<PAGE> 1
SBL CAPITAL BANK SHARES, INC.
102 NORTH MAIN STREET
LODI, WISCONSIN 53555
January 30, 1996
Dear Fellow Shareholder:
Following this letter is a notice of a Special Meeting of the
Shareholders of SBL Capital Bank Shares, Inc. (the "Company"), a Proxy
Statement/Prospectus and a proxy card for the Special Meeting. The Special
Meeting will commence at 3:00 p.m. on March 1, 1996 at the principal
executive offices of the Company at 102 North Main Street, Lodi, Wisconsin.
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 November 10, 1995, as amended
by the First Amendment to the Agreement and Plan of Merger dated as of November
28, 1995 (the "Merger 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 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 will thereafter operate its banking business as "Associated Bank
Lodi." As described in the accompanying Proxy Statement/Prospectus, certain
shareholders of the Company including each of the directors and executive
officers have agreed to vote their shares in favor of approval of the Merger
Agreement. Assuming compliance with such agreement, 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.
If the Merger becomes effective, each share of the Company Common
Stock will be converted into 222.892 shares of Associated Common Stock. See
"The Merger - Merger 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 the
Merger will offer greater liquidity than that of the Company Common Stock which
you presently own.
The Merger is intended to be tax-free for federal income tax purposes
to Company shareholders who receive Associated Common Stock in exchange for
Company Common Stock, except as discussed in "The Merger-Certain Material
Federal Income Tax Consequences" in the accompanying Proxy
Statement/Prospectus. No fractional shares of Associated Common Stock will be
issued in the Merger. Company shareholders entitled to a fractional share of
Associated Common Stock will receive an amount of cash calculated upon the
average closing prices as reported on The Nasdaq Stock Market for a specified
period. Company shareholders are advised to consult their tax advisors with
respect to income tax consequences of the transaction. Details of the Merger
are set forth in the accompanying Proxy Statement/Prospectus. We encourage you
to read it carefully.
The Board of Directors of the Company has unanimously approved the
Merger Agreement as being in the best interest of the Company and its
shareholders. Your Board recommends that the Company shareholders vote to
approve the Merger Agreement.
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, which requires no postage if
mailed in the United States. If you later find that you may be present at the
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.
Very truly yours,
/s/ Sherry L. Jimieson
--------------------------------
Chairman and President
<PAGE> 2
SBL CAPITAL BANK SHARES, INC.
102 NORTH MAIN STREET
LODI, WISCONSIN 53555
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 1, 1996
TO THE SHAREHOLDERS OF SBL CAPITAL BANK SHARES, INC.
A Special Meeting of Shareholders of SBL Capital Bank Shares, Inc.
(the "Company") will be held at the principal executive offices of the Company
at 102 North Main Street, Lodi, Wisconsin, on March 1, 1996 at 3:00
p.m. for the purpose of voting on the following matters:
1. To approve the Agreement and Plan of Merger dated as of
November 10, 1995 among Associated Banc-Corp ("Associated"),
Associated Banc-Shares, Inc., a wholly-owned subsidiary of
Associated ("Holding"), and the Company as amended by the
First Amendment to the Agreement and Plan of Merger dated as
of November 28, 1995 (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 Exhibit A
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 C to the Proxy
Statement/Prospectus. See "The Merger-Dissenters' Rights" in the accompanying
Proxy Statement/Prospectus.
The Board of Directors has fixed the close of business on January 30,
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> 3
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/ Sherry L. Jimieson
---------------------------
Chairman and President
Lodi, Wisconsin
January 30, 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> 4
PROXY STATEMENT
SBL CAPITAL BANK SHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
PROSPECTUS
ASSOCIATED BANC-CORP
COMMON STOCK
This Proxy Statement/Prospectus is being furnished to the shareholders
of SBL Capital Bank Shares, Inc., a Wisconsin corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at its special meeting of shareholders (including any
adjournments or postponements thereof) to be held on Friday,
March 1, 1996 (the "Special Meeting"). This Proxy Statement/Prospectus
relates to the proposed merger (the "Merger") of the Company with and into
Associated Banc-Shares, Inc. ("Holding"), a Wisconsin corporation and a
wholly-owned subsidiary of Associated Banc-Corp, a Wisconsin corporation
("Associated"), pursuant to the Agreement and Plan of Merger dated as of
November 10, 1995, as amended by the First Amendment to Agreement and Plan of
Merger dated as of November 28, 1995 (the "Merger Agreement"), a copy of which
is attached hereto as Exhibit A. FOR A MORE COMPLETE DESCRIPTION OF THE
MERGER, THE MERGER AGREEMENT AND CERTAIN RISK FACTORS ASSOCIATED THEREWITH, SEE
"THE MERGER-CERTAIN CONSIDERATIONS" AND "CERTAIN PROVISIONS OF THE MERGER
AGREEMENT."
Your Board recommends that the Company shareholders vote to approve
the Merger Agreement. As described herein, certain shareholders of the Company
including each of the directors and executive officers have agreed to vote
their shares in favor of the approval of the Merger Agreement pursuant to a
Voting Agreement dated as of November 10, 1995 (the "Voting Agreement").
Assuming compliance with the terms of the Voting Agreement, 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.
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,
par value $0.10 per share ("Company Common Stock") pursuant to the Merger
Agreement. Pursuant to the Merger Agreement, each of the outstanding shares of
the Company Common Stock will be converted into 222.892 shares of Associated
Common Stock. See "The Merger - Merger Consideration."
This Proxy Statement/Prospectus and the accompanying proxy materials
are first being mailed to shareholders on or about January 31, 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 January 25, 1996 was $36.75.
------------
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 JANUARY 30, 1996
<PAGE> 5
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 OR THE
COMPANY. 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
HAS BEEN FURNISHED BY THE COMPANY.
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.
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 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, 1994;
(2) Associated's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1995; and
2
<PAGE> 6
(3) 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.
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 Meeting 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 MEETING, REQUESTS SHOULD BE MADE BY
FEBRUARY 23, 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> 7
SBL CAPITAL BANK SHARES, INC.
AND
ASSOCIATED BANC-CORP
PROXY STATEMENT/PROSPECTUS
<TABLE>
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<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Status of Associated Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Required Vote; Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Recommendation of the Company's Board of Directors . . . . . . . . . . . . . . . . . . . . . . 9
Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Material Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . 10
Anticipated Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Dissenting Shareholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Interests of Certain Persons in the Merger: . . . . . . . . . . . . . . . . . . . . . . . . . 11
SELECTED FINANCIAL DATA OF ASSOCIATED BANC-CORP AND THE COMPANY . . . . . . . . . . . . . . . . . . . . 12
COMPARATIVE STOCK PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Associated Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
COMPARATIVE UNAUDITED PER SHARE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
RECENT RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PROPOSED ACQUISITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Historical and Pro Forma Selected Financial Contributions . . . . . . . . . . . . . . . . . . 15
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ASSOCIATED BANC-CORP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Matters to Be Considered at the Special Meeting . . . . . . . . . . . . . . . . . . . . . . . 16
Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Voting of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Revocability of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Record Date; Stock Entitled to Vote; Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 17
Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
4
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<TABLE>
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<S> <C>
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Recommendations of the Board of Directors of the Company . . . . . . . . . . . . . . . . . . 23
Certain Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Regulatory Approvals Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Conversion of Shares; Procedures for Exchange of Certificates; Fractional Shares . . . . . . . 26
Description of Associated Common Stock Issuable in the Merger . . . . . . . . . . . . . . . . 28
Comparison of Shareholder Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Appraisal Rights and Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . 30
Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Classified Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Removal of Directors For "Cause" . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Newly Created Directorships and Vacancies on the Board of Directors . . . . . . . . . 31
Certain Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Advance Notice of Proposals to Be Brought at the Annual Meeting . . . . . . . . . . . 31
Advance Notice of Nominations of Directors . . . . . . . . . . . . . . . . . . . . . . 32
Resale of Associated Common Stock Issued Pursuant to the Merger . . . . . . . . . . . . . . . 32
Pre-Merger Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Post-Merger Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Certain Material Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . 33
Anticipated Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 35
The Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Other Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Management After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
CERTAIN PROVISIONS OF THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
No Solicitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
CERTAIN PROVISIONS OF THE VOTING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
CERTAIN INFORMATION CONCERNING ASSOCIATED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
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<S> <C>
CERTAIN INFORMATION CONCERNING THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Ownership of the Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SHAREHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Exhibit A: Agreement and Plan of Merger among Associated Banc-Corp,
Associated Banc-Shares, Inc. and SBL Capital Bank
Shares, Inc. dated as of November 10, 1995, as
Amended by the First Amendment to Agreement
and Plan of Merger dated as of November 28, 1995 . . . . . . . . . . . . . . A-1
Exhibit B: Voting Agreement dated as of November 10, 1995 . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C: Subchapter XIII of the Wisconsin Business Corporation Law . . . . . . . . . . . . . . C-1
Exhibit D: SBL Capital Bank Shares, Inc. and Subsidiaries Financial Statements
and Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . D-1
</TABLE>
6
<PAGE> 10
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 has
been provided by the Company. 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. As of
September 30, 1995, Associated had total assets
of $3.54 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. SBL Capital Bank Shares,
Inc. (the "Company") is a one-bank holding
company which owns 100% of the stock of the
State Bank of Lodi (the "Bank"). The Bank has
two wholly-owned subsidiaries, SBL Management
Corp. ("SBL Management") and Lodi Insurance
Agency, Inc. ("Insurance Agency"). As of
September 30, 1995 the Company had total assets
of $66.9 million. The principal executive
offices of the Company are located at 102 North
Main Street, Lodi, Wisconsin 53555 and its
telephone number is (608) 592-3251. See
"Certain Information Concerning the Company."
THE MERGER: 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, and each
outstanding share of the Company Common Stock
will be converted into the right to receive
222.892 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 - The 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 concluded
that the only affiliates of the Company are the
directors and executive officers. See "The
Merger - Resale of Associated Common Stock
Issuable in the Merger."
THE SPECIAL MEETING: A Special Meeting of the Shareholders of the
Company will be held at the principal
executive offices of the Company at 102 North
Main Street, Lodi, Wisconsin on
March 1, 1996 at 3:00 p.m. (the
"Special Meeting"). At the Special Meeting,
holders of the Company Common Stock entitled to
vote at the meeting will consider and vote upon
a proposal to approve the Merger Agreement.
Shareholders of Associated are not required to
approve the Merger
7
<PAGE> 11
Agreement. See "The Merger" and
"Certain Provisions of the Merger Agreement."
The record date for the Special Meeting is
January 30, 1996 (the "Record Date").
REQUIRED VOTE; The affirmative vote of the holders of a
VOTING AGREEMENT: majority of the outstanding shares of the
Company Common Stock entitled to vote at
the Special Meeting is required to approve the
Merger Agreement under the Wisconsin Business
Corporation Law (the "WBCL").
Associated has entered into a Voting
Agreement dated as of November 10, 1995 (the
"Voting Agreement") attached hereto as Exhibit
B with certain shareholders of the Company
including each of the directors and executive
officers (the "Party Shareholders") pursuant to
which the Party Shareholders have agreed to
vote their shares (i) in favor of the adoption
and approval of the Merger Agreement and the
Merger and (ii) against any Competing
Transaction (as such term is defined herein)
which generally includes an acquisition of
control of, or a significant equity interest in
or significant assets of, the Company by a
third party in the form of a merger,
consolidation, share exchange, business
combination or other similar transaction,
acquisition of assets or shares or otherwise,
or certain announcements, proposals or offers
with respect thereto. The Party Shareholders
hold 816 shares, or approximately 55% of the
Company Common Stock entitled to vote at the
meeting. Assuming compliance with the terms of
the Voting Agreement and provided the Merger
Agreement has not been terminated prior to its
being voted upon by the Company shareholders,
the approval and adoption of the Merger
Agreement are assured. The Voting Agreement
also provides that Associated has the exclusive
right to purchase any or all of the shares of
Company Common Stock owned by the Party
Shareholders for $7,578.33 per share, payable
in cash, subject to any necessary regulatory
approval, after a material breach of the Merger
Agreement by the Company or any events or
circumstances that lead Associated reasonably
to believe that the Company is likely to
materially breach the Merger Agreement, a
breach by a Party Shareholder, or the
acquisition or overtly threatened acquisition
of 5% of the stock or a material portion of the
assets of the Company or the Bank. The
purchase right is not exercisable as of the
date hereof. The purchase price per share
under the Voting Agreement equalled the value
of the Company Common Stock based upon the
trading price of Associated Common Stock at the
date that the Voting Agreement was requested by
Associated. The execution and delivery of the
Voting Agreement was a condition to Associated
entering into the Merger Agreement. The Voting
Agreement may have the effect of discouraging
persons who might now or in the future be
interested in acquiring all of or a significant
interest in the Company from considering or
proposing such an acquisition, even if such
persons were prepared to pay a higher price per
share for the Company Common Stock than the
price per share implicit in the Exchange
Ratio. The Voting Agreement is intended to
increase the likelihood that the Merger will be
consummated. See "The Merger - The Voting
Agreement."
REASONS FOR THE MERGER: The Board of Directors of the Company believes
that the Merger will have a positive
impact on the customers and employees of the
Company by providing overall additional
financial strength to the banking business of
the Bank. Shareholders of the Company will
benefit as a result of the enhanced liquidity,
marketability and dividend paying capacity of
the Associated Common Stock to
8
<PAGE> 12
be received in the Merger. 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 - Reasons for the
Merger."
