========
</TABLE>
The aggregate amount of maturities of long-term borrowings at December 31, 1995
are as follows:
<TABLE>
<S> <C>
1996 $ 1,500,000
1997 500,000
1998 3,500,000
1999 1,000,000
2000 2,000,000
After 500,000
-----------
TOTAL $ 9,000,000
===========
</TABLE>
NOTE 8 - INCOME TAXES
The current and deferred amounts of income tax expense (benefit) are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current income tax expense:
Federal $ 235,291 $ 347,975 $ 427,400
State 45,200 53,938 49,011
---------- ---------- ----------
Total current 280,491 401,913 476,411
---------- ---------- ----------
Deferred income tax benefit:
Federal (534,100) (13,400) (59,900)
State (135,100) (3,400) (15,100)
---------- ---------- ----------
Total deferred (669,200) (16,800) (75,000)
---------- ---------- ----------
TOTAL INCOME TAX EXPENSE (BENEFIT) $ (388,709) $ 385,113 $ 401,411
========== =========== ==========
</TABLE>
F-23
<PAGE> 150
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 8 - INCOME TAXES (Continued)
The tax effects of temporary differences that give rise to the deferred tax
assets and deferred tax liabilities at December 31 are presented below:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax liabilities:
Depreciation $(153,000) $(165,800)
--------- ---------
Total deferred tax liabilities (153,000) (165,800)
--------- ---------
Deferred tax assets:
Allowance for credit losses 911,133 248,687
Available-for-sale investment securities 27,158 84,425
--------- ---------
Total deferred tax assets 938,291 333,112
--------- ---------
NET DEFERRED TAX ASSETS $ 785,291 $ 167,312
========= =========
</TABLE>
The Company believes, based on its history of taxable income, it is more likely
than not that the benefit of deferred tax assets will be realized. Therefore,
no valuation allowance for deferred tax assets is deemed necessary at December
31, 1995 and 1994.
The differences between the effective rate and the statutory federal income tax
rate of 34% were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------------ ------------------- ----------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Tax expense (credit) at statutory rate $(104,232) (34.0%) $ 499,833 34.0% $ 581,018 34.0%
State income tax (credit) net of federal tax (59,334) (19.4 ) 33,355 2.3 22,381 1.3
Tax-exempt interest (247,226) (80.6 ) (210,692) (14.3 ) (171,749) (10.0 )
Other 22,083 7.1 62,617 4.2 (30,239) (1.8 )
--------- ------ --------- ----- --------- -----
TOTAL $(388,709) (126.9%) $ 385,113 26.2% $ 401,411 23.5%
========= ====== ========= ===== ========= =====
</TABLE>
NOTE 9 - EMPLOYEE BENEFITS
The Bank terminated its VEBA Plan for all employees in 1995. The Plan was
fully funded prior to termination. Plan assets consisted of life insurance
policies which were transferred to the Plan participants upon termination.
Company contributions to the Plan totaled $131,966, $33,672 and $35,351 for the
years ended December 31, 1995, 1994 and 1993, respectively.
The Bank has adopted a 401(k) plan which allows employees to defer a percentage
of their wages. The plan covers all employees over 21 years of age who have
completed one year of service and over 1,000 hours each year of service. The
plan requires the Bank to match 50% of employee deferrals up to 4% of the
employee's wages. The plan also allows discretionary employer profit sharing
contributions. Bank contributions totaled $75,047, $72,781, and $72,035, for
the years ended December 31, 1995, 1994 and 1993, respectively.
F-24
<PAGE> 151
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES
COMMITMENTS AND LETTERS OF CREDIT
The Company is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit.
The Company's exposure to credit loss in the event of non-performance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Company uses the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet instruments.
The following is a summary of contractual amounts of unused commitments and
conditional obligations at December_31:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Commitments to extend credit, including unused credit card lines $ 7,551,204 $ 7,440,451
Standby letters of credit 422,903 508,471
</TABLE>
Commitments to extend credit are agreements to lend funds to a customer as long
as there is no violation of any condition established in the contact.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each
customer's credit worthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Company upon extension of credit, is based
on management's credit evaluation of the customer. Collateral held varies but
may include accounts receivable, inventory, property, plant, equipment,
securities, certificates of deposit and income-producing commercial properties.
A letter of credit is a document issued by the Company on behalf of its
customer (the account party) authorizing a third party (the beneficiary), or in
special cases the account party, to draw drafts on the Company up to a
stipulated amount and with specified terms and conditions. The letter of
credit is a conditional commitment (except when prepaid by the account party)
on the part of the Company to provide payment on drafts drawn in accordance
with the terms of the document.
Standby letters of credit are conditional commitments issued by the subsidiary
bank to guarantee the performance of a customer to a third party. Those
standby letters of credit are primarily issued to support extensions of credit.
The credit risk involved in issuing standby letters of credit is essentially
the same as that involved in extending loans to customers. The subsidiary bank
secures the standby letters of credit with various types of collateral similar
to those used to secure loans.
F-25
<PAGE> 152
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 11 - REGULATORY CAPITAL REQUIREMENTS
Federal regulatory agencies have adopted various capital standards for
financial institutions, including risk-based capital standards. The primary
objectives of the risk-based capital framework are to provide a more consistent
system for comparing capital positions of financial institutions and to take
into account the different risks among financial institutions' assets and
off-balance sheet items. Management believes, as of December 31, 1995, that
the Bank and Company meet all capital adequacy requirements to which they are
subject.
Risk-based capital standards have been supplemented with requirements for a
minimum Tier 1 capital to average assets ratio (leverage ratio). In addition,
regulatory agencies consider the published capital levels as minimum levels and
may require a financial institution to maintain capital at higher levels.
According to FDIC capital guidelines, the Bank is considered to be well
capitalized.
A comparison of the Bank's capital ratios as of December 31, 1995 with the
requirements for "well capitalized" banks, as defined by the FDIC, is presented
below:
<TABLE>
<CAPTION>
TO BE WELL
ACTUAL CAPITALIZED
------ -----------
<S> <C> <C>
Tier 1 Capital to Risk-Weighted Assets 19.46% > 6%
-
Total Capital to Risk-Weighted Assets 20.88% > 10%
-
Leverage Ratio 7.51% > 5%
-
</TABLE>
Bank regulatory authorities limit the amount of dividends which can be paid by
banks without obtaining prior approval from such authorities. Regardless of
formal regulatory restrictions, the Bank may not pay dividends to the Company
that would result in its capital levels being reduced below minimum
requirements.