RECOMMENDATION OF THE The Board of Directors of the Company, after
COMPANY'S BOARD OF consideration of the terms and conditions of
DIRECTORS: the Merger Agreement and other factors deemed
relevant by the Board of Directors, believes
that the Merger and the Exchange Ratio
are fair to and in the best interests of the
shareholders of the Company. The Board of
Directors of the Company has approved the
Merger Agreement and the transactions
contemplated thereby. See "The
Merger-Background of the Merger," "- Reasons
for the Merger" and "- Recommendations of the
Board of Directors of the Company."
CONDITIONS TO THE The obligations of Associated and the Company
MERGER: to consummate the Merger are subject to various
conditions, including, among other
things, obtaining requisite shareholder and
regulatory approvals, the absence of any
materially burdensome restriction or condition
imposed in connection with obtaining such
regulatory approvals and receipt of an opinion
of independent counsel to Associated at the
closing of the Merger in respect of certain
federal income tax consequences of the Merger.
Furthermore, the obligation of Associated to
consummate the Merger is subject to various
conditions, including, among other things,
receipt of an opinion from the independent
public accountants of Associated that the
Merger qualifies 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 due to the exercise of
dissenters' rights, shall not be more than 10%
of the shares of Associated Common Stock which
would otherwise have been issued pursuant to
the Merger, 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 and that
the Company shall have taken reasonably
appropriate action in response to any
environmental condition identified by
Associated's environmental consultant. Various
conditions to Associated's obligation to
consummate the Merger have been satisfied by
the Company, including, that all stock options
issued by the Company have been exercised, that
the Company has taken certain action with
respect to matters related to a Federal Deposit
Insurance Corporation compliance report, that
the Company has terminated all employment
agreements, that the Company's consolidated
earnings for calendar year 1995 (with certain
adjustments) were in excess of $900,000, and
that the Company has become the owner of all
issued and outstanding stock of Insurance
Agency. See "Certain Provisions of the Merger
Agreement - Conditions to Consummation of the
Merger."
TERMINATION: 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
9
<PAGE> 13
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 shall
have become final and nonappealable; (iv) by
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 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") have denied approval of the
Merger, 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 Company Common Stock. See "Certain
Provisions of the Merger Agreement -
Termination."
REGULATORY APPROVALS The Merger is subject to prior approval by the
REQUIRED: Federal Reserve Board (which was granted as of
January 26, 1996) and the Wisconsin
Commissioner (which was granted as of January
19, 1996). See "The Merger - Regulatory
Approvals Required."
CERTAIN MATERIAL The Merger is conditioned upon Associated and
FEDERAL INCOME the Company receiving an opinion of
TAX CONSEQUENCES: independent counsel to Associated, subject to
customary assumptions and representations,
to the effect that the Merger will be a
tax-free reorganization for federal income tax
purposes. Such opinion, however, is not
binding on the Internal Revenue Service. In
the event that the Merger qualifies as a
tax-free reorganization, no gain or loss will
be recognized by holders of the Company 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 or the Company. See
"The Merger - Certain Material Federal Income
Tax Consequences."
ANTICIPATED ACCOUNTING The Merger is expected to qualify as a
TREATMENT: "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 will
qualify for "pooling of interests" accounting
treatment is a condition to consummation of the
Merger. See "The Merger - Anticipated
Accounting Treatment."
DISSENTING SHAREHOLDERS' Holders of Company Common Stock who comply
RIGHTS: 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 - Dissenters' Rights"
and Exhibit C hereto.
CERTAIN CONSIDERATIONS: In deciding whether to vote in favor of the
Merger Agreement, shareholders of
10
<PAGE> 14
the Company should carefully evaluate
the matters set forth in the section herein
entitled "The Merger - Certain Considerations."
Shareholders of the Company should consider
that the exercise of dissenters' rights is the
only alternative to avoid conversion of Company
Common Stock to shares of Associated Common
Stock as shareholder approval is assured
pursuant to the terms of the Voting Agreement,
the lack of audited consolidated financial
statements and certain bank holding company
financial data relating to the Company and the
changing legislative and regulatory environment
affecting the banking and the financial
services businesses in which Associated and the
Company engage.
INTERESTS OF CERTAIN Mr. Alan K. Langeteig, a director and Chief
PERSONS IN THE MERGER: Executive Officer and Secretary
of the Company will receive $36,000
from the Company pursuant to a provision
in his employment agreement providing for a
bonus under certain circumstances including
that the Bank is sold (a "Change in Control").
Mr. Larry L. Gehrke, a director and Cashier of
the Bank will receive $27,000 from the Company
pursuant to an oral agreement providing for a
bonus in the event of a Change in Control. The
Merger would constitute a Change in Control
under these agreements. As a condition to
Associated's obligation to consummate the
Merger, all outstanding stock options of the
Company were required to be exercised. The
Company's stock option plan permitted the Board
in its discretion to grant a tax offset bonus
payable in cash for each option calculated
based upon the highest marginal federal and
state individual income tax rate. In
connection with such option exercise, the Board
granted a tax offset bonus to the following
directors in the respective amounts: Ms. Sherry
L. Jimieson, $76,000; Mr. Langeteig, $46,444;
Mr. Gehrke, $33,778; Mr. Albert Deans, $46,444;
Mr. Thomas G. Klein, $88,667; and Mr. Timothy
C. Sweeney, $88,667.
11
<PAGE> 15
SELECTED FINANCIAL DATA OF ASSOCIATED BANC-CORP AND THE COMPANY
(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, 1994 derived from
the audited consolidated financial statements of Associated, including the
respective notes thereto, incorporated by reference to this Proxy
Statement/Prospectus which should be read in conjunction therewith. See
"Incorporation of Certain Documents by Reference." The Company's selected
historical data as of and for each of the years in the two year period ended
December 31, 1994 and for each of the years in the three year period ended
December 31, 1992, are derived from the unaudited consolidated financial
statements of the Company attached hereto as Exhibit D and the unaudited
financial statements of the Bank prior to the formation of the Company in May,
1993, respectively. The selected historical data as of and for the nine months
ended September 30, 1995 and 1994 are derived from the unaudited consolidated
financial statements of Associated and the Company incorporated herein by
reference and attached hereto as Exhibit D, respectively. In the opinion of
their respective managements, the accompanying unaudited consolidated financial
statements contain all adjustments necessary to present fairly Associated's and
the Company's financial position and results of operations for the periods
presented. All adjustments necessary to the fair presentation of the financial
statements are of a normal recurring nature. Results for the nine months ended
September 30, 1995 are not necessarily indicative of the results which may be
expected for the year as a whole.
<TABLE>
<CAPTION>
As of and for the
Nine Months
Ended September 30, As of and for the Year Ended December 31,
------------------- -------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
ASSOCIATED (1): (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONDENSED STATEMENT OF INCOME:
Interest Income . . . . . . . . . . . $ 195,472 $ 158,338 $ 219,351 $ 209,446 $ 226,817 $ 247,671 $ 250,031
Interest Expense . . . . . . . . . . 86,767 58,728 82,801 80,272 102,969 136,124 148,614
Less: Provision for Possible Loan
Losses .. . . . . . . . . . . . . . 2,368 1,529 2,211 5,700 10,581 21,768 7,202
--------- --------- --------- --------- ------- ------- ---------
Net Interest Income After Provision
for Possible Loan Losses . . . . . 106,337 98,081 134,339 123,474 113,267 89,779 94,215
Plus: Non-Interest Income . . . . . . 39,332 37,463 49,103 49,980 48,449 41,849 35,506
Less: Non-Interest Expense . . . . . 92,232 88,284 119,079 117,022 117,043 110,706 96,912
------- -------- ------- ------- ------- ------- -------
Net Non-Interest Expense . . . . . . 52,900 50,821 69,976 67,042 68,594 68,857 61,406
Net Income . . . . . . . . . . . . . $ 34,122 $ 30,728 $ 41,662 $ 37,398 $ 31,622 $ 12,918 $ 23,760
====== ======== ========= ====== ====== ======= =======
PER COMMON SHARE DATA:
Net Income Per Share (2)(3) . . . . . $ 2.07 $ 1.87 $ 2.53 $ 2.30 $ 1.99 $ 0.83 $ 1.52
Cash Dividends Per Share (2) . . . . 0.70 0.63 0.85 0.74 0.61 0.57 0.50
SELECTED BALANCE SHEET DATA:
Total Assets . . . . . . . . . . . . $3,540,384 $3,210,435 $3,418,330 $3,114,310 $3,100,879 $3,066,403 $ 2,854,323
Long-Term Borrowings . . . . . . . . 3,467 3,866 3,866 5,347 17,925 39,841 15,687
THE COMPANY: (UNAUDITED)
CONDENSED STATEMENT OF INCOME:
Interest Income . . . . . . . . . . . $ 3,778 $ 3,205 $ 4,338 $ 4,181 $ 4,381 $ 4,740 $ 4,637
Interest Expense . . . . . . . . . . 1,843 1,345 1,825 1,756 2,059 2,581 2,795
Less: Provision for Loan Losses . . . 8 58 72 78 78 78 78
Net Interest Income After Provision
for Loan Losses . . . . . . . . . . . 1,927 1,802 2,441 2,347 2,244 2,081 1,764
Plus: Non-Interest Income . . . . . 312 331 414 706 578 290 284
Less: Non-Interest Expense . . . . . 1,336 1,344 1,818 1,844 1,550 1,482 1,473
--------- --------- -------- -------- -------- -------- --------
Net Non-Interest Expense . . . . . . 1,024 1,013 1,404 1,138 972 1,192 1,189
Net Income . . . . . . . . . . . . . $ 644 $ 521 $ 733 $ 854 $ 831 $ 615 $ 463
========= ========= ======== ======== ======== ======== ========
PER COMMON SHARE DATA:
Net Income Per Share (3) . . . . . . $ 458 $ 371 $ 522 $ 593 $ 554 $ 410 $ 309
Cash Dividends Per Share . . . . . . -- -- 110 110 100 68 68
SELECTED BALANCE SHEET DATA:
Total Assets . . . . . . . . . . . . $ 66,928 $ 61,149 $ 63,404 $ 58,887 $ 56,365 $ 52,764 $ 50,627
Long-Term Debt . . . . . . . . . . . 482 482 482 332 -- -- --
</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 dividends declared in 1993 and
1990.
(3) Earnings per share are calculated based upon the weighted average
shares outstanding.
12
<PAGE> 16
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>
1993
First Quarter . . . . . . . . . . . . . . . . $ 26.73 $ 23.46 $ 0.18
Second Quarter . . . . . . . . . . . . . . . $ 28.00 $ 25.64 $ 0.18
Third Quarter . . . . . . . . . . . . . . . . $ 32.00 $ 26.00 $ 0.18
Fourth Quarter . . . . . . . . . . . . . . . $ 31.00 $ 26.00 $ 0.20
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 (through January 25, 1996) . . $ 39.50 $ 36.75 $ 0.27
</TABLE>
On November 13, 1995, the last trading day before the announcement of
the Merger Agreement, the last sale price of Associated Common Stock as
reported on The Nasdaq Stock Market was $39.19 per share. On January 25, 1996
the last sale price of Associated Common Stock as reported on The Nasdaq Stock
Market was $36.75 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 quoted in
the over-the-counter market, and no established "bid" or "ask" price is
available. In connection with the formation of the Company as a bank holding
company for the Bank which was consummated in May, 1993, the shareholders of
the Bank were solicited to approve a consolidation of the Bank with a
newly-formed bank subsidiary of the Company (the "Consolidation") pursuant to
which each share of the Bank would be converted into $2,569 in cash or one
share of Company Common Stock. The Board of Directors of the Bank determined
the cash purchase price of shares of Bank stock based upon a method disclosed
in the offering circular and proxy statement prepared for the Consolidation
which discounted the market value for lack of marketability of the shares and
minority interest. The Bank's accountants assisted and consulted on the
determination of the cash purchase price and advised the directors of the Bank
that such price was reasonable and appropriate. Shareholders of the Bank
holding 96 shares elected to receive the cash consideration. On December 8,
1993 and December 7, 1994, options to purchase 39 shares and 51 shares,
respectively, were granted to directors at an exercise price of $2,569 per
share and $2,901 per share, respectively. All options have been exercised as
of December 27, 1995. On January 30, 1995, Mr. Langeteig purchased 15 shares
from a shareholder at a purchase price of $3,265 per share. The Company is not
aware of any other transactions in which the Company Common Stock was valued.
The Board of Directors of the Company declared dividends in each of
1993 and 1994 of $110 per share. 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 except that the Company is permitted to
declare and pay a dividend not to exceed $55 per share on 1,404 shares. Such
dividend was declared December 6, 1995 and was paid December 20, 1995. See
"The Merger - Pre-Merger Dividend Policy."
On the Record Date, there were 78 holders of record of the Company
Common Stock.
13
<PAGE> 17
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth for Associated Common Stock and the
Company Common Stock certain unaudited historical, pro forma and pro forma
equivalent per share financial information as of and for the nine months ended
September 30, 1995 and as of and for each of the years in the three year period
ended December 31, 1994. The following data assumes that each outstanding
share of Company Common Stock will be converted into 222.892 shares of
Associated Common Stock. The information presented herein should be read in
conjunction with the financial statements of Associated incorporated by
reference into this Proxy Statement/Prospectus, and with the unaudited
consolidated financial statements of the Company, including the notes thereto,
attached hereto as Exhibit D. See "Incorporation of Certain Documents By
Reference."
<TABLE>
<CAPTION>
As of and for the
Nine Months Ended As of and for the Year
September 30, Ended December 31,
----------------- ------------------------------------------
1995 1994 1993 1992
----------------- --------- --------- ----------
<S> <C> <C> <C> <C>
ASSOCIATED
Net Income Per Common Share (1):
Historical . . . . . . . . . . . . $ 2.07 $ 2.53 $ 2.30 $ 1.99
Pro forma (2) . . . . . . . . . . . 2.07 2.52 2.31 2.00
Dividends Per Common Share (1):
Historical . . . . . . . . . . . . $ 0.70 $ 0.85 $ 0.74 $ 0.61
Pro forma (3) . . . . . . . . . . . 0.70 0.85 0.74 0.61
Book Value Per Common Share:
Historical . . . . . . . . . . . . $ 19.09 $ 17.32 $ 16.23 $ 14.29
Pro forma (2) . . . . . . . . . . . 19.18 17.40 16.30 14.35
THE COMPANY
Net Income Per Common Share:
Historical . . . . . . . . . . . . $ 458.00 $ 522.00 $ 593.00 $ 554.00
Pro forma equivalent (4) . . . . . 461.38 561.69 514.88 445.78
Dividends Per Common Share:
Historical . . . . . . . . . . . . $ 0.00 $ 110.00 $ 110.00 $ 100.00
Pro forma equivalent (4) . . . . . 156.02 189.45 164.94 135.96
Book Value Per Common Share:
Historical . . . . . . . . . . . . $ 5,331 $ 4,835 $ 4,444 $ 3,859
Pro forma equivalent (4) . . . . . 4,275 3,878 3,633 3,199
</TABLE>
- ----------------------
(1) Per share data adjusted retroactively for the GNB Acquisition, the
Stock Split and the stock dividend declared in 1993. 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.
(3) The Associated pro forma dividends per share amounts represent
historical dividends of Associated as adjusted retroactively for the
Stock Split and the stock dividend declared in 1993.
(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 222.892 shares.
RECENT RESULTS
For the year ended December 31, 1995, Associated reported net income of
$46.7 million up 12.0% compared to 1994. Net income for the fourth quarter
1995 was $12.5 million up 14.6% from the comparable prior period in 1994.
Earnings per share were $2.83 and $0.76 for the year ended December 31, 1995
and for the fourth quarter 1995, respectively. Total assets were $3.7 billion
at December 31, 1995 up 8.2% from reported assets at December 31, 1994. On
January 24, 1996, Associated declared a dividend of $0.27 per share payable
February 15, 1996 to shareholders of record as of February 5, 1996.
14
<PAGE> 18
PROPOSED ACQUISITIONS
Associated signed definitive merger agreements for proposed
stock-for-stock merger transactions with Greater Columbia Bancshares, Inc.
("Greater Columbia") and F&M Bankshares of Reedsburg, Inc. ("F&M") on December
22, 1995 and January 23, 1996, respectively. Greater Columbia is a $211
million one bank holding company with main offices in Portage, Wisconsin. F&M
is a $140 million one bank holding company with main offices in Reedsburg,
Wisconsin. Greater Columbia is expected to be consummated during the
first quarter of 1996 and F&M is expected to be consummated during the second
quarter of 1996. Each of these acquisitions is expected to be accounted for
as a pooling of interests. 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.
HISTORICAL AND PRO FORMA SELECTED FINANCIAL CONTRIBUTIONS
The following table sets forth certain consolidated unaudited
financial data of Associated as of and for the nine months ended September 30,
1995 and the data on a pro forma combined basis after giving effect to the
acquisition of the Company and the proposed acquisitions of Greater
Columbia and F&M. The information is derived from the historical unaudited
financial statements of Associated, the Company, Greater Columbia and F&M.
The unaudited consolidated financial statements of Associated and the Company,
including the related notes thereto, are incorporated by reference and attached
as Exhibit D, respectively, to this Proxy Statement/Prospectus. See
"Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
Pro Forma Associated, the
Combined Greater Company, Greater
Associated Columbia Columbia and F&M
The Company and the and F&M Pro Forma
Associated Historical Company Pro Forma Combined
---------- ---------- ------- --------- --------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
For the nine months
ended September 30, 1995:
Total revenue:
Amount . . . . . . . $ 234,804 $ 4,090 $ 238,894 $ 20,254 $ 259,148
Percentage of total . 90.6% 1.6% 92.2% 7.8% 100%
Net income:
Amount . . . . . . . $ 34,122 $ 644 $ 34,766 $ 2,678 $ 37,444
Percentage of total . 91.1% 1.7% 92.8% 7.2% 100%
At September 30, 1995:
Total assets:
Amount . . . . . . . $ 3,540,384 $ 66,928 $ 3,607,312 $ 350,098 $ 3,957,410
Percentage of total . 89.5% 1.7% 91.2% 8.8% 100%
Shareholders' equity .
Amount . . . . . . . $ 315,063 $ 7,485 $ 322,548 $ 24,813 $ 347,361
Percentage of total . 90.7% 2.2% 92.9% 7.1% 100%
Shares of common stock:
Amount . . . . . . . 16,501,225 333,000(1) 16,834,225 1,502,500(1) 18,336,725
Percentage of total . 90.0% 1.8%(1) 91.8% 8.2%(1) 100%
</TABLE>
- ------------
(1) Assumes consummation of each proposed transaction and conversion to
shares of Associated Common Stock based upon the respective proposed
Exchange Ratios.
15
<PAGE> 19
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to holders of the
Company Common Stock in connection with the solicitation of proxies by the
Company's Board of Directors for use at the Special Meeting of Shareholders of
the Company and at any adjournment or postponement thereof. The Company
Meeting will be held at the principal executive offices of the Company at 102
North Main Street, Lodi, Wisconsin on March 1, 1996. The Special Meeting will
commence at 3:00 p.m.
At the Special Meeting, the shareholders of the Company will be asked
to approve the Merger Agreement attached hereto as Exhibit A, as more fully
described herein. See "The Special Meeting," "The Merger," and "Certain
Provisions of the Merger Agreement." The approximate date on which this Proxy
Statement/Prospectus is first being mailed to shareholders of the Company is on
or about January 31, 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 September 30, 1995, Associated had total assets of
$3.54 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 MEETING
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, holders of the 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 Special Meeting. For a detailed
description of the Merger and the Merger Agreement, see "The Merger" and
"Certain Provisions of the Merger Agreement."
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding
shares of the Company Common Stock entitled to vote at the Special Meeting is
required to approve the Merger Agreement. Each share of the Company Common
Stock outstanding on the Record Date (as defined herein) is entitled to one
vote. Shareholders of Associated are not required to approve the Merger
Agreement and no further corporate authorization by Associated is required to
consummate the Merger.
Pursuant to the Voting Agreement, Party Shareholders who have voting
power with respect to a total of 816 shares or approximately 55% of the Company
Common Stock entitled to vote at the Special Meeting have agreed, among other
things, to vote their shares in favor of the approval and adoption of the
Merger Agreement and against certain other transactions. Assuming compliance
with the terms of the Voting Agreement and provided the Merger Agreement has
not been terminated prior to its being voted upon by the Company shareholders,
the approval and adoption of the Merger Agreement are assured. See "Certain
Provisions of the Voting Agreement." As of the Record Date, the Company's
directors and executive officers (each of whom is a Party Shareholder) had
16
<PAGE> 20
voting power with respect to a total of 734 shares or approximately 49% of the
Company Common Stock entitled to vote at the Special Meeting.
VOTING OF PROXIES
Shares represented by all properly executed proxies for the Company
Common Stock received in time for the Special Meeting will be voted at the
Special 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 Special 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 a duly
executed proxy or revocation of proxy bearing a later date or by voting in
person at the Special Meeting. Attendance at the Special Meeting will not of
itself constitute revocation of a proxy.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of the Company Common Stock at the close of
business on January 30, 1996 (the "Record Date") will be entitled to receive
notice of and to vote at the Special Meeting.
At the Record Date, 1,494 shares of the Company Common Stock were
outstanding. Shares representing a majority of the outstanding shares of the
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. 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. 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, 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 may solicit proxies from shareholders of
the Company 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 WILL BE PROVIDED WITH MATERIALS RELATING TO THE EXCHANGE OF THEIR
STOCK CERTIFICATES. SEE "THE MERGER - CONVERSION OF SHARES; PROCEDURES FOR
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES."
17
<PAGE> 21
THE MERGER
This section of the Proxy Statement/Prospectus describes certain
aspects of the proposed Merger. To the extent that it relates to the Merger
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 Exhibit A and is incorporated herein by reference. All
shareholders are urged to read the Merger Agreement and the other exhibits to
this Proxy Statement/Prospectus in their entirety.
BACKGROUND OF THE MERGER
Since the early 1990's, the directors of the Company (as directors of
the Bank prior to the formation of the Company) began to recognize and discuss
the demands that would be placed upon the Company to remain competitive in the
banking industry in the 1990's and into the 21st Century. Increased
competition for banking services, deposits and loans continued to escalate
within the Company's market area. As a result, the directors of the Company
identified the need for significant growth and expenditures of time and
resources in the areas of marketing, technology, training and auxiliary
services, such as trust services and nontraditional banking products. The
Board of Directors of the Company identified several strategies to meet these
anticipated demands, including, but not limited to: (i) to create, purchase
and implement initiatives from within; (ii) to acquire or merge with other
banks of similar size and nature to increase the cost efficiency of
implementing these initiatives and to utilize the Company's strong capital
position; (iii) to establish cooperative arrangements for services, equipment
and training with other bank(s) of similar size and nature; and/or (iv) to be
acquired by a larger financial institution with greater resources that could be
utilized to meet these demands.
To provide flexibility to meet industry demands, the directors of the
Company recommended to and the shareholders of the Bank approved the formation
of the Company as a bank holding company in April, 1993. During 1993 and 1994,
the directors and officers of the Company continued their successful efforts to
remain competitive in the Bank's market by developing in-house initiatives and
purchasing resources to implement them. These efforts produced earnings
competitive with bank holding companies of similar size and steady growth in
assets and loans. However, the directors acknowledged that ever advancing
marketing, financial products and services and technology of the evolving
financial services industry, demanded implementation of even further upgrades
of bank services, training, technology and marketing.
The directors of the Company believed that continued internal
initiatives would be insufficient to maintain the Company's market share in
future years. The acquisition of or merger with other bank(s) of similar size
and nature to achieve cost efficiency of initiatives was acceptable, but
appeared to magnify the tasks necessary to compete in this market rather than
meet the needs identified by the directors. After preliminary investigation of
establishing cooperative arrangements for services, equipment and training with
other banks of similar size and nature, the directors concluded that such
strategy was acceptable, but not the strategy of first choice. In addition,
these options provided minimal potential for maximization of value to
shareholders. These factors, combined with the directors' fiduciary duty to
shareholders, employees and the communities the Company serves, resulted in a
decision to pursue merger opportunities with a large publicly-traded financial
institution as the preferred strategy, and acquisition/merger or cooperative
arrangements with other banks of similar size and nature as a secondary
strategy. The directors of the Company believed that the merger with a larger
publicly-traded financial institution in a tax-free exchange of stock, appeared
to be the most effective and beneficial approach for the Company's customers,
employees and shareholders. In addition, it appeared that the window of
opportunity for organizations the size of the Company to be acquired by
publicly-traded regional financial institutions was disappearing due to those
organizations' apparent desire to make themselves attractive to potential
acquirers. The directors of the Company also realized that because the
expenditure of time and resources by a potential acquiror were not
significantly different in acquiring an institution the size of the Company
versus an institution several times larger than the Company, that the Company's
attractiveness as an acquisition candidate would be diminished as consolidation
among financial institutions increasingly involved substantially larger
institutions.
18
<PAGE> 22
In early 1995, the directors of the Company formed an
acquisition/merger subcommittee of the Board of Directors consisting of
Chairperson Sherry L. Jimieson and directors Alan K. Langeteig, Thomas G. Klein
and Timothy C. Sweeney (the "Subcommittee") to begin exploration of various
strategies. The Subcommittee reviewed available information to formulate
acceptable price ranges for various acquisition, merger or sale strategies,
including but not limited to information available through Alex Sheshunoff &
Co. Investment Banking, Sheshunoff Information Services, Inc. and The Bank
Advisory Group. Such information included "Weighted Average Price Paid Data
For U.S. Banks Under $500 Million" from 1982 through the third quarter of 1994
(3,350 transactions), and "Profitable Banks under $500 Million in Assets
Acquired" during the first three quarters of 1994 (207 transactions). The 207
1994 transactions were further categorized according to the form of
consideration (cash, stock, or other), asset size, equity to asset ratio,
return on average assets and by location. Of particular interest was the
information concerning 47 transactions occurring in the first three quarters of
1994 with institutions in the $50-100 million size range, including 29 stock
for stock transactions involving institutions located in the north central
region of the United States. This information, along with the Subcommittee
members' combined experience and knowledge helped to formulate acceptable
ranges of ratios and prices.
A fair and reasonable price was one of the essential considerations
for the directors of the Company, but not the sole consideration. Of
significant importance were compatibility with the Company's existing and
future customers and markets, commitment to the communities served by the
Company and professional opportunities for the Company's officers and
employees.
Although there was no public dissemination of notice that the Company
was seeking offers from potential buyers, the directors of the Company believe
such interest became widely known through traditional channels in the banking
community in south central Wisconsin and beyond, and through contacts by
Subcommittee members with parties who expressed interest in the past and/or
identifiable financial institutions potentially compatible with the Company's
identified strategies.