NOTE 12 - PARENT COMPANY FINANCIAL INFORMATION
Presented below are condensed financial statements for the Parent Company only:
CONDENSED BALANCE SHEETS
(Parent Company Only)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994
---- ----
<S> <C> <C>
ASSETS
Cash $ 227,867 $ 85,876
Investment in bank subsidiary 9,258,578 9,229,803
------------ ------------
TOTAL ASSETS $ 9,486,445 $ 9,315,679
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other liabilities $ 12,982 $ -
Short-term borrowings 1,400,000 1,400,000
------------ ------------
Total liabilities 1,412,982 1,400,000
------------ ------------
STOCKHOLDERS' EQUITY
Common stock 151,215 151,215
Surplus 3,638,725 3,638,725
Undivided profits 5,689,657 5,620,953
Net unrealized loss on available-for-sale securities (42,244) (131,324)
------------ ------------
9,437,353 9,279,569
Less treasury stock at cost (1,363,890) (1,363,890)
------------ ------------
Total stockholders' equity 8,073,463 7,915,679
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,486,445 $ 9,315,679
============ ============
</TABLE>
F-26
<PAGE> 153
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 12 - PARENT COMPANY FINANCIAL INFORMATION (Continued)
CONDENSED STATEMENTS OF INCOME
(Parent Company Only)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
----------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
INCOME
Dividends from bank subsidiary $ 421,400 $ 420,872 $ 420,300
Other income - - 493
--------- ---------- ----------
Total income 421,400 420,872 420,793
--------- ---------- ----------
EXPENSE
Interest expense on borrowed funds 116,821 111,376 108,947
Salaries and employee benefits 280,000 - -
Other expense 20,050 20,050 20,051
--------- ---------- ----------
Total expense 416,871 131,426 128,998
--------- ---------- ----------
Income before income taxes and
equity in undistributed income 4,529 289,446 291,795
INCOME TAX EXPENSE (BENEFIT) (124,480) 7,204 (34,586)
--------- ---------- ----------
Income before equity in undistributed
net income of subsidiary 129,009 282,242 326,381
EQUITY IN UNDISTRIBUTED
(OVERDISTRIBUTED) NET
INCOME OF SUBSIDIARY (60,305) 767,415 981,083
--------- ---------- ----------
NET INCOME $ 68,704 $1,049,657 $1,307,464
========= ========== ==========
</TABLE>
F-27
<PAGE> 154
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 12 - PARENT COMPANY FINANCIAL INFORMATION (Continued)
CONDENSED STATEMENTS OF CASH FLOWS
(Parent Company Only)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
----------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 68,704 $ 1,049,657 $ 1,307,464
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed (overdistributed)
net income of subsidiary 60,305 (767,415) (981,083)
Increase (decrease) in interest payable and
other liabilities 12,982 (20,000) (207,492)
--------- ----------- -----------
Net cash provided by operating activities 141,991 262,242 118,889
--------- ----------- -----------
INVESTING ACTIVITIES
Proceeds from sales of land - 46,100 -
Purchase of minority interest in subsidiary - (22,000) -
--------- ----------- -----------
Net cash provided by investing activities - 24,100 -
--------- ----------- -----------
FINANCING ACTIVITIES
Repayment of short-term borrowings - (230,000) (200,000)
--------- ----------- -----------
Net cash used by financing activities - (230,000) (200,000)
--------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents 141,991 56,342 (81,111)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 85,876 29,534 110,645
--------- ----------- -----------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 227,867 $ 85,876 $ 29,534
========= =========== ===========
</TABLE>
F-28
<PAGE> 155
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires
that the Company disclose estimated fair values for its financial instruments.
Fair value estimates, methods, assumptions, and limitations are set forth below
for the Company's financial instruments.
CASH AND DUE FROM BANKS:
For these short-term instruments, the carrying amount is a reasonable estimate
of fair value.
INVESTMENT SECURITIES HELD TO MATURITY AND INVESTMENT SECURITIES AVAILABLE FOR
SALE:
The fair value of investment securities held to maturity and investment
securities available for sale, except certain state and municipal securities,
is estimated based on bid prices published in financial newspapers or bid
quotations received from securities dealers. The fair value of certain state
and municipal securities is not readily available through market sources other
than dealer quotations, so fair value estimates are based on quoted market
prices of similar instruments, adjusted for differences between the quoted
instruments and the instruments being valued.
LOANS:
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial, residential
mortgage, installment and, other consumer.
The fair value is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar
credit ratings and for similar maturities. Future cash flows are also adjusted
for estimated reductions or delays due to delinquencies, non-accruals or
potential charge-offs.
DEPOSITS:
Under SFAS No. 107, the fair value of deposits with no stated maturity such as
noninterest-bearing demand deposits, savings, NOW accounts and money market
accounts, is equal to the amount payable on demand as of year end. The fair
value of certificates of deposit is based on the discounted value of
contractual cash flows. The discount rate is estimated using the rates
currently offered for deposits of similar remaining maturities.
SHORT-TERM BORROWINGS AND LONG-TERM DEBT:
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate fair value of existing borrowings.
F-29
<PAGE> 156
F&M BANKSHARES OF REEDSBURG, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(Information with Respect to 1994 and 1993 is Unaudited)
NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
The estimated fair values of the Company's financial instruments at December
31, 1995, are as follows:
<TABLE>
<CAPTION>
CARRYING
AMOUNT FAIR VALUE
------- ----------
<S> <C> <C>
Financial assets:
Cash and due from banks $ 2,288,996 $ 2,288,996
Federal funds sold 2,704,000 2,704,000
Investment securities:
Available for sale 5,897,570 5,897,570
Held to maturity 23,256,716 23,596,099
Loans, net 100,452,619 102,359,619
Financial liabilities:
Deposits 118,417,742 119,047,925
Short-term borrowings 1,400,000 1,400,000
Long-term debt 9,000,000 9,180,866
</TABLE>
The above does not include accrued interest receivable and payable which are
also considered financial instruments. The estimated fair value of such items
is considered to be the carrying amount.
The Bank also has off-balance sheet financial instruments, consisting of
commitments to extend credit and letters of credit. No estimated fair value is
attributable to unused lines of credit and letters of credit as the income
associated with these instruments is not significant.
LIMITATIONS:
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument. Because no market exists for a significant portion of
the Company's financial instruments, fair value estimates are based on
judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments and other
factors. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and therefore cannot be determined with
precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing financial instruments without
attempting to estimate the value of anticipated future business and the value
of assets and liabilities that are not considered financial instruments. For
example, the Company has a trust department that contributes net fee income
annually. The trust department is not considered a financial instrument and
its value has not been incorporated into the fair value estimates. Other
significant assets and liabilities that are not considered financial assets or
liabilities include the deferred tax liabilities, the benefit of low cost core
deposits, property, equipment, and goodwill. In addition, the tax
ramifications related to the realization of the unrealized gains and losses can
have a significant effect on fair value estimates and have not been considered
in many of the estimates.
This information is an integral part of the accompanying consolidated financial
statements.
F-30
<PAGE> 157
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated under the Wisconsin Business Corporation
Law (the "WBCL"). Under Section 180.0851 of the WBCL, the Registrant shall
indemnify a director or officer, to the extent such person is successful on the
merits or otherwise in the defense of a proceeding, for all reasonable expenses
incurred in the proceeding, if such person was a party to such proceeding
because he or she was a director or officer of the Registrant. In all other
cases, the Registrant shall indemnify a director or officer against liability
incurred in a proceeding to which such person was a party because he or she was
a director or officer of the Registrant; unless liability was incurred because
he or she breached or failed to perform a duty owed to the Registrant and such
breach or failure to perform constitutes: (i) a willful failure to deal fairly
with the Registrant or its shareholders in connection with a matter in which
the director or officer has a material conflict of interest; (ii) a violation
of criminal law, unless the director or officer had reasonable cause to believe
his or her conduct was lawful or no reasonable cause to believe his or her
conduct was unlawful; (iii) a transaction from which the director or officer
derived an improper personal profit; or (iv) willful misconduct. Section
180.0858 of the WBCL provides that subject to certain limitations, the
mandatory indemnification provisions do not preclude any additional right to
indemnification or allowance of expenses that a director or officer may have
under the Registrant's articles of incorporation, bylaws, a written agreement
between the director or officer and the Registrant or a resolution of the Board
of Directors or adopted by majority vote of the Registrant's shareholders.
Section 180.0859 of the WBCL provides that it is the public policy of the
State of Wisconsin to require or permit indemnification, allowance of expenses
and insurance to the extent required or permitted under Sections 180.0850 to
180.0858 of the WBCL for any liability incurred in connection with a proceeding
involving a federal or state statute, rule or regulation regulating the offer,
sale or purchase of securities.
The Registrant's Articles of Incorporation contains no provisions in
relation to the indemnification of directors and officers of the Registrant.
Article XI of the Registrant's By-laws ("Article XI") authorizes
indemnification of officers and directors of the Registrant consistent with the
description of the indemnification provisions in Section 180.0851 of the WBCL
as described above. Article XI provides that the Registrant shall indemnify a
director, officer, employee or agent of the Registrant to the extent such
individual has been successful on the merits or otherwise in the defense of any
threatened, pending or completed civil, criminal, administrative or
investigative action, suit, arbitration or other proceeding, whether formal or
informal (including, but not limited to, any act or failure to act alleged or
determined (i) to have been negligent, (ii) to have violated the Employee
Retirement Income Security Act of 1974; or (iii) to have violated Sections
180.0832, 180.0833 and 180.1202 of the WBCL, or any successor thereto,
regarding loans to directors, unlawful distributions and distributions of
assets, which involves foreign, federal, state or local law and which is
brought by or in the right of the Registrant or by any other person or entity,
to which the director, officer, employee or agent was a party because he or she
is a director, officer, employee or agent. In all other cases, the Registrant
shall indemnify a director, officer, employee or agent of the Registrant
against liability and expenses incurred by such person in a proceeding unless
it shall have been proven by final judicial adjudication that such person
breached or failed to perform a duty owed to the Registrant under the
circumstances described above as set forth in Section 180.0851 of the WBCL.
Article XI defines a "director, officer, employee or agent" as (i) a natural
person who, is or was a director, officer, employee or agent of the Registrant,
(ii) a natural person who, while a director, officer, employee or agent of the
Registrant, is or was serving either pursuant to the Registrant's specific
request or as a result of the nature of such person's duties to the Registrant
as a director, officer, partner, trustee, member of any governing or decision
making committee, employee or agent of another corporation or foreign
corporation, partnership, joint venture, trust or other enterprise and (iii) a
person who, while a director,
II-1
<PAGE> 158
officer, employee or agent of the Registrant, is or was serving an employee
benefit plan because his or her duties to the Registrant also impose duties on,
or otherwise involve services by, the person to the plan or to participants in
or beneficiaries of the plan. Unless the context requires otherwise, Article
XI indemnification extends to the estate or personal representative of a
director, officer, employee or agent.
All officers, directors, employees and agents of controlled subsidiaries
of the Registrant shall be deemed for purposes of Article XI to be serving as
such officers, directors, employees and agents at the request of the
Registrant. The right to indemnification granted to such officers and
directors by Article XI is not subject to any limitation or restriction imposed
by any provision of the Articles of Incorporation or Bylaws of a controlled
subsidiary. For purposes of Article XI, a "controlled subsidiary" means any
corporation at least 80% of the outstanding voting stock of which is owned by
the Registrant or another controlled subsidiary of the Registrant.
Upon written request by a director, officer, employee or agent who is a
party to a proceeding, the Registrant shall pay or reimburse his or her
reasonable expenses as incurred if the director, officer, employee or agent
provides the Registrant with: (i) a written affirmation of his or her good
faith belief that he or she is entitled to indemnification under Article XI;
and (ii) a written undertaking to repay all amounts advanced without interest
to the extent that it is ultimately determined that indemnification under
Article XI is prohibited. The Registrant shall have the power to purchase and
maintain insurance on behalf of any person who is a director, officer, employee
or agent against any liability asserted against or incurred by the individual
in any such capacity arising out of his or her status as such, regardless of
whether the Registrant is required or authorized to indemnify or allow expenses
to the individual under Article XI.
The right to indemnification under Article XI may be amended only by a
majority vote of the shareholders and any reduction in the right to
indemnification may only be prospective from the date of such vote.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Exhibit No.
2(a) Agreement and Plan of Merger dated as of January 23, 1996 among
the Registrant, Associated Banc-Shares, Inc. and F&M Bankshares of
Reedsburg, Inc., incorporated by reference to Exhibit A to the Proxy
Statement/Prospectus of the Registrant and F&M Bankshares of
Reedsburg, Inc. (the "Proxy Statement/Prospectus").
2(b) Form of First Amendment to Agreement and Plan of Merger
incorporated by reference to Exhibit B to the Proxy
Statement/Prospectus.
2(c) Form of Agreement and Plan of Consolidation between Associated
Interim Bank and Farmers & Merchants Bank incorporated by reference to
Exhibit C to the Proxy Statement/Prospectus.
3(a) Articles of Incorporation, as amended and restated, incorporated
by reference to Exhibit 3 of the Registrant's Quarterly Report on Form
10-Q filed for the quarter ended June 30, 1993, SEC File No. 0-5519.
3(b) Bylaws, as amended, incorporated by reference to Exhibit 3(b) of
the Registrant's Quarterly Report on Form 10-Q filed for the quarter
ended September 30, 1991, SEC File No. 0-5519.