During the first quarter of 1995, the Subcommittee received
indications of interest and/or initiated discussions with several publicly-
traded bank holding companies larger than the Company, as well as other
financial institutions of similar size and nature as the Company to
preliminarily discuss the level of interest of possible acquisitions, mergers
or establishing cooperative arrangements for services, equipment and/or
training.
During 1995, the Subcommittee, or certain members thereof, discussed
possible acquisition, merger, or establishing cooperative arrangements with
three non-publicly traded organizations ("NPO-1," "NPO-2," and "NPO-3,"
respectively). In early 1995, certain members of the Subcommittee met with the
President and Chief Executive Officer of NPO-1 to discuss possible merger of
the Company and NPO-1. The Subcommittee was provided with information about
NPO-1 which supplemented the Subcommittee's existing knowledge and information.
NPO-1 proposed a transaction wherein shares of the Company's stock would be
exchanged for shares of NPO-1 stock. No exchange rate was discussed. The
parties also discussed compatibility, strengths, performance, short and long
term goals, and other issues of mutual interest. Subsequent to the meeting,
the Subcommittee further researched NPO-1 and concluded that a merger of the
Company and NPO-1 could be beneficial for the Company, but that the Company
should first pursue the possibility of its acquisition by a publicly-traded
organization because of liquidity considerations for shareholders of the
Company, and so advised the Chief Executive Officer of NPO-1. It was mutually
agreed between the parties to renew discussions later in 1995 if no other
Company acquisition discussions materialized.
NPO-2 contacted the Company in the spring of 1995 and expressed its
interest in merging with the Company. Meetings were held between certain
members of the Subcommittee and the Chief Executive Officer of NPO-2 on May 10,
1995 and June 15, 1995. NPO-2 proposed a transaction wherein shares of the
Company's stock would be exchanged for shares of NPO-2 stock. No exchange
ratio was discussed, although NPO-2 proposed a redemption arrangement whereby
selected shareholders of the Company could, subsequent to the acquisition,
liquidate portions of their NPO-2 stock. Upon further study, the Subcommittee
concluded that although the
19
<PAGE> 23
Subcommittee and NPO-2 shared a common vision of the future of community banks,
there did not exist the desired level of market compatibility or ability to
create desired alternatives for shareholders. NPO-2 was so advised in June of
1995.
On August 17, 1995 the Chief Executive Officer of NPO-3 contacted
certain members of the Subcommittee to express NPO-3's desire to discuss merger
possibilities. NPO-3 is another community Bank with a market compatible with
the Company's market. On several prior occasions in the late 1980's and early
1990's, the Company (and the Bank prior to formation of the Company) made
informal merger overtures to NPO-3. On all prior occasions, NPO-3 advised that
it was not interested in pursuing merger possibilities. The Chief Executive
Officer of NPO-3 was advised that the Company may desire to pursue such
discussions in late 1995 if such a merger remained an option for the Company at
that time. No exchange rate was proposed during the August 17, 1995
discussion.
In addition, during 1995 several individuals or representatives of
individuals or organizations expressing an interest in purchasing the Company
contacted members of the Subcommittee. Although no sale prices were discussed,
the Subcommittee elected not to pursue these discussions because these
individuals appeared unable to satisfy the non-economic considerations
identified by the directors of the Company as discussed above.
During 1995, the Subcommittee, or certain members thereof, discussed
possible acquisition or merger with four publicly-traded regional financial
institutions. ("PTO-1," "PTO-2," "PTO-3" and "PTO-4," respectively) in
addition to its discussions with Associated. PTO-1 had locations in south
central Wisconsin. In early 1995, a member of the Subcommittee discussed with
the Chief Executive Officer of PTO-1's south central Wisconsin division, the
Company's interest in exploring a merger. The Chief Executive Officer of PTO-1
advised a member of the Subcommittee that PTO-1 was in the process of
reorganizing its south central Wisconsin region, and was not presently focusing
on acquisitions. The Subcommittee member recommended to the Subcommittee that
discussions not be pursued with PTO-1, as there also appeared to be an
overcentralization of operations and decision making.
PTO-2 also had locations throughout south central Wisconsin. PTO-2
had, in the past, expressed interest in the Company and its predecessor, the
Bank. In early 1995, a member of the Subcommittee contacted the regional
president of PTO-2 who initially expressed a desire to pursue discussions with
the Company. Upon further review, however, PTO-2 advised the Subcommittee
member that it was unable to initiate any discussion with the Company at this
time.
In early January of 1995, a member of the Subcommittee contacted the
Chief Executive Officer of PTO-3 and both parties expressed an interest in
pursuing discussions. PTO-3 had locations in the Company's market. On January
20, 1995, counsel for the Company drafted and forwarded to PTO-3 a
Confidentiality and Standstill Agreement which was signed by PTO-3.
Thereafter, mutual due diligence was commenced and the Company forwarded to
PTO-3 requested financial and other information. Additional information was
exchanged in February and a meeting of the Subcommittee and PTO-3
representatives occurred in late February, 1995. After initial due diligence
review, both parties desired to continue further with due diligence. In early
April, 1995, the Subcommittee was advised by PTO-3 representatives that a
reorganization of PTO-3 was going to be implemented that would affect the
manner that PTO-3 would serve its customers in the Company's market. The
directors of the Company did not believe the restructuring of PTO-3 would be
beneficial to the Company's customers and would result in overcentralization of
operations and decisions. By mutual agreement, the Company and PTO-3
terminated further discussions. No exchange ratio or price offer was proposed
by PTO-3.
On July 7, 1995, counsel for the Company received an inquiry from the
Senior Vice President of PTO-4. The Subcommittee reviewed information on PTO-4
and elected not to pursue discussions at that time, due in part to the
advancement of discussions with Associated and Associated's more favorable
compatibility of markets and PTO-4's limited presence in Wisconsin.
20
<PAGE> 24
In May of 1995 initial contacts were made by members of the
Subcommittee with the President of a banking affiliate of Associated in south
central Wisconsin. Informal discussions continued until it was determined by
the directors and Associated that each desired to pursue more formal and
in-depth discussions. On July 19, 1995, a Confidentiality and Standstill
Agreement was drafted by counsel for the Company and forwarded to and signed by
Associated. Subsequent to the execution of the Confidentiality and Standstill
Agreement, Associated and the directors of the Company discussed a proposed
exchange rate, subject to due diligence, and proposed direction for
negotiations. The directors of the Company believed the exchange rate was
within acceptable ranges and multiples, and the Company desired to remove any
exchange rate contingencies before further discussing or finalizing the
exchange rate.
Accordingly, the directors of the Company and representatives of
Associated discussed potential processes to continue discussions. The
directors of the Company did not believe it was in the best interests of the
Company to proceed towards a letter of intent or letter of understanding.
Rather, the directors of the Company and representatives of Associated agreed
to enter a period of mutual due diligence. The due diligence period proceeded
from approximately July 19, 1995 through early October of 1995, during which
financial and other information of the Company and Associated were exchanged
and analyzed. The due diligence period reconfirmed the Company's directors'
belief that a merger with Associated would achieve the necessary upgrades of
bank services, training, technology and marketing to better serve the Company's
customers, and present desired professional opportunities to the Company's
employees and officers. During this due diligence period, Associated also
conducted on site due diligence of the Company's loan files and premises.
After mutual due diligence, the directors of the Company and representatives of
Associated believed that it was in the best interests of both entities to
proceed towards a definitive merger agreement. On or about October 16, 1995,
counsel for the Company received the initial draft of a proposed merger
agreement from counsel for Associated.
The draft merger agreement required shareholders of the Company to
execute the Voting Agreement pursuant to which such shareholders would agree to
vote their shares in favor of adoption and approval of the Merger Agreement,
and against any Competing Transaction, as long as such vote(s) did not violate
any fiduciary duty of director/shareholders. If any shareholder who is a party
to the Voting Agreement violates the Voting Agreement, Associated has the right
under the Voting Agreement to purchase such shareholder's shares at the price
of $7,578.33 per share. The price per share was established based upon $34.00
per share of Associated Common Stock, which was the approximate value of
Associated Common Stock at the date the Voting Agreement was requested by
Associated. Definitive agreement negotiations among counsel, directors of the
Company and representatives of Associated continued through approximately
November 7, 1995 when final terms, conditions and language of the Merger
Agreement and Voting Agreement were agreed upon.
Associated proposed the issuance of 333,000 shares of Associated
Common Stock (an exchange rate of 222.892 shares based upon outstanding shares
and the exercise of outstanding options of the Company). At the date of the
initial proposal, Associated Common Stock was trading at $32.50 per share, or
$7,244 per share of the Company Common Stock. Such proposed exchange rate
(when Associated Common Stock was $32.50 per share), accordingly, was
approximately 12.03 times estimated earnings for 1995 and 1.44 times the
October 31, 1995 book value, or a total of approximately $10,822,500. As the
proposed exchange rate was fixed, both the Company 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, the
directors of the Company considered a 10% variation from this $32.50 per
Associated share price. If the price of Associated Common Stock declined 10%
to $29.25, at the exchange ratio of 222.892 shares of Associated Common Stock
for each share of the Company Common Stock, the offer would equal 10.82 times
estimated earnings for 1995 and 1.29 times the October 31, 1995 book value, or
a total of approximately $9,740,250. If the price of Associated Common Stock
rose 10% to $35.75, at the exchange ratio of 222.892 shares of Associated
Common Stock for each share of the Company Common Stock, the offer would equal
13.23 times estimated earnings for 1995, or 1.58 times the October 31, 1995
book value, or a total of approximately $11,904,750. The directors of the
Company determined that these ranges and multiples appeared to be within
acceptable parameters based upon their review and analysis of industry
information described above.
21
<PAGE> 25
The directors of the Company concluded that they would not engage an
investment banking firm to render an opinion that the Exchange Ratio is fair
from a financial point of view. As discussed above, the directors of the
Company concluded that they would recommend the Merger and Exchange Ratio as
fair to and in the best interests of the Company when the price of Associated
Common Stock ranged between $29.25 and $35.75 per share. Although the
directors of the Company were aware that the price would continue to fluctuate
until the Effective Time, the directors believed that the benefit to the
Company and its shareholders of a "fairness opinion" would not be commensurate
with its cost.
Final drafts of and exhibits to the Merger Agreement were prepared and
the same were executed on behalf of Associated and the Company at a meeting in
Oshkosh, Wisconsin on November 10, 1995. The aggregate consideration based
upon the closing price of Associated Common Stock on November 10, 1995 as
reported on The Nasdaq Stock Market ($39.13 per share) was approximately 14.48
times estimated earnings for 1995 and 1.73 times the October 31, 1995 book
value, or a total of approximately $13,030,300 (or approximately $8,722 per
share), with the understanding and accompanying risk that the actual
consideration would fluctuate until the Effective Time. On November 14, 1995,
the Company and Associated issued a joint press release announcing the
execution of the Merger Agreement.
The First Amendment to Agreement and Plan of Merger which eliminated
the requirement for an independent audit of the Company's financial statements
as of December 31, 1995 and 1994 and for the years then ended was executed by
the respective parties on November 28, 1995.
REASONS FOR THE MERGER
The Company. In considering the Merger, the directors of the Company
reviewed the terms and conditions of the proposed Merger Agreement, along with
certain business and financial information relating to Associated and the
Company. The Board of Directors of the Company determined to approve the
proposed transaction primarily because the Merger will increase the financial
strength of the Bank by enabling it to better serve its depositors and
customers, to provide additional opportunities for professional advancement for
the Bank's employees, and to be more competitive with other bank subsidiaries
of large bank holding companies currently doing business in South Central
Wisconsin or which might locate in the community. The directors of the Company
also concluded that the Merger will enhance both the long-term and short-term
value of the Company shareholders' investments. Among the additional factors
important to the directors of the Company in determining to approve the Merger,
were: (i) the increased opportunity and resources to serve the Bank's
customers; (ii) the possibility for career enhancement which employees of the
Company and the Bank might be provided as a result of the Merger; (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 the Associated Common Stock to be received in the Merger
as compared to the illiquidity and lack of marketability of the Company Common
Stock and the dividend history of the Company Common Stock; (v) the tax-free
nature of the Merger for federal income tax purposes which would permit the
Company shareholders who receive shares of Associated Common Stock to defer
federal income taxation under certain circumstances; (vi) the potential for
future appreciation of Associated Common Stock due to 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 - Certain Material Federal Income Tax Consequences."
While each member of the Company's Board of Directors evaluated each
of the foregoing as well as other factors, the Board of Directors 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
Company's Board of Directors collectively made its determination with respect
to the Merger based on its unanimous conclusion that the Merger, in light of
the factors that each of them individually considered as appropriate, is fair
and in the best interests of the Company's shareholders.
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<PAGE> 26
Associated. Prior to authorizing the Merger, 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. The Board also considered the benefits to
Associated of expanding in South Central Wisconsin by acquisition of the
Company as opposed to the opening of a new branch bank, the positive impact of
the Merger on Associated by enhancing its visibility in the region and the
terms of the Merger Agreement.