II-2
<PAGE> 159
4 The Registrant has outstanding certain long term debt. None of such
debt exceeds 10% of the total assets of the Registrant and its
consolidated subsidiaries. Thus, copies of the constituent
instruments defining the rights of the holders of such debt are
not included as exhibits to this Registration Statement. The
Registrant agrees to furnish copies of such instruments to the
Commission upon request.
5 Opinion of Saitlin, Patzik, Frank & Samotny Ltd. regarding
legality of issuance of the Registrant's securities.
8 Opinion of KPMG Peat Marwick LLP regarding certain federal
income tax matters.
10(a) The 1982 Incentive Stock Option Plan of the Registrant
incorporated by reference to Exhibit 10 to Annual Report on Form 10-K
for fiscal year ended December 31, 1987.
10(b) The Restated Long-Term Incentive Stock Option Plan of the
Registrant incorporated by reference to Exhibit 10 filed with the
Registrant's registration statement (33-86790) on Form S-8 filed under
the Securities Act of 1933.
10(c) Deferred Compensation Agreement dated November 1, 1986 between
Associated Bank Green Bay, National Association and Robert C.
Gallagher incorporated by reference to Exhibit 10(c) of the
Registrant's Annual Report on Form 10-K for fiscal year ended December
31, 1992, SEC. File No. 0-5519.
10(d) Change of Control Plan of the Registrant effective April 25,
1994 incorporated by reference to Exhibit 10(d) of the Registrant's
Annual Report on Form 10-K for fiscal year ended December 31, 1994,
SEC File No. 0-5519.
10(e) Deferred Compensation Plan and Deferred Compensation Trust
effective as of December 16, 1993, and Deferred Compensation Agreement
of the Registrant dated December 31, 1994, incorporated by reference
to Exhibit 10(e) of the Registrant's Annual Report on Form 10-K for
fiscal year ended December 31, 1994, SEC File No. 0-5519.
11 Statement Re Computation of Per Share Earnings incorporated by
reference to Exhibit 11 of the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, SEC File No.
0-5519.
21 List of Subsidiaries of the Registrant incorporated by
reference to Exhibit 21 of the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, SEC File No.
0-5519.
23(a) Consent of KPMG Peat Marwick LLP as to the financial statements
of the Registrant and the tax opinion.
23(b) Consent of Saitlin, Patzik, Frank & Samotny Ltd. incorporated by
reference to Exhibit 5.
23(c) Consent of Clifton, Gunderson & Co. as to the financial
statements of F&M Bankshares of Reedsburg, Inc.
24 Powers of Attorney.
(b) No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) or (c) of this Form.
II-3
<PAGE> 160
ITEM 22. UNDERTAKINGS.
(a)(1) The undersigned Registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(x) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act"); (y) to
reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement; (z) to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to
such information in the registration statement.
(ii) That, for the purpose of determining any liability under the
Securities Act, 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 such time
shall be deemed to be the initial bona fide offering thereof.
(iii) 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.
(2) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(and, where applicable, each filing of an employee benefit plan's annual
report to Section 15(d) of the Exchange Act), 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.
(3) The undersigned registrant hereby undertakes as follows: 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.
(4) The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (3) immediately preceding, or (ii) that
purports to meet the requirements of section 10(a)(3) of the Securities
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,
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.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or
II-4
<PAGE> 161
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy, as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(b) The undersigned registrant 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 this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE> 162
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 Green Bay, State of
Wisconsin, on this 10th day of May, 1996.
ASSOCIATED BANC-CORP
By: /s/ Harry B. Conlon
-----------------------
Harry B. Conlon,
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Harry B. Conlon Chairman, President, May 10, 1996
- ------------------------ Chief Executive Officer
Harry B. Conlon and a Director
(Principal Executive
Officer)
/s/ Robert C. Gallagher Executive Vice President May 10, 1996
- ------------------------ and a Director
Robert C. Gallagher
/s/ Joseph B. Selner Senior Vice President, May 10, 1996
- ------------------------ Chief Financial Officer,
Joseph B. Selner and Principal Financial
and Accounting Officer
* Director May 10, 1996
- ------------------------
Robert Feitler
* Director May 10, 1996
- ------------------------
Ronald R. Harder
* Director May 10, 1996
- ------------------------
John S. Holbrook, Jr.
* Director May 10, 1996
- ------------------------
William R. Hutchinson
II-6
<PAGE> 163
* Director May 10, 1996
- ------------------------
James F. Janz
* Director May 10, 1996
- ------------------------
John C. Meng
* Director May 10, 1996
- ------------------------
J. Douglas Quick
*Brian R. Bodager hereby signs this registration statement on May 10, 1996
on behalf of each of the indicated persons for whom he is attorney-in-fact
pursuant to a power of attorney filed herewith.
*By: /s/ Brian R. Bodager
--------------------------
Brian R. Bodager
II-7
<PAGE> 164
EXHIBIT INDEX
EXHIBIT NO.
2(a) Agreement and Plan of Merger dated as of January 23, 1996 among
the Registrant, Associated Banc-Shares, Inc. and F&M Bankshares of
Reedsburg, Inc., incorporated by reference to Exhibit A to the Proxy
Statement/Prospectus of the Registrant and F&M Bankshares of
Reedsburg, Inc. (the "Proxy Statement/Prospectus").
2(b) Form of First Amendment to Agreement and Plan of Merger
incorporated by reference to Exhibit B to the Proxy
Statement/Prospectus.
2(c) Form of Agreement and Plan of Consolidation between Associated
Interim Bank and Farmers & Merchants Bank incorporated by reference to
Exhibit C to the Proxy Statement/Prospectus.
3(a) Articles of Incorporation, as amended and restated, incorporated
by reference to Exhibit 3 of the Registrant's Quarterly Report on Form
10-Q filed for the quarter ended June 30, 1993, SEC File No. 0-5519.
3(b) Bylaws, as amended, incorporated by reference to Exhibit 3(b) of
the Registrant's Quarterly Report on Form 10-Q filed for the quarter
ended September 30, 1991, SEC File No. 0-5519.
4 The Registrant has outstanding certain long term debt. None of
such debt exceeds 10% of the total assets of the Registrant and its
consolidated subsidiaries. Thus, copies of the constituent
instruments defining the rights of the holders of such debt are not
included as exhibits to this Registration Statement. The Registrant
agrees to furnish copies of such instruments to the Commission upon
request.
5 Opinion of Saitlin, Patzik, Frank & Samotny Ltd. regarding
legality of issuance of the Registrant's securities.
8 Opinion of KPMG Peat Marwick LLP regarding certain federal
income tax matters.
10(a) The 1982 Incentive Stock Option Plan of the Registrant
incorporated by reference to Exhibit 10 to Annual Report on Form 10-K
for fiscal year ended December 31, 1987.
10(b) The Restated Long-Term Incentive Stock Option Plan of the
Registrant incorporated by reference to Exhibit 10 filed with the
Registrant's registration statement (33-86790) on Form S-8 filed under
the Securities Act of 1933.
10(c) Deferred Compensation Agreement dated November 1, 1986 between
Associated Bank Green Bay, National Association and Robert C.
Gallagher incorporated by reference to Exhibit 10(c) of the
Registrant's Annual Report on Form 10-K for fiscal year ended December
31, 1992, SEC. File No. 0-5519.
10(d) Change of Control Plan of the Registrant effective April 25,
1994 incorporated by reference to Exhibit 10(d) of the Registrant's
Annual Report on Form 10-K for fiscal year ended December 31, 1994,
SEC File No. 0-5519.
<PAGE> 165
EXHIBIT NO.
10(e) Deferred Compensation Plan and Deferred Compensation Trust
effective as of December 16, 1993, and Deferred Compensation Agreement
of the Registrant dated December 31, 1994, incorporated by reference
to Exhibit 10(e) of the Registrant's Annual Report on Form 10-K for
fiscal year ended December 31, 1994, SEC File No. 0-5519.
11 Statement Re Computation of Per Share Earnings incorporated by
reference to Exhibit 11 of the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, SEC File No.
0-5519.
21 List of Subsidiaries of the Registrant incorporated by
reference to Exhibit 21 of the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1995, SEC File No.
0-5519.
23(a) Consent of KPMG Peat Marwick LLP as to the financial statements
of the Registrant and the tax opinion.
23(b) Consent of Saitlin, Patzik, Frank & Samotny Ltd. incorporated by
reference to Exhibit 5.
23(c) Consent of Clifton, Gunderson & Co. as to the financial
statements of F&M Bankshares of Reedsburg, Inc.
24 Powers of Attorney.
<PAGE> 1
EXHIBIT 5
[SAITLIN, PATZIK, FRANK & SAMOTNY LTD. LETTERHEAD]
(312) 551-8300 May 10, 1996 1169-037-A
The Board of Directors of
Associated Banc-Corp
112 North Adams Street
Green Bay, Wisconsin 54307
Re: ASSOCIATED BANC-CORP: REGISTRATION STATEMENT ON FORM S-4
Gentlemen:
We have acted as legal counsel to Associated Banc-Corp, a Wisconsin
corporation (the "Registrant"), in connection with the preparation of the
Registration Statement filed on or about May 10, 1996 on Form S-4 with exhibits
with the Securities and Exchange Commission (the "Registration Statement"),
relating to the registration of 535,000 shares of the Registrant's common stock
$0.01 par value ("Common Stock"). The shares of Common Stock are being issued
in connection with the merger of F&M Bankshares of Reedsburg, Inc. ("F&M") with
and into Associated Banc-Shares, Inc., a wholly-owned subsidiary of the
Registrant and the consolidation of Farmers & Merchants Bank, a majority-owned
subsidiary of F&M, with and into Associated Interim Bank, a wholly-owned
subsidiary of the Registrant. We have reviewed such records, documents and
matters of law as we have deemed necessary to render this opinion. We have
also participated in conversations with officers of the Registrant during which
facts material to the opinions expressed herein were discussed. We have
assumed such factual matters to be true and correct.
In making our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as certified or
photostatic copies and the capacity of each party executing a document to so
execute such document.
An opinion of counsel is predicated upon all of the facts and conditions
as set forth therein and is based upon counsel's analysis of the statutes,
regulatory interpretations and case law in effect as of the date of this
opinion. It is neither a guarantee of the current status of the
<PAGE> 2
The Board of Directors of
Associated Banc-Corp
May 10, 1996
Page 2
law nor should it be accepted as a guarantee that a court of law or an
administrative agency will concur in the opinion.
Based upon the foregoing and assuming the accuracy of the statements
regarding the Registrant and the conduct of its business all as set forth in
its Registration Statement, it is our opinion that the Common Stock, when
issued as provided under applicable Wisconsin law, the Registration Statement,
and the Registrant's Articles of Incorporation and By-laws, will be validly
issued, fully paid and non-assessable except as such shares may be subject to
Section 180.0622(2)(b) of Wisconsin Business Corporation Law.
We do not find it necessary for the purpose of this opinion, and
accordingly we do not purport to cover herein, the application of the
securities or "Blue Sky" laws of the various states to the issuance of the
Common Stock.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose.
We are licensed to practice only in Illinois and no opinion is expressed
by us herein as to laws of other jurisdictions. This opinion is limited to the
matters expressly set forth herein, and no opinion is to be implied or may be
inferred beyond the others expressly so stated.
We hereby consent to the references to this firm and the inclusion of the
legality opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ Saitlin, Patzik, Frank & Samotny Ltd.
SAITLIN, PATZIK, FRANK & SAMOTNY LTD.
SPFS:bjw
<PAGE> 1
EXHIBIT 8
KPMG PEAT MARWICK LLP
303 E. Wacker Drive
Chicago, IL 60601
(312) 938-1000
May 8, 1996
Board of Directors Board of Directors
Associated Banc-Corp F&M Bankshares of Reedsburg, Inc.
112 North Adams Street 170 Main Street
P.O. Box 13307 Reedsburg, Wisconsin 53959
Green Bay, Wisconsin 54307-3307
Board of Directors Board of Directors
Associated Banc-Shares, Inc. Farmers & Merchants Bank
112 North Adams Street 170 Main Street
P.O. Box 13307 Reedsburg, Wisconsin 53959
Green Bay, Wisconsin 54307-3307
Board of Directors
Associated Interim Bank
112 North Adams Street
P. O. Box 13307
Green Bay, Wisconsin 54307-3307
Dear Board Members:
You have requested the opinion of KPMG Peat Marwick LLP ("KPMG") as to certain
federal income tax consequences of the proposed merger (the "Merger") of F&M
Bankshares of Reedsburg, Inc., a Wisconsin corporation (the "Company"), with
and into Associated Banc-Shares, Inc., a Wisconsin corporation ("Holding") and
a wholly-owned subsidiary of Associated Banc-Corp, a Wisconsin corporation
("Associated"), pursuant to an Agreement and Plan of Merger dated January 23,
1996 and a First Amendment to Agreement and Plan of Merger, by and between
Associated, Holding and the Company (the "Merger Agreement"), and the proposed
consolidation (the "Consolidation") of Farmers & Merchants Bank, a Wisconsin
banking corporation (the "Bank"), with and into Associated Interim Bank, a
wholly-owned subsidiary of Associated ("Interim"), pursuant to an Agreement
and Plan of Consolidation by and between Interim and Bank, attached as Exhibit
4.01(n) to the Merger Agreement (the "Consolidation Agreement"). Unless
otherwise defined, capitalized terms used herein have the meanings assigned to
them in the Merger Agreement and the Consolidation Agreement, as the case may
be.