Associated's Board of Directors believes the Merger will, (i) result
in operational and managerial efficiencies which will better enable the Company
to contain costs and grow more rapidly than historic growth rates; (ii) result
in the Company 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 BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company has determined that the terms of
the Merger are fair to, and in the best interests of, the Company, and its
shareholders for the reasons stated immediately above.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
CERTAIN CONSIDERATIONS
In deciding whether to vote in favor of the Merger, the Company
shareholders should consider the following factors, in addition to the other
matters set forth herein:
Anticipated Shareholder Approval of Merger. Assuming compliance with
the terms of the Voting Agreement and provided the Merger Agreement has not
been terminated prior to its being voted upon by the Company shareholders, the
approval and adoption of the Merger Agreement are assured. Accordingly,
shareholders of the Company who do not wish to have their shares of Company
Common Stock converted into the right to receive shares of Associated Common
Stock pursuant to the Merger Agreement, must in addition to voting against the
Merger or abstaining from the vote, also exercise Dissenters' Rights. See "The
Merger - Dissenters' Rights" and Exhibit C hereto.
Unaudited Financial Statements and Omitted Industry Financial
Information. This Proxy Statement/Prospectus contains unaudited consolidated
financial statements of the Company. In the absence of an audit, there is no
positive assurance that the financial statements are fairly presented in
accordance with generally accepted accounting principles. Associated and the
Company have concluded that it would not be practicable to obtain an audit of
the financial statements attached hereto as Exhibit D. In addition, certain
financial disclosures required of bank holding companies under rules
promulgated by the Commission have not been included in the Company's
Management's Discussion and Analysis of Financial Condition attached hereto as
Exhibit D. Omitted industry financial information relates to, among other
things, certain disclosures as to the Bank's investments and deposits.
Associated and the Company have determined that as the Company has not been
required to make such disclosures in the past to its shareholders, it has not
compiled and would be unable to create such financial information from existing
financial records without incurring considerable expense and effort.
Accordingly, it is the determination of Associated and the Company that the
lack of audited consolidated financial statements and the omission of certain
bank holding company financial disclosure is not material to the shareholders
of the Company. Associated has requested and received from the Commission a
waiver of the requirements for audited consolidated financial statements of the
Company and certain bank holding company information not included in Exhibit D.
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Uncertain Legislative and Regulatory Environment. The banking and
financial services businesses in which the Company 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 nor Associated can predict what changes will occur or the effect that
any such changes would have on the ability of the combined entity to compete
effectively or to take advantage of new opportunities after the Merger.
Competition. The markets in which the Company 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 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 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 results
primarily from its retail banking activities located in the City of Lodi and
Village of Dane, Wisconsin and surrounding markets in South Central Wisconsin.
Company shareholders who receive shares of Associated Common Stock will own an
interest in a diversified multi-bank holding company with 85 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
is based upon the financial condition of the Company and the market value for
similar non-publicly traded bank holding companies 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.
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MERGER 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 222.892 shares of Associated Common Stock. See "Certain Provisions of
the Merger Agreement - Termination."
Based upon the capitalization of Associated and the Company as of the
Record Date, the shareholders of the Company will own Associated Common Stock
representing approximately 2.0% of the outstanding voting shares of Associated
following consummation of the Merger (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 November 29, 1995 and accepted for processing by the
Federal Reserve Bank under delegated authority from the Federal Reserve Board
on December 29, 1995.
Associated has been advised that the Federal Reserve Bank has approved
the application as of January 26, 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 Wisconsin Statutes 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
November 30, 1995 which was accepted for processing on the date filed.
The Wisconsin Commissioner approved the Merger as of January 19, 1996. 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).
General. The Merger cannot proceed in the absence of all requisite
regulatory approvals. See "Conditions to Consummation of the Merger." 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
"Conditions to Consummation of the Merger."
Associated and the Company are not aware of any other governmental
approvals or actions that are required for consummation of the Merger 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 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 June 30, 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."
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL
SHARES
At the Effective Time and without any action on the part of
Associated, the Company or the holders of the Company Common Stock, each share
of the Company Common Stock issued and outstanding immediately prior to
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the Effective Time (other than shares held by Company shareholders exercising
their dissenters' rights under the WBCL) shall be converted into the right to
receive shares of Associated Common Stock. See "The Merger - Dissenters'
Rights." 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 stock certificate previously representing any such shares of
the Company 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 has been converted. Certificates previously representing shares
of the Company 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, Associated shall deposit, or cause to be
deposited, with a bank or trust company designated by Associated (the "Exchange
Agent"), for the benefit of the holders of shares of the Company Common Stock
and for exchange in accordance with the terms of the Merger Agreement,
certificates representing the shares of Associated Common Stock (such
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") issuable pursuant to the terms of the
Merger Agreement in exchange for outstanding shares of the Company Common
Stock. It is anticipated that Harris Trust and Savings Bank, Chicago, Illinois
will serve as the Exchange Agent.
As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate which
immediately prior to the Effective Time represented outstanding shares of the
Company 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 Certificates in
exchange for certificates representing shares of Associated Common Stock. Upon
surrender of a certificate previously representing shares of the Company 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, 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. Until surrendered, each certificate previously representing
shares of the Company Common Stock shall be deemed at any time after the
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 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 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,
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 represent 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 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.
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All shares of Associated Common Stock issued upon conversion of the
shares of the Company 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.
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 average of the daily closing prices
of a share of Associated Common Stock as quoted on The Nasdaq Stock Market
during the ten consecutive trading days commencing 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, as
relevant.
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 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 nor the Company shall be liable to any holder of
shares of the Company Common Stock for any such shares of the Company 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.
Associated shall be entitled to deduct and withhold from any cash
consideration payable pursuant to the Merger Agreement to any holder of shares
of the Company 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 there shall be no further registration of transfers of shares of
the Company Common Stock, thereafter on said record books. From and after the
Effective Time, the holders of certificates shall cease to have any rights with
respect to such shares of the Company Common Stock except as otherwise provided
in the Merger Agreement, 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 the
terms of the Merger Agreement as described above.
DESCRIPTION OF ASSOCIATED COMMON STOCK ISSUABLE IN THE MERGER
The following description of Associated Common Stock issuable in the
Merger 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 SHAREHOLDERS SINCE, AT THE EFFECTIVE TIME, EACH ISSUED
AND OUTSTANDING SHARE OF THE COMPANY COMMON STOCK WILL BE CONVERTED INTO THE
RIGHT TO RECEIVE SHARES OF ASSOCIATED COMMON STOCK AT THE EXCHANGE RATIO.
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General. Associated has one class of common stock, the Associated
Common Stock. Of the 48,000,000 shares of Associated Common Stock authorized,
16,518,145 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.
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 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. Their rights 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 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 9,000 shares of
one class of common stock, $0.10 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.
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
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Common Stock, see "Description of Associated Common Stock Issuable in the
Merger." 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.
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.
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.
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 six 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 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 a vote of shareholders where the
votes cast to remove the director exceed the number of votes cast not to remove
the director.
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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
shareholders or the Board of Directors, by the affirmative vote of a majority
of the shareholders or 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.
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.
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 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.
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.
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ADVANCE NOTICE OF NOMINATIONS OF DIRECTORS
The Company. The Company's Articles and By-laws do not contain any
provisions relating to advance notice of nominations of directors.
Associated. Pursuant to Article II, Section 6 of Associated's
By-laws, any shareholder who intends to nominate directors for election at a
meeting called for that purpose must provide Associated with notice of such
intention, certain information regarding the proposed nominee and certain
information regarding the nominating shareholder, not less than 60 days 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 publicly announced, if such
announcement date is less than 70 days before the meeting date.
RESALE OF ASSOCIATED COMMON STOCK ISSUED PURSUANT TO THE MERGER
The Associated Common Stock issued pursuant to the Merger 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 who
may be deemed to be an "affiliate" of the Company for purposes of Rule 145
under the Securities Act. Each affiliate identified by the Company 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 except in compliance with the Securities Act. 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 or
Associated Common Stock (or any interests therein) during the period beginning
30 days before the Effective Time and ending when the financial results for at
least 30 days of combined operations of the Company and Associated after the
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. The Company has concluded that the
only affiliates of the Company are its directors and executive officers.
PRE-MERGER DIVIDEND POLICY
The Company. Pursuant to the Merger Agreement, except for a dividend
not to exceed $55 per share on 1,404 shares to be declared and paid on or
before December 31, 1995, the Company is 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 does not anticipate paying any other dividends on
shares of the Company Common Stock prior to the Effective Time.
Associated. Associated expects to continue to declare, until the
Effective Time, its regularly scheduled dividends.
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 $0.27 per quarter
or $1.08 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 - Pre-Merger Dividend Policy."
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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 and the Company have received an opinion of KPMG Peat
Marwick LLP that the Merger will qualify as a tax-free reorganization under
Section 368(a)(1)(A) of the Code and that each of Associated and the Company
will be a party to such reorganization within the meaning of Section 368(b) of
the Code. Accordingly, the Company, Associated and Holding will recognize no
gain or loss for federal income tax purposes as a result of the Merger and no
gain or loss will be recognized by any holder of the Company Common Stock upon
receipt of Associated Common Stock pursuant to the Merger (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 assumes that none
of the holders of Company 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 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 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:
(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 party to a reorganization" within the
meaning of Section 368(b) of the Code for purposes of this
reorganization.
(ii) No gain or loss will be recognized by the holders of
the Company Common Stock upon the exchange of the Company Common Stock
solely for Associated Common Stock pursuant to the Merger, except with
respect to cash received in lieu of fractional shares of Associated
Common Stock.
(iii) A Company 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 will be the
same as the aggregate basis of the Company Common Stock exchanged
therefor.
(iv) The holding period of the Associated Common Stock
received by a holder of Company Common Stock pursuant to the Merger
will include the period during which the Company Common Stock
exchanged therefor was held, provided that the Company Common Stock
surrendered was held as a capital asset as of the time of the Merger.
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(v) The receipt by a holder of Company 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 for holders of the Company 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.
It does not discuss all of the consequences that may be relevant to holders of
the Company 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 Agreements or the Merger 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 combination resulting from the Merger is 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 and the Company will be carried forward to the combined
corporation at their recorded amounts; income of the combined corporation will
include income of Associated and the Company 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 qualifies 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
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 SBL Capital Bank Shares, Inc., 102 North Main Street,
Lodi, Wisconsin 53555, Attention Mr. Alan K. Langeteig, 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.
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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 November 14, 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.
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 Dane 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 Meeting 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 Meeting 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.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Mr. Langeteig will receive $36,000 from the Company pursuant to a
provision in his employment agreement providing for a bonus in the event of a
Change in Control. Mr. Gehrke will receive $27,000 from the Company pursuant
to an oral agreement providing for a bonus in the event of a Change in Control.
The Merger would constitute a Change in Control under these agreements. As a
condition to Associated's obligation to consummate the Merger, all outstanding
stock options of the Company were required to be exercised. The Company's
stock option plan permitted the Board in its discretion to grant a tax offset
bonus payable in cash accompanying each option calculated based upon the
highest marginal federal and state individual income tax rate.
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In connection with such option exercise, the Board granted a tax offset bonus
to the following directors in the respective amounts: Ms. Jimieson, $76,000;
Mr. Langeteig, $46,444; Mr. Gehrke, $33,778; Mr. Deans, $46,444; Mr. Klein,
$88,667; and Mr. Sweeney, $88,667.
THE VOTING AGREEMENT
Pursuant to the Voting Agreement, attached hereto as Exhibit B, the
execution of which was a condition to Associated entering into the Merger
Agreement, the Party Shareholders have agreed to vote their shares (i) in favor
of the adoption and approval of the Merger Agreement and the Merger and (ii)
against any Competing Transaction. The Voting Agreement also provides that
Associated has the exclusive right to purchase any or all of the shares of
Company Common Stock owned by the Party Shareholders for $7,578.33 per share,
payable in cash, subject to any necessary regulatory approval, after a material
breach of the Merger Agreement by the Company or any events or circumstances
that lead Associated reasonably to believe that the Company is likely to
materially breach the Merger Agreement, a breach by a Party Shareholder, or the
acquisition or overtly threatened acquisition of 5% of the stock or a material
portion of the assets of the Company or the Bank. The purchase right is not
exercisable as of the date hereof. The purchase price per share under the
Voting Agreement equalled the value of the Company Common Stock based upon the
trading price of Associated Common Stock at the date that the Voting Agreement
was requested by Associated. See "Certain Provisions of the Voting Agreement."
Anti-Takeover Effect of the Voting Agreement. The Voting Agreement
may have the effect of discouraging persons who might now or in the future be
interested in acquiring all of or a significant interest in the Company from
considering or proposing such an acquisition, even if such persons were
prepared to pay a higher price per share for the Company Common Stock than the
price per share implicit in the Exchange Ratio. Certain attempts to acquire
the Company or an interest in the Company would cause Associated's right to
purchase such shares and to receive any premium offered to Party Shareholders.
OTHER RELATED PARTY TRANSACTIONS
In the ordinary course of conducting their banking and financial
services businesses, each of Associated, the Company 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. Associated will
thereby acquire control of the Bank through Holding and the Bank will operate
under the name "Associated Bank Lodi."
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 Effective Time will continue as directors after the
Effective Time until their successors shall have been duly elected and
qualified.
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CERTAIN PROVISIONS OF THE MERGER AGREEMENT
The following is a brief summary of certain provisions of the Merger
Agreement, which is attached as Exhibit A 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.
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 222.892 shares of Associated Common Stock. With regard to the
treatment of fractional share interests, see "The Merger - 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 or which would
prevent the Merger from qualifying as a tax-free reorganization 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.