<PAGE> 2
KPMG PEAT MARWICK LLP
Board of Directors
May 8, 1996
Page 2
FACTS
The Merger Agreement provides that at the Effective Time, Company will be
merged with and into Holding in accordance with Wisconsin law. As a result of
the Merger, the separate corporate existence of Company will cease, and
Holding will continue as the surviving corporation of the Merger. By virtue
of the Merger, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares held in the
treasury of Company or beneficially owned by Associated or its wholly owned
subsidiaries or shares for which dissenters' rights have been perfected
("Dissenting Shares")) will be converted into the right to receive 173.7766
shares of Associated Common Stock, subject to adjustment under certain
circumstances. Shares held in the treasury of Company or beneficially owned
by Associated or its wholly owned subsidiaries immediately prior to the
Effective Time will be canceled and extinguished without any conversion
thereof. Except for cash paid in lieu of fractional shares and Dissenting
Shares, no cash will be paid to holders of Company Common Stock in
consideration for the exchange of their shares pursuant to the Merger.
The Consolidation Agreement provides that at the Effective Time, Bank will be
merged with and into Interim, and Bank and Interim shall become a single
banking corporation existing under the banking laws of the State of Wisconsin.
Prior to the Merger, Bank was approximately 93.64% owned by Company and 6.36%
by a group of minority shareholders (this group of minority shareholders are
referred to herein as "Unaffiliated Shareholders"). As a result of the
Merger, Holding will own approximately 93.64% of the Bank stock and the
ownership of Bank by the Unaffiliated Shareholders will be unaffected. As a
result of the Consolidation, Bank and Interim will become a single banking
corporation surviving under the charter of Interim. By virtue of the
Consolidation, each share of Bank issued and outstanding immediately prior to
the Effective Time (other than shares beneficially owned by Associated or
shares for which dissenters' rights have been perfected ("Bank Dissenting
Shares")) will be converted into the right to receive 59.4441 shares of
Associated Common Stock, subject to adjustment under certain circumstances.
Shares beneficially owned by Associated immediately prior to the Effective
Time will be canceled and extinguished without any conversion thereof. Except
for cash paid in lieu of fractional shares or Bank Dissenting Shares, no cash
will be paid to holders of Bank Common Stock in consideration for the exchange
of their shares pursuant to the Consolidation.
In delivering our opinion, we have reviewed the Merger Agreement and the
Consolidation Agreement, and have assumed that the representations and
warranties therein are true, correct and complete and that the parties have
complied with the covenants therein. We have assumed that the Merger and
Consolidation will be consummated in accordance with the terms and conditions
of the Merger Agreement and the Consolidation Agreement, respectively. In
addition, we have reviewed the Proxy Statement/Prospectus of Company, Bank and
Associated (the "Proxy
<PAGE> 3
KPMG PEAT MARWICK LLP
Board of Directors
May 8, 1996
Page 3
Statement/Prospectus") filed with the Securities and Exchange Commission (the
"SEC") in an S-4 Registration Statement, and have assumed that the S-4
Registration Statement did not contain any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Merger Agreement,
the Consolidation Agreement, the Proxy Statement/Prospectus and the S-4
Registration are collectively referred to herein as the "Documents".
The opinion expressed in this letter is based on the Internal Revenue Code of
1986, as amended (the "Code"), the Income Tax Regulations promulgated by the
Treasury Department thereunder and judicial authority reported as of the date
hereof. We have also considered the position of the Internal Revenue Service
(the "Service") reflected in published and private rulings. Although we are
not aware of any pending changes to these authorities that would alter our
opinions, there can be no assurance that future legislative or administrative
changes, court decisions or Service interpretations will not significantly
modify the statements or opinions expressed herein. Unless specifically
requested otherwise, KPMG undertakes no responsibility to update this opinion
letter in the event of any such change or modification. Although the
conclusions contained herein are based upon our best interpretation of existing
sources of law and express what we believe a court would properly conclude if
presented with these issues, no assurance can be given that such
interpretations would be followed if they were to become the subject of
judicial or administrative proceedings. We express no opinion herein as to any
issue of federal law other than those specifically considered herein. We also
do not express any opinion as to any issue of foreign, state or local law.
For the purposes indicated above and based upon our review of the Documents,
the information set forth above under the section entitled "FACTS" and the
representations made to KPMG by Company, Bank, Associated, Holding and Interim
all as contained in letters to KPMG dated May 7, 1996, KPMG renders the
following opinions.
With respect to the Merger, it is the opinion of KPMG that:
(1) Provided the Merger qualifies as a statutory merger under
applicable law, the merger of the Company into Holding, pursuant
to the Merger Agreement, will constitute a reorganization within
the meaning of section 368(a)(1)(A) and
<PAGE> 4
KPMG PEAT MARWICK LLP
Board of Directors
May 8, 1996
Page 4
section 368(a)(2)(D) of the Code. The Company, Associated and
Holding will each be considered "a party to a reorganization"
within the meaning of section 368(b) of the Code for purposes of
this reorganization;
(2) No gain or loss will be recognized by the Company on the
transfer of substantially all its assets to Holding in exchange
for shares of Associated Common Stock, cash to be paid to the
shareholders of the Company in lieu of fractional share interests
of Associated Common Stock or Dissenting Shares, and the
assumption by Holding of the liabilities of the Company (Code
sections 361(a) and 357(a));
(3) The basis of the Company assets to be received by Holding
will be the same as the basis of such assets in the hands of the
Company immediately prior to the Merger (Code section 362(b));
(4) The holding period of the Company assets in the hands of
Holding will include the period during which such assets were
held by the Company (Code section 1223(2));
(5) No gain or loss will be recognized by Associated or Holding
upon the receipt by Holding of substantially all the Company
assets in exchange for shares of Associated Common Stock, cash to
be paid to the shareholders of the Company in lieu of fractional
share interests of Associated Common Stock or Dissenting Shares,
and the assumption by Holding of the liabilities of the Company
(Regulation 1.1032-2);
(6) No gain or loss will be recognized by the holders of Company
Common Stock, no par value per share, upon the exchange of such
stock solely for shares of Associated Common Stock, including any
fractional share interest to which they may be entitled (Code
section 354(a)(1));
(7) The basis of the Associated Common Stock (including any
fractional share interests to which they may be entitled) which
is received by Company shareholders will be the same as the basis
of the Company common stock surrendered in exchange therefore
(Code section 358(a)(1));
(8) The holding period of Associated Common Stock (including any
fractional share interests to which they may be entitled or
Dissenting Shares) which is received by a Company shareholder
will include the period during which the Company
<PAGE> 5
KPMG PEAT MARWICK LLP
Board of Directors
May 8, 1996
Page 5
Common Stock surrendered in exchange therefore was held,
provided that the Company Common Stock is held as a capital asset
in the hands of the Company shareholder on the date of the Merger
(Code section 1223(1));
(9) A holder of Dissenting Shares who receives cash in exchange
for his or her Dissenting Shares will be treated as receiving a
distribution in redemption of his or her Dissenting Shares,
subject to the provisions and limitations of Section 302 of the
Code. If, as a result of such distribution, a shareholder owns
no stock of Associated either directly or through the application
of Section 318(a) of the Code, the redemption will be a complete
termination of interest within the meaning of Section 302(b)(3)
of the Code and such cash will be treated as a distribution in
full payment in exchange for his or her Dissenting Shares, as
provided by Section 302(a) of the Code;
(10) The payment of cash in lieu of fractional share interests of
Associated Common Stock will be treated as if the fractional
shares were distributed as part of the exchange and then redeemed
by Associated. These cash payments will be treated as having
been received as distributions in full payment in exchange for
the fractional shares redeemed, subject to the provisions and
limitations of section 302(a) of the Code (Rev. Rul. 66-365,
1966-2 C.B. 116; Rev. Proc. 77-41, C.B. 574);
(11) Holding will succeed to and take into account, as of the
effective date of the Merger, the items of the Company
described in section 381(c) of the Code, subject to the
conditions and limitations of sections 381, 382, 383 and 384
of the Code, and the regulations thereunder; and
(12) As a result of the Merger, the basis of the Holding common
stock in the hands of Associated immediately prior to the Merger
will be increased by an amount equal to Company's tax basis in
its assets immediately prior to the Merger and decreased by an
amount equal to the liabilities of Company assumed by Holding in
the Merger plus the amount of liabilities, if any, to which the
assets of Company transferred to Holding in the Merger are
subject. The basis of Holding common stock will be increased by
the amount in which Company's tax basis in its assets exceeds the
tax basis in its liabilities (Regulation 1.358 - 6(c)(1)).
With respect to the Consolidation, it is the opinion of KPMG
that:
<PAGE> 6
KPMG PEAT MARWICK LLP
Board of Directors
May 8, 1996
Page 6
(13) Provided the Consolidation qualifies as a statutory merger
under applicable law, the consolidation of the Bank into Interim,
pursuant to the Consolidation Agreement, will constitute a
reorganization within the meaning of section 368(a)(1)(A) and
section 368(a)(2)(D) of the Code. The Bank, Associated and
Interim will each be considered "a party to a reorganization"
within the meaning of section 368(b) of the Code for purposes of
this reorganization;
(14) No gain or loss will be recognized by the Bank on the
transfer of substantially all its assets to Interim in exchange
for shares of Associated Common Stock, cash to be paid to the
Unaffiliated Shareholders in lieu of fractional share interests
of Associated Common Stock or Bank Dissenting Shares, and the
assumption by Interim of the liabilities of the Bank (Code
sections 361(a) and 357(a));
(15) The basis of the Bank assets to be received by Interim will
be the same as the basis of such assets in the hands of the Bank
immediately prior to the Consolidation (Code section 362(b));
(16) The holding period of the Bank assets in the hands of Interim
will include the period during which such assets were held by the
Bank (Code section 1223(2));
(17) No gain or loss will be recognized by Associated or Interim
upon the receipt by Interim of substantially all the Bank assets
in exchange for shares of Associated Common Stock, cash to be
paid to the Unaffiliated Shareholders in lieu of fractional share
interests of Associated Common Stock or Bank Dissenting Shares,
and the assumption by Interim of the liabilities of the Bank
(Regulation 1.1032-2);
(18) No gain or loss will be recognized by the Unaffiliated
Shareholders of Bank, upon the exchange of Bank Common Stock
solely for shares of Associated Common Stock, including any
fractional share interest to which they may be entitled (Code
section 354(a)(1));
(19) The basis of the Associated Common Stock (including any
fractional share interests to which they may be entitled) which is
received by Unaffiliated Shareholders will be the same as the
basis of the Bank Common Stock surrendered in exchange therefore (Code
section 358(a)(1));
<PAGE> 7
KPMG PEAT MARWICK LLP
Board of Directors
May 8, 1996
Page 7
(20) The holding period of Associated Common Stock (including any
fractional share interests to which they may be entitled or Bank
Dissenting Shares) which is received by the Unaffiliated
Shareholders will include the period during which the Bank Common
Stock surrendered in exchange therefore was held, provided that
the Bank Common Stock is held as a capital asset in the hands of
the Unaffiliated Shareholders on the date of the Consolidation
(Code section 1223(1));
(21) A holder of Bank Dissenting Shares who receives cash in
exchange for his or her Bank Dissenting Shares will be treated as
receiving a distribution in redemption of his or her Bank
Dissenting Shares, subject to the provisions and limitations of
Section 302 of the Code. If, as a result of such distribution, a
shareholder owns no stock of Associated either directly or
through the application of Section 318(a) of the Code, the
redemption will be a complete termination of interest within the
meaning of Section 302(b)(3) of the Code and such cash will be
treated as a distribution in full payment in exchange for his or
her Bank Dissenting Shares, as provided by Section 302(a) of the
Code;
(22) The payment of cash in lieu of fractional share interests of
Associated Common Stock will be treated as if the fractional
shares were distributed as part of the exchange and then redeemed
by Associated. These cash payments will be treated as having
been received as distributions in full payment in exchange for
the fractional shares redeemed, subject to the provisions and
limitations of section 302(a) of the Code (Rev. Rul. 66-365,
1966-2 C.B. 116; Rev. Proc. 77-41, C.B. 574);
(23) Interim will succeed to and take into account, as of the
effective date of the Consolidation, the items of the Bank
described in section 381(c) of the Code, subject to the
conditions and limitations of sections 381, 382, 383 and 384
of the Code, and the regulations thereunder; and
(24) As a result of the Consolidation, the basis of Interim common
stock in the hands of Associated immediately prior to the
Consolidation will be increased by an amount equal to Bank's tax
basis in its assets immediately prior to the Consolidation and
decreased by an amount equal to the liabilities of Bank assumed
by Interim in the Consolidation plus the amount of liabilities,
if any, to which the assets of Bank transferred to Interim in the
Consolidation are subject. The basis of Interim common stock
will be increased by the amount in which the
<PAGE> 8
KPMG PEAT MARWICK LLP
Board of Directors
May 8, 1996
Page 7
Bank's tax basis in its assets exceeds the tax basis in its
liabilities (Regulation 1.358-6(c)(1)).