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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 1.75% of period ending loans, (viii) comply with
capital requirements specified by Associated, (ix) fully expense on its
calendar year 1995 financial statement employee bonuses and all expenses
payable as a result of the consummation of the Merger and (x) 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 a
dividend to be declared and paid on or before December 31, 1995 not to exceed
$55 per share on 1,404 shares, 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, other than in the ordinary course of
business consistent with past practice; (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; (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
$50,000; (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 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; or
(xxii) take any action or fail to take any action which individually or in the
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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.
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 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.
Notwithstanding the foregoing, the Board of Directors of the Company is not
prohibited from (i) furnishing or permitting any of its officers, directors,
employees, investment bankers, financial advisors, attorneys, accountants or
other representatives to furnish information to any party that requests
information as to the Company if the Board of Directors of the Company, after
consultation with and based upon the written advice of independent legal
counsel, determines in good faith that such action is required for the Board of
Directors of the Company to comply with its fiduciary duties to shareholders
imposed by law, and if prior to furnishing such information to such party, the
Company receives from such party an executed confidentiality agreement in
reasonably customary form.
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 shall have been approved by
the holders of the Company Common Stock; (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; (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 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
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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, or the conversion of
the Company Common Stock into Associated Common Stock pursuant to the Merger,
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) the parties shall have received the
opinion of independent counsel to Associated that the Merger will be treated
for federal income tax purposes as a "reorganization" within the meaning of
Section 368(a) of the Code (see "The Merger - Certain Material Federal Income
Tax Consequences," above); (iv) Associated shall have received (x) an opinion
from KPMG Peat Marwick LLP to the effect that the Merger qualifies for "pooling
of interests" accounting treatment and (y) a letter from Smith & Gesteland with
respect to the financial condition of the Company dated (a) the date of the
mailing of the Proxy Statement/Prospectus and (b) the Effective Time; (v) the
aggregate of (a) fractional share interests in Associated Common Stock to be
paid in cash pursuant to the Merger Agreement and (b) the number of shares of
Associated Common Stock which would have been issuable pursuant to the Merger
Agreement 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; (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) 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; and (ix) that the
Company shall have taken reasonably appropriate action in response to any
environmental condition identified by Associated's environmental consultant.
Various conditions to Associated's obligation to consummate the Merger
have been satisfied by the Company, including, (i) that all stock options
issued by the Company have been exercised, (ii) that the Company has taken
certain action with respect to matters related to a Federal Deposit Insurance
Corporation compliance report, (iii) that the Company has terminated all
employment agreements, (iv) that the Company's consolidated earnings for
calendar year 1995 (with certain adjustments) were in excess of $900,000, and
(v) that the Company has become the owner of all issued and outstanding stock
of Insurance Agency.
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 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 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
40
<PAGE> 44
provided by applicable law; (v) by either Associated or the Company if the
Merger has not been consummated by June 30, 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% of the Company Common
Stock.
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 VOTING AGREEMENT
The following is a brief summary of certain provisions of the Voting
Agreement, which is attached as Exhibit B to this Proxy Statement/Prospectus
and is incorporated herein by reference. The following summary is qualified in
its entirety by reference to the Voting Agreement.
Associated has entered into the Voting Agreement with Party
Shareholders of the Company. The Party Shareholders hold 816 shares
representing approximately 55% of the total voting power of Company Common
Stock. The Voting Agreement provides that the Party Shareholders, in
consideration of the substantial expenses incurred by Associated in connection
with the Merger Agreement and as a condition to Associated entering into the
Merger Agreement, shall vote or cause to be voted or express a written consent
with respect to all of such Party Shareholder's shares:
41
<PAGE> 45
(a) in favor of adoption and approval of the Merger
Agreement and the Merger at every meeting of shareholders of the
Company at which such matters are considered and at every adjournment
thereof and in connection with every proposal to take action by
written consent with respect thereto, and
(b) against any other Competing Transaction at every
meeting of shareholders of the Company at which such matters are
considered and at every adjournment thereof and in connection with
every proposal to take action by written consent with respect thereto.
The Voting Agreement also provides that Associated has the exclusive
right to purchase any or all of the shares of Company Common Stock owned by
each Party Shareholder for $7,578.33 per share, payable in cash, subject to any
necessary regulatory approval, after a material breach of the Merger Agreement
by the Company or any events or circumstances that lead Associated reasonably
to believe that the Company is likely to materially breach the Merger
Agreement, a breach by a Party Shareholder, or the acquisition or overtly
threatened acquisition of 5% of the stock or a material portion of the assets
of the Company or the Bank. The purchase right is not exercisable as of the
date hereof. The purchase price per share under the Voting Agreement equalled
the value of the Company Common Stock based upon the trading price of
Associated Common Stock at the date that the Voting Agreement was requested by
Associated.
The Voting Agreement also provides that:
(a) Each of the Party Shareholders agrees that such Party
Shareholder will not, nor will such Party Shareholder permit any
entity under such Party Shareholder's control to, deposit any of such
Party Shareholder's shares in a voting trust or subject any of their
shares to any agreement, arrangement or understanding with respect to
the voting of such shares inconsistent with the Voting Agreement.
(b) During the term of the Voting Agreement, each Party
Shareholder agrees not to sell, assign, transfer or dispose of such
Party Shareholder's shares.
The Voting Agreement shall terminate upon the earlier of (a) the
Effective Time of the Merger and (b) the date on which the Merger Agreement is
terminated in accordance with its terms. Upon such termination, no party shall
have any further obligations or liabilities under the Voting Agreement;
provided that termination shall not relieve any party from liability for any
breach of the Voting Agreement prior to such termination.
The Voting Agreement binds the actions of the signatories thereto only
in their capacity as shareholders of the Company, and those
shareholders/directors of the Company who signed the Voting Agreement were not
and could not be contractually bound to abrogate their fiduciary duties as
directors of the Company. Accordingly, while such shareholders/directors are,
under the Voting Agreement, contractually bound to vote as a shareholder in
favor of the Merger and against a Competing Transaction should one be
presented, their fiduciary duties as directors nevertheless require them to
act, in their capacity as directors, in the best interests of the Company when
they decided to approve and adopt the Merger Agreement. In addition, such
shareholders/directors will continue to be bound by their fiduciary duties as
directors of the Company with respect to any decisions they may take in
connection with the Merger of otherwise.
Assuming compliance with the terms of the Voting Agreement, and
provided the Merger Agreement has not been terminated prior to its being voted
upon by the shareholders of the Company, the approval and adoption of the
Merger Agreement are assured.
42
<PAGE> 46
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 September 30, 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
September 30, 1995 the Associated Affiliates operated a total of 85
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.
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.
43
<PAGE> 47
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 September 30, 1995 Associated and the Associated Affiliates, as a
group, employed approximately 1,733 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 Lodi, Wisconsin. The
Company owns all the issued and outstanding stock of the Bank, a Wisconsin
banking corporation. The Bank owns all the issued and outstanding stock of SBL
Management, a Nevada corporation, and 80% of the issued and outstanding stock
of Insurance Agency, a Wisconsin corporation. As of September 30, 1995, the
Company had total assets of approximately $66.9 million and the Bank had
deposits of approximately $58.4 million.
The Bank is a full service bank serving the banking needs of the South
Central Wisconsin communities of Lodi and Dane. The Bank provides commercial
banking services and products, including savings and demand deposits, real
estate, commercial and consumer loans, collection and safe deposit facilities
and other services tailored to meet the needs of the individual and business
customer. The Company owns the Bank's main banking premises located at 102
North Main Street, Lodi, Wisconsin. SBL Management was formed to manage the
Bank's investment portfolio. Insurance Agency was formed to market property,
casualty and surety coverage to customers of the Bank but has been inactive for
several years and has no insurance policies outstanding.
The Company and the Bank are not dependent upon a single or a few
customers, the loss of which would have a material adverse effect on the
Company or the Bank. No material portion of the Company or the Bank's business
is seasonal.
At September 30, 1995, the Company and Bank employed approximately 28
full-time and six part-time employees.
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. The address for Ms.
Jimieson and Mr. Klein is the executive offices of the Company.
44
<PAGE> 48
<TABLE>
<CAPTION>
NAME OF NUMBER OF PERCENT
BENEFICIAL OWNER SHARES OF CLASS
-------------------- -------- ------
<S> <C> <C>
Sherry L. Jimieson . . 530 35.48%
Thomas G. Klein . . . . 81 (1) 5.42%
Albert R. Deans . . . . 11 *
Larry L. Gehrke . . . . 12 *
Alan K. Langeteig . . . 27 1.81%
Timothy C. Sweeney . . 73 (2) 4.89%
All Directors and
executive officers as a
group (6 persons) . . . 734 49.12%
</TABLE>
- ------------
* Less than 1%
(1) Includes 60 shares held in the name of Mr. Klein's spouse.
(2) Includes 37 shares held by trusts of which Mr. Sweeney is trustee.
Also includes 15 shares held by a corporation wholly-owned by Mr.
Sweeney's spouse.
EXPERTS
The consolidated financial statements of Associated as of December 31,
1994 and 1993, and for each of the years in the three-year period ended
December 31, 1994, 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.
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 -
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 matters.
LEGAL OPINIONS
The validity of the shares issued in connection with the Merger will
be passed upon for Associated by Saitlin, Patzik, Frank & Samotny Ltd.,
Chicago, Illinois and certain legal matters in connection with the Merger will
be passed upon for Associated by Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, s.c., Milwaukee, Wisconsin and for the Company by Sweeney &
Sweeney, S.C., Madison, Wisconsin. Mr. Sweeney, a shareholder in Sweeney &
Sweeney, S.C., is a director of the Company and is deemed to beneficially own
73 shares or 4.89% of the outstanding shares of the Company.
SHAREHOLDER PROPOSALS
If the Merger is consummated, shareholders of the Company 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.
45
<PAGE> 49
EXHIBIT A
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
ASSOCIATED BANC-CORP,
ASSOCIATED BANC-SHARES, INC.
AND
SBL CAPITAL BANK SHARES, INC.
NOVEMBER 10, 1995
<PAGE> 50
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
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-2
SECTION 1.07. Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3
SECTION 1.08. Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
SECTION 1.09. Anti-Dilution Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
</TABLE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<TABLE>
<S> <C> <C>
SECTION 2.01. Organization and Qualification of the Company;
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-5
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-11
SECTION 2.14. Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . A-12
SECTION 2.15. Absence of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
SECTION 2.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
SECTION 2.17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
SECTION 2.18. Absence of Adverse Agreements . . . . . . . . . . . . . . . . . . . . . . . . . A-14
SECTION 2.19. Internal Controls and Records . . . . . . . . . . . . . . . . . . . . . . . . . A-14
SECTION 2.20. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
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-15
</TABLE>
A-i
<PAGE> 51
ARTICLE III
REPRESENTATLONS AND WARRANTLES OF
ASSOCIATED
<TABLE>
<S> <C> <C>
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-16
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-18
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
</TABLE>
ARTICLE IV
COVENANTS OF THE COMPANY
<TABLE>
<S> <C> <C>
SECTION 4.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
SECTION 4.02. Negative Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
SECTION 4.03. Letter of the Company's Accountants . . . . . . . . . . . . . . . . . . . . . . . A-23
SECTION 4.04. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
SECTION 4.05. Affiliates; Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . A-23
SECTION 4.06. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
SECTION 4.07. Delivery of Shareholder List . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
</TABLE>
ARTICLE V
COVENANTS OF ASSOCIATED
<TABLE>
<S> <C> <C>
SECTION 5.01. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
SECTION 5.02. Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
SECTION 5.03. Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
</TABLE>
ARTICLE VI
ADDITIONAL AGREEMENTS
<TABLE>
<S> <C> <C>
SECTION 6.01. Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
SECTION 6.02. Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
SECTION 6.03. Appropriate Action; Consents; Filings . . . . . . . . . . . . . . . . . . . . . A-26
SECTION 6.04. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . A-26
SECTION 6.05. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
SECTION 6.06. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
</TABLE>
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ARTICLE VII
CONDITIONS OF MERGER
<TABLE>
<S> <C> <C>
SECTION 7.01. Conditions to Obligation of Each Party to Effect
the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
SECTION 7.02. Additional Conditions to Obligations of Associated . . . . . . . . . . . . . . . A-27
SECTION 7.03. Additional Conditions to Obligations of the Company . . . . . . . . . . . . . . A-29
</TABLE>
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
<TABLE>
<S> <C> <C>
SECTION 8.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30
SECTION 8.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
SECTION 8.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
SECTION 8.04. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
</TABLE>
ARTICLE IX
GENERAL PROVISIONS
<TABLE>
<S> <C> <C>
SECTION 9.01. Non-Survival of Representations, Warranties
and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
SECTION 9.02. Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
SECTION 9.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
SECTION 9.04. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
SECTION 9.05. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
SECTION 9.06. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
SECTION 9.07. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
SECTION 9.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
SECTION 9.09. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
SECTION 9.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
SECTION 9.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
</TABLE>
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<PAGE> 53
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 10, 1995 (the
"Agreement"), among ASSOCIATED BANC-CORP, a Wisconsin corporation
("Associated"), ASSOCIATED BANC-SHARES, INC., a Wisconsin corporation
("Holding") and SBL CAPITAL BANK SHARES, 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 the State Bank of Lodi, a Wisconsin state chartered bank
located in Lodi, Wisconsin (the "Bank"); and
WHEREAS, the Bank has two wholly owned subsidiaries, SBL Management
Corp. ("SBL Management") and Lodi Insurance Agency, Inc., ("Insurance Agency").
The Bank and its subsidiaries, SBL Management and Insurance Agency, 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 Lodi, 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:
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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 January 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.
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:
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(a) each Share of common stock, par value $.10 per share,
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 222.892 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).
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, for exchange in accordance with this 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.
(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
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<PAGE> 56
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).
(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 (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.
(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
"Daily Average Price." For purposes hereof, the "Daily Average Price"
shall mean the average of the daily closing prices of a share of
Associated Common Stock as quoted on the NASDAQ National Market during
the ten consecutive trading days commencing on the first business day
following the date the Federal Reserve Board issues an order approving
consummation of the Merger.
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(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.
(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.
(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.
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
Exchange Agent or Associated for any reason shall be converted into shares of
Associated Common Stock in accordance with this Article I.
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.
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. SBL
Management is duly
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organized, validly existing and in good standing under the laws of the State of
Nevada. Insurance Agency is duly organized and validly existing under the laws
of the State of Wisconsin. The Bank is and has been the only subsidiary of the
Company. SBL Management and Insurance Agency are and have been the only
subsidiaries 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 any
Subsidiary has received notice of proceedings relating to the revocation or
modification of any Company Approvals. The Company, the Bank, SBL Management
and Insurance Agency are duly qualified or licensed as a 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 its
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 9,000 shares of Common Stock,
par value $ .10 per share. As of the date of this Agreement, (i)
1,404 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) 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, 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. Upon exercise of existing stock
options, 1,494 shares of the Company's Common Stock will be issued and
outstanding, all of which will be 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 will be issued in
compliance with applicable securities laws. 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 500 shares of common stock, par value
$300 per share. As of the date of this Agreement, (i) 500 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)
the Company owns all of the Bank's capital stock. As of the date of
this Agreement, there are no options,
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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 SBL Management and Insurance
Agency. The authorized capital stock of SBL Management consists of
25,000 shares of common stock, par value $1.00 per share. As of the
date of this Agreement, (i) 100 shares of SBL Management'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 SBL Management's issued and outstanding capital stock. The
authorized capital stock of Insurance Agency consists of 56,000 shares
of common stock, par value $1.00 per share. As of the date of this
Agreement, (i) 100 shares of Insurance Agency'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) the
Bank owns 80 shares of Insurance Agency's issued and outstanding
capital stock. 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 SBL Management or Insurance Agency or obligating SBL
Management or Insurance Agency to issue or sell any shares of capital
stock of, or other equity interests in SBL Management or Insurance
Agency. There are no obligations, contingent or otherwise, of SBL
Management or Insurance Agency to repurchase, redeem or otherwise
acquire any shares of SBL Management's or Insurance Agency'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 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
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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
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 accounting
principles applied on a consistent basis throughout the periods
involved 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 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), except (i) for liabilities or obligations
incurred in the ordinary
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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 "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
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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 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.
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(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) Except as reflected in the Company Disclosure
Schedule at Section 2.10(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 employment or
consulting contract, (b) any contract or commitment for capital expenditures in
excess of $10,000 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.
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. 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
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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.
(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
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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) To the Company's knowledge, 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 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
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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).
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. There is
no amendment to any lending agreement, 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
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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 who will
receive Associated Common Stock to sell or otherwise dispose of an
amount of Associated Common Stock to be received in the Merger 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.
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:
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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, 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 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.
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(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.
(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
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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, 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
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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) fully expense in 1995 the bonuses payable to all
employees, including, without limitation, those payable to Alan K.
Langeteig and Larry L. Gehrke as a result of the consummation of the
Merger;
(c) 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;
(d) use reasonable efforts to maintain and keep its
properties in as good repair and condition as at present, ordinary
wear and tear excepted;
(e) 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;
(f) 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;
(g) purchase and sell securities in accordance with the
guidelines set forth in Exhibit 4.01;
(h) with respect to the Bank, maintain as of December 31,
1995 and thereafter a loan loss reserve of not less than 1.75 percent
of period ending loans;
(i) comply with and perform in all material respects all
obligations and duties imposed upon it by all applicable laws;
(j) obtain an independent audit of its financial
statements for the years ended December 31, 1994 and December 31, 1995;
(k) comply with the capital requirements set forth in
Exhibit 4.01; and
(l) fully expense in 1995 all expenses (including fees)
incurred in connection with the consummation of the transaction
contemplated hereby.
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:
(a) (i) grant any increase in compensation or grant any
bonuses (incentive or special) to its officers or directors, or to its
employees as a class or otherwise, except the Company may establish a
bonus pool and grant bonuses to employees (other than senior officers
and directors), provided the total amount expended for all such
bonuses (inclusive of any amounts paid to Alan Langeteig as a
performance bonus)
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does not exceed $35,000 and except the Company may, prior to December
31, 1995, grant and pay the "gross up" for taxes upon exercise of
stock options under the Company's stock option plan provided the
aggregate amount of such "gross up" does not exceed $380,000, (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) except for a dividend to be declared and paid on or
before December 31, 1995 and not to exceed $55 per share on the
outstanding shares of common stock of record as of the date hereof
(1,404 shares), 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, other than in the ordinary course of its
business consistent with past practice; 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;
provided, however, that nothing contained in this subsection (e) shall
prohibit the Board of Directors of the Company from furnishing or
permitting any of its officers, directors, employees, investment
bankers, financial advisors, attorneys, accountants or other
representative to furnish information to any party that requests
information as to the Company and the Subsidiaries if (i) the Board of
Directors of the Company, after consultation with and based upon the
written advice of independent legal counsel, determines in good faith
that such action is required for the Board of Directors of the Company
to comply with its fiduciary duties to shareholders imposed by law and
(ii) prior to furnishing such information to such party, the Company
receives from such party an executed confidentiality agreement in
reasonably customary form. 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
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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;
(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;
(i) subject to Section 4.01(h), 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
$50,000, (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
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 individually; (vii)
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 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
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(k) agree in writing or otherwise to do any of the
foregoing.
SECTION 4.03. Letter of the Company's Accountants. The Company shall
use its best efforts to cause to be delivered to Associated "cold comfort"
letters of Smith & Gesteland, the Company's independent public accountants,
dated the date on which the Registration Statement shall become effective and
the Effective Time, respectively, and addressed to Associated, in form and
substance substantially similar to that attached hereto as Annex A and
reasonably satisfactory to Associated.
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 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.
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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, their
holdings of stock as of the latest practicable date, and such other shareholder
information as Associated may reasonably request.
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
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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
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 will mail to its 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 or otherwise furnish or publish to shareholders of the Company 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 Company and
the Subsidiaries shall furnish all information concerning the Company and the
Subsidiaries, and the holders of the Company'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; provided, however, the
obligations of the Company's officers and directors under this Section 6.02 are
subject to any action which the
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officers and directors, after consultation with and based upon the written
advice of independent legal counsel, determine, in good faith, is required to
comply with their fiduciary duties to shareholders imposed by law.
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 and the Merger 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.
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 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.
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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 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
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seeking material damages in connection with the Merger or the
conversion of the Company Common Stock into Associated Common Stock
pursuant to the Merger, 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 Sweeney & Sweeney, S.C. 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) Accountant Letters. Associated shall have received
from the Company a copy of the letters of Smith & Gesteland dated (i)
the date of the mailing of the Proxy Statement/Prospectus, and (ii)
the Effective Time, in form and substance satisfactory to Associated
with respect to the Company's financial condition.
(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.
(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.
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(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) Stock Options. All stock options under all stock
option or similar agreements shall have been exercised prior to
December 31, 1995.
(o) FDIC Matters. The Company shall have:
(i) completed a search for regulatory violations
pursuant to the FDIC compliance report dated April 3, 1995 (the
"Compliance Report");
(ii) gained regulatory approval with respect to
amounts to be reimbursed as a result of such violations; and
(iii) accounted for any such amounts on or before
December 31, 1995.
(p) Compliance Report. The Company shall have responded
to all matters raised in the Compliance Report in a manner reasonably
satisfactory to Associated.
(q) Employment Agreements. All employment agreements to
which the Company or any Subsidiary is party shall have been
terminated on or prior to the Effective Time.
(r) Earnings. The Company's consolidated earnings for
calendar year 1995 plus the sum of (i) the additional amount of loan
loss reserve established as a result of section 4.01(h), (ii) the
additional amount of change of control bonus for Alan Langeteig (but
not to exceed $36,000) and Larry Gehrke (but not to exceed $27,000)
established as a result of section 4.01(b), (iii) the additional
amount of accountant audit fees established as a result of section
4.01(j), (iv) the additional amount of transactional related costs
established as a result of section 4.01(l), (v) the additional amount
of printing and filing expenses established as a result of section
4.06, (vi) the additional amount of required environmental remediation
(for expenses incurred and paid in 1995), if any, established as a
result of section 6.06, (vii) the amount of the tax "gross up"
referenced in section 4.02(a)(i), and (viii) the amount of the bonus
pool permitted by section 4.02(a)(i) shall be at least $900,000.
(s) Insurance Agency. The Bank shall have become the
owner of all of the issued and outstanding capital stock of Insurance
Agency on or prior to the Effective Time.
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:
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(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.
(e) 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.
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;
(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
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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 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.
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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
(b) If to Company:
SBL Capital Bank Shares, Inc.
102 North Main Street
Lodi, WI 53555
Telecopier: (608) 592-4260
Attention: Alan K. Langeteig, CEO
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With a copy to:
Sweeney & Sweeney, S.C.
440 Science Drive, 4th Floor
Madison, WI 53711
Telecopier: (608) 238-8262
Attention: Attorney Timothy C. Sweeney
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 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
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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
SBL CAPITAL BANK SHARES, INC.
By: /s/ Sherry L. Jimieson
-------------------------------
Name: Sherry L. Jimieson
Title: Chairman and President
[NO SEAL] Attest: /s/ Alan K. Langeteig
----------------------
Alan K. Langeteig,
Chief Executive
Officer and Secretary
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<PAGE> 87
FIRST AMENDMENT TO AGREEMENT
AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated as of
November 28, 1995 among ASSOCIATED BANC-CORP, a Wisconsin corporation
("Associated"), ASSOCIATED BANC-SHARES, INC., a Wisconsin corporation
("Holding") and SBL CAPITAL BANK SHARES, INC., a Wisconsin corporation
("Company").
RECITALS
A. Associated, Holding and the Company are parties to an
Agreement and Plan of Merger dated November 10, 1995 (the "Merger Agreement").
B. The parties desire to amend the Merger Agreement in
the manner set forth below.
AGREEMENTS
1. Section 4.01(j) of the Merger Agreement is hereby
deleted.
2. All other provisions of the Merger Agreement remain
in full force and effect.
ASSOCIATED BANC-CORP
BY /s/ H. B. Conlon
------------------------------------
H.B. Conlon, Chairman/President/
Chief Executive Officer
ASSOCIATED BANC-SHARES, INC.
BY /s/ H. B. Conlon
-------------------------------------
Name: H.B. Conlon
Title: Chairman/President/Chief Executive Officer
SBL CAPITAL BANK SHARES, INC.
BY /s/ Sherry L. Jimieson
-------------------------------------
Sherry L. Jimieson, Chairman/President
Attest:
/s/ Alan K. Langeteig
Alan K. Langeteig, Chief Executive Officer/
Secretary
A-35
<PAGE> 88
EXHIBIT B
CONFORMED COPY
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement"), dated as of November
10, 1995, among the undersigned shareholders (the "Shareholders") of SBL
CAPITAL BANK SHARES, INC., a Wisconsin corporation (the "Company"), and
ASSOCIATED BANC-CORP, a Wisconsin corporation ("Associated").
RECITAL
The Shareholders, the Company and Associated acknowledge the
following:
A. Concurrent with the execution of this Agreement, the
Company, Associated and Associated Banc-Shares, Inc., a Wisconsin corporation
and a wholly owned subsidiary of Associated ("Holding"), have entered into an
Agreement and Plan of Merger (the "Merger Agreement"), providing for the
business combination transaction contemplated therein pursuant to which the
Company will merge with and into Holding pursuant to the terms and conditions
of the Merger Agreement ("Merger").
B. Upon consummation of the Merger, the Shareholders
will receive shares of Associated Common Stock for each share of Company Common
Stock, par value $.10 per share (the "Company Common Stock"), owned by them.
C. The Shareholders own the shares of Company Common
Stock set forth opposite such Shareholder's respective names on Exhibit A
hereto (such shares set forth on Exhibit A, and together with all shares of
Company Common Stock subsequently acquired by any Shareholder during the term
of this Agreement, being referred to as the "Shares").
D. In order to induce Associated to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Associated in connection therewith, the Shareholders have
agreed to enter into and perform this Voting Agreement.
AGREEMENTS
In consideration of the Recitals and the mutual agreements
which follow, Shareholders, the Company and Associated agree as follows:
1. Agreement to Vote Shares. Each of the Shareholders
shall vote or cause to be voted, or express a written consent with respect to,
all of such Shareholder's Shares (a) in favor of adoption and approval of the
Merger Agreement and the Merger at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto and (b) against any proposal for a Competing Transaction (as
such term is defined in the Merger Agreement) at every meeting of the
shareholders of the Company at which such matters are considered and at every
adjournment thereof and in connection with every proposal to take action by
written consent with respect thereto; provided, however, that the obligations
under this paragraph 1 of those Shareholders who are also directors of the
Company are subject to any action such Shareholder/directors, after
consultation with and based upon the written advice of their independent legal
counsel, determine, in good faith, is required to comply with their respective
fiduciary duties to shareholders imposed by law. As of the date hereof, such
Shareholder/directors (a) intend to recommend approval of the Merger Agreement
and Merger to the shareholders of the Company and
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(b) are aware of no facts or circumstances existing as of the date hereof that
could cause or reasonably be expected to cause any such Shareholder/director to
change such recommendation.