Our opinion is limited to those federal income tax issues specifically
considered herein and is addressed to and is only for the benefit of the
Company, Bank, Associated and Holding. The opinion is furnished to you
pursuant to section 7.02(f) of the Merger Agreement and may not be used or
relied upon for any other purpose, and may not be circulated or otherwise
referred to for any other purpose, without our express written consent.
Very truly yours,
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Associated Banc-Corp:
We consent to the use of our report incorporated herein by reference and our
tax opinion included herein and to the reference to our firm under the headings
"The Merger and the Consolidation - Certain Material Federal Income Tax
Consequences" and "Experts" in the registration statement.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
May 9, 1996
<PAGE> 1
EXHIBIT 23 (C)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Registration Statement of Associated Banc-Corp of
our report on the consolidated balance sheet of F&M Bankshares of Reedsburg,
Inc. as of December 31, 1995, and the related consolidated statements of
income, changes in stockholders' equity, and cash flows for the year then ended
and to the reference to our firm under the heading "Experts."
CLIFTON, GUNDERSON & CO.
Certified Public Accountants
Madison, Wisconsin
May 8, 1996
<PAGE> 1
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Associated Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby
constitutes and appoints Brian R. Bodager his true and lawful attorney-in-fact
and agent to sign on his behalf a registration statement on Form S-4 in
connection with the issuance of shares of common stock to shareholders of F&M
Bankshares of Reedsburg, Inc.
Said attorney-in-fact and agent shall have full power to act for him and
in his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including
post-effective amendments), with power where appropriate to affix the corporate
seal of the Corporation thereto and to attest such seal, and to file such Form
S-4 and each amendment (including post-effective amendments) so signed, with
all exhibits thereto, and any and all documents in connection therewith, with
the SEC, and to appear before the SEC in connection with any matter relating to
such Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 24th day of January, 1996.
/s/ Robert Feitler
------------------------
Robert Feitler
Director
<PAGE> 2
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Associated Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby
constitutes and appoints Brian R. Bodager his true and lawful attorney-in-fact
and agent to sign on his behalf a registration statement on Form S-4 in
connection with the issuance of shares of common stock to shareholders of F&M
Bankshares of Reedsburg, Inc.
Said attorney-in-fact and agent shall have full power to act for him and
in his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including
post-effective amendments), with power where appropriate to affix the corporate
seal of the Corporation thereto and to attest such seal, and to file such Form
S-4 and each amendment (including post-effective amendments) so signed, with
all exhibits thereto, and any and all documents in connection therewith, with
the SEC, and to appear before the SEC in connection with any matter relating to
such Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 24th day of January, 1996.
/s/ Ronald R. Harder
------------------------
Ronald R. Harder
Director
<PAGE> 3
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Associated Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby
constitutes and appoints Brian R. Bodager his true and lawful attorney-in-fact
and agent to sign on his behalf a registration statement on Form S-4 in
connection with the issuance of shares of common stock to shareholders of F&M
Bankshares of Reedsburg, Inc.
Said attorney-in-fact and agent shall have full power to act for him and
in his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including
post-effective amendments), with power where appropriate to affix the corporate
seal of the Corporation thereto and to attest such seal, and to file such Form
S-4 and each amendment (including post-effective amendments) so signed, with
all exhibits thereto, and any and all documents in connection therewith, with
the SEC, and to appear before the SEC in connection with any matter relating to
such Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 24th day of January, 1996.
/s/ John S. Holbrook, Jr.
------------------------
John S. Holbrook, Jr.
Director
<PAGE> 4
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Associated Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby
constitutes and appoints Brian R. Bodager his true and lawful attorney-in-fact
and agent to sign on his behalf a registration statement on Form S-4 in
connection with the issuance of shares of common stock to shareholders of F&M
Bankshares of Reedsburg, Inc.
Said attorney-in-fact and agent shall have full power to act for him and
in his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including
post-effective amendments), with power where appropriate to affix the corporate
seal of the Corporation thereto and to attest such seal, and to file such Form
S-4 and each amendment (including post-effective amendments) so signed, with
all exhibits thereto, and any and all documents in connection therewith, with
the SEC, and to appear before the SEC in connection with any matter relating to
such Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 24th day of January, 1996.
/s/ William R. Hutchinson
--------------------------
William R. Hutchinson
Director
<PAGE> 5
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Associated Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby
constitutes and appoints Brian R. Bodager his true and lawful attorney-in-fact
and agent to sign on his behalf a registration statement on Form S-4 in
connection with the issuance of shares of common stock to shareholders of F&M
Bankshares of Reedsburg, Inc.
Said attorney-in-fact and agent shall have full power to act for him and
in his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including
post-effective amendments), with power where appropriate to affix the corporate
seal of the Corporation thereto and to attest such seal, and to file such Form
S-4 and each amendment (including post-effective amendments) so signed, with
all exhibits thereto, and any and all documents in connection therewith, with
the SEC, and to appear before the SEC in connection with any matter relating to
such Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 24th day of January, 1996.
/s/ James F. Janz
------------------------
James F. Janz
Director
<PAGE> 6
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Associated Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby
constitutes and appoints Brian R. Bodager his true and lawful attorney-in-fact
and agent to sign on his behalf a registration statement on Form S-4 in
connection with the issuance of shares of common stock to shareholders of F&M
Bankshares of Reedsburg, Inc.
Said attorney-in-fact and agent shall have full power to act for him and
in his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including
post-effective amendments), with power where appropriate to affix the corporate
seal of the Corporation thereto and to attest such seal, and to file such Form
S-4 and each amendment (including post-effective amendments) so signed, with
all exhibits thereto, and any and all documents in connection therewith, with
the SEC, and to appear before the SEC in connection with any matter relating to
such Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 24th day of January, 1996.
/s/ John C. Meng
------------------------
John C. Meng
Director
<PAGE> 7
\
DIRECTOR'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of
Associated Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby
constitutes and appoints Brian R. Bodager his true and lawful attorney-in-fact
and agent to sign on his behalf a registration statement on Form S-4 in
connection with the issuance of shares of common stock to shareholders of F&M
Bankshares of Reedsburg, Inc.
Said attorney-in-fact and agent shall have full power to act for him and
in his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including
post-effective amendments), with power where appropriate to affix the corporate
seal of the Corporation thereto and to attest such seal, and to file such Form
S-4 and each amendment (including post-effective amendments) so signed, with
all exhibits thereto, and any and all documents in connection therewith, with
the SEC, and to appear before the SEC in connection with any matter relating to
such Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 24th day of January, 1996.
/s/ J. Douglas Quick
------------------------
J. Douglas Quick
Director