2. No Voting Trusts. Each of the Shareholders agrees
that such Shareholder will not, nor will such Shareholder permit any entity
under such Shareholder's control to, deposit any of such Shareholder's Shares
in a voting trust or subject any of their Shares to any agreement, arrangement
or understanding with respect to the voting of such Shares inconsistent with
this Agreement.
3. Limitation on Sales. During the term of this
Agreement, each Shareholder agrees not to sell, assign, transfer or dispose of
any such Shareholder's Shares.
4. Purchase Right. Subject to the terms of this
paragraph 4, the Shareholders hereby grant to Associated the exclusive right
("Purchase Rights") to purchase any or all of such Shareholders' Shares for a
price of $7,578.33 per share, payable in cash. The exercise of the Purchase
Rights by Associated, with respect to any amount of Shares that exceeds 5% of
the outstanding voting stock of the Company is subject to the approval of the
Board of Governors of the Federal Reserve System and any other necessary
regulatory approvals. The Purchase Rights are exercisable at any time prior to
the earlier of the Effective Time, as defined in the Merger Agreement, or the
termination of the Merger Agreement and after (a) a material breach by the
Company of the Merger Agreement; (b) a breach by a Shareholder of this
Agreement; (c) the acquisition or overtly threatened acquisition by any person
not related to the current Shareholders of the Company of more than 5% of the
stock of the Company or its subsidiary, State Bank of Lodi or of a material
portion of the assets of the Company or State Bank of Lodi; or (d) any similar
events or circumstances that lead Associated reasonably to believe that the
Company is likely to materially breach the Merger Agreement.
5. Shareholders' Representations. Each Shareholder severally
represents that: (a) subject to the terms of paragraph 1, such Shareholder has
the complete and unrestricted power and unqualified right to enter into and
perform the terms of this Agreement; (b) this Agreement constitutes a valid and
binding agreement with respect to such Shareholder, enforceable against such
Shareholder in accordance with its terms and (c) such Shareholder owns the
number of Shares indicated opposite such Shareholder's name on Exhibit A
hereto, has the sole and unrestricted voting power with respect to such Shares
and such Shares are all of the Shares directly or indirectly held by such
Shareholder.
6. Specific Performance and Remedies. The parties hereto
acknowledge that it will be impossible to measure in money the damage to the
other party(ies) if a party hereto fails to comply with the obligations imposed
by this Agreement and that, in the event of such failure, the other party(ies)
will not have an adequate remedy at law or in damages. Accordingly, each party
hereto agrees that injunctive relief or other equitable remedy, in addition to
remedies at law or in damages, is the appropriate remedy for any such failure.
No party will oppose the granting of such relief on the basis that the other
party(ies) have an adequate remedy at law. Each party hereto agrees that it
will not seek, and agrees to waive any requirement for, the securing or posting
of a bond in connection with any other party's seeking or obtaining such
equitable relief. In addition to all other rights or remedies which any party
hereto may have against any other party hereto who defaults in the performance
of such party's obligations under the Agreement, such defaulting party shall be
liable to the nondefaulting party for all litigation costs and attorneys' fees
incurred by the nondefaulting party(ies) in connection with the enforcement of
any of the nondefaulting party's rights or remedies against the defaulting
party.
7. Term of the Agreement; Termination. The term of this
Agreement shall commence on the date hereof and such term and this Agreement
shall terminate upon the earlier to occur of (a) the Effective Time (as defined
in the Merger Agreement) and (b) the date on which the Merger Agreement is
terminated in accordance with its terms. Upon such termination, no party shall
have any further obligations or liabilities hereunder; provided, that such
termination shall not relieve any party from liability for any breach of this
Agreement prior to such termination.
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8. Entire Agreement. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by all parties hereto. No waiver of
any provisions hereof by any party shall be deemed a waiver of any other
provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
9. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by Federal
Express, Express Mail or other reputable overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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
Attn: 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
Attn: Richard W. Graber, Esq.
If to a Shareholder, to the address or telecopy number set forth for
such Shareholder on the signature page hereof:
With a copy to:
Sweeney & Sweeney, S.C.
440 Science Drive, Fourth Floor
Madison, WI 53711
Telecopier: 608-238-8262
Attn: Timothy C. Sweeney, Esq.
10. Miscellaneous.
(a) This Agreement shall be deemed a contract made under,
and for all purposes shall be construed in accordance with, the laws of the
State of Wisconsin, without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the application
of such provision to any person or circumstances shall be held invalid or
unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability, and the remainder of the
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provision held invalid or unenforceable and the application of such provision
to persons or circumstances, other than the party as to which it is held
invalid, and the remainder of this Agreement, shall not be affected.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(d) All Section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction or
reference shall be derived therefrom.
(e) In the event any Shareholder acquires any additional
Shares during the term of this Agreement, then such Shareholder agrees that the
provisions of this Agreement shall apply to such additional Shares.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
ASSOCIATED BANC-CORP.
By: /s/ H. B. Conlon
---------------------------------------------------
Its: Chairman/President/Chief Executive Officer
/s/ Albert Deans /s/ Larry K. Gehrke
- ------------------------------------- ----------------------------------
Albert Deans Larry L. Gehrke
JOHN N. JIMIESON FAMILY TRUST
/s/ Sherry L. Jimieson /s/ Timothy C. Sweeney
- ------------------------------------- ----------------------------------
Sherry L. Jimieson Timothy C. Sweeney, Trustee
SHERRY L. JIMIESON 1988
INSURANCE TRUST
/s/ Timothy C. Sweeney /s/ Thomas G. Klein
- ------------------------------------- ----------------------------------
Timothy C. Sweeney, Trustee Thomas G. Klein
/s/ Mary L. Klein /s/ J. Robert Maney
- ------------------------------------- ----------------------------------
Mary L. Klein J. Robert Maney
JIMIE CORP
BY /s/ Ann E. Sweeney /s/ Alan Langeteig
---------------------------- ----------------------------------
Ann E. Sweeney, President Alan Langeteig
/s/ Timothy C. Sweeney /s/ David Engelke
- ------------------------------------- ----------------------------------
Timothy C. Sweeney David Engelke
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EXHIBIT A
<TABLE>
<CAPTION>
Number of Common
Shareholder Address/Fax No. Shares Options
- ----------- --------------- ------ -------
<S> <C> <C> <C>
Deans, Albert 324 S. Millitary Road 0 11
Dane, WI 53529
Gehrke, Larry L. 7949 Highway 113 4 8
Lodi, WI 53555
Fax: 608-592-4260
Jimieson, Sherry L. 510 Chestnut Street 512 18
Lodi, WI 53555
Fax: 608-592-4260
John N. Jimieson Family 440 Science Drive 18 0
Trust, Timothy C. Fouth Floor
Sweeney, Trustee Madison, WI 53711
Fax: 608-238-8262
Sherry L. Jimieson 1988 440 Science Drive 19 0
Insurance Trust Timothy Fourth Floor
C. Sweeney, Trustee Madison, WI 53711
Fax: 608-238-8262
Klein, Thomas G. 6029 S. Highlands Ave. 0 21
Madison, WI 53711
Fax: 608-238-2625
Maney, J. Robert 1200 Ft. Pickens Road 41 0
Unit 6F
Pensacola Beach, FL 32561
Jimie Corp. c/o Ann E. Sweeney 15 0
1901 Commonwealth
Madison, WI 53711
Fax: 608-238-8262
Langeteig, Alan W12130 Hillcrest Drive 16 11
Lodi, WI 53555
Fax: 608-592-4260
Sweeney, Timothy C. 440 Science Drive 0 21
Fourth Floor
Madison, WI 53711
Fax: 608-238-8262
Engelke, David 2532 Bigler Circle 41 0
Verona, WI 53593 -- -
Total 726 90
=== ==
</TABLE>
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EXHIBIT C
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.
C-5
<PAGE> 98
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.
C-6
<PAGE> 99
(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 Section Section 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.
C-7
<PAGE> 100
EXHIBIT D
SBL CAPITAL BANK SHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion provides additional analysis of the
consolidated financial condition of SBL Capital Bank Shares, Inc. (the
"Company"), and the results of operations as of and for the periods shown.
This discussion and analysis should be read in conjunction with the Company's
unaudited consolidated financial statements and the notes thereto included
herein.
EARNINGS SUMMARY AND SELECTED FINANCIAL DATA
(In thousands, except per share and ratio data)
(Unaudited)
<TABLE>
<CAPTION>
As of and for the As of and for the
Nine Months Ended Year Ended
September 30, December 31,
--------------------- ---------------------------------
1995 1994 1994 1993 1992
--------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income $ 3,778 $ 3,205 $ 4,338 $ 4,181 $ 4,381
Interest expense 1,843 1,345 1,825 1,756 2,059
--------- -------- --------- --------- ---------
Net interest income 1,935 1,860 2,513 2,425 2,322
Provision for loan losses 8 59 72 78 78
Securities gains (losses) -- (19) (26) -- 1
Other operating income 312 350 440 706 577
Other operating expenses 1,336 1,344 1,818 1,844 1,550
--------- -------- --------- --------- ---------
Income before income taxes 903 788 1,037 1,209 1,272
Income tax expense 259 267 304 355 441
--------- -------- --------- --------- ---------
Net income $ 644 $ 521 $ 733 $ 854 $ 831
========= ======== ========= ========= =========
PER COMMON SHARE DATA:
Net income per share $ 458 $ 371 $ 522 $ 593 $ 554
Cash dividends per share -- -- 110 110 100
Weighted average shares
outstanding 1,404 1,404 1,404 1,440 1,500
BALANCE SHEET DATA:
Average total assets $ 65,166 $ 60,018 $ 61,145 $ 57,338 $ 54,284
Loans, net of unearned discount 47,441 42,878 43,862 40,701 36,433
Allowance for loan losses 686 681 681 612 691
Total deposits 58,449 53,518 54,971 50,632 49,464
Average stockholders' equity 7,137 6,484 6,514 6,014 5,448
KEY FINANCIAL RATIOS:
Return on average assets 1.32% 1.16% 1.20% 1.49% 1.53%
Return on average equity 12.03% 10.71% 11.25% 14.20% 15.25%
Average equity to average total
assets 10.95% 10.80% 10.65% 10.49% 10.04%
Book value per share $ 5,331 $ 4,466 $ 4,835 $ 4,444 $ 3,859
Dividend payout ratio -- -- 21.07% 18.08% 18.05%
</TABLE>
D-1
<PAGE> 101
RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995
For the nine months ended September 30, 1995, net income was $644,000,
an increase of $123,000, or 23.5%, over the $521,000 earned during the first
nine months of 1994. The increase in net income resulted primarily from an
increase in interest income of $75,000 and a decrease in the provision for loan
losses of $51,000. Annualized return on average assets and return on average
equity for the period ended September 30, 1995, were 1.32% and 12.03%,
respectively, compared to 1.16% and 10.71%, respectively, for the same period a
year ago. Both changes were due primarily to the increased earnings in 1995.
Total consolidated assets were $66.9 million at September 30, 1995, an increase
of 9.5% over September 30, 1994. Loans were $47.4 million at September 30,
1995, an increase of 10.6% over the $42.9 million a year earlier. Total
deposits at September 30, 1995, were $58.4 million, up 9.2% from the $53.5
million a year earlier.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
Net income for 1994 was $733,000, a 14% decrease from the $854,000
earned in 1993. The decrease resulted primarily from a substantial reduction
in premiums earned on sales of real estate mortgage loans through the Federal
Home Loan Mortgage Corporation (FHLMC) Program. Premiums earned in 1994 were
$87,000, down from $334,000 in 1993, due to significantly less mortgage
refinancing. This was offset by an $88,000 increase in net interest income for
1994 compared to 1993. Net income for 1993 was up 3% over 1992 earnings of
$831,000.
Net interest income for 1994 improved $88,000, or 3.6%, over 1993
levels. In an increasing rate environment (which began in early 1994),
interest income increased 3.8% and interest expense increased 3.9%. Net
interest income for 1993 was up 4.4% over 1992.
Other income declined by $293,000, or 41.5%, from 1993 levels, which
resulted from rising interest rates which adversely affected the level of
refinancing of real estate mortgage loans as discussed above. Securities
transactions resulted in $26,000 of realized losses in 1994, compared to none
in 1993.
Noninterest expenses decreased slightly in 1994 ($26,000, or 1.4%)
compared to 1993.
Return on average assets decreased to 1.20% in 1994 compared with 1.49%
in 1993 and 1.53% in 1992. Average assets grew 6.6% in 1994 and 5.6% in 1993.
Return on average equity in 1994 likewise showed a decline to 11.25%
compared to 14.20% in 1993 and 15.25% in 1992.
D-2
<PAGE> 102
NET INTEREST INCOME
Net interest income is the amount by which interest generated from
interest earning assets exceeds the expenses associated with funding those
assets. Net interest income for 1994 totaled $2.5 million compared to $2.4
million in 1993 and $2.3 million in 1992. The increases in 1994 and 1993 were
primarily attributable to growth in the loan portfolio, which is the Bank's
highest yielding asset. Average loans outstanding grew from $36.4 million in
1992 to $40.7 million in 1993 and to $43.9 million in 1994. Loan to deposit
ratios increased from approximately 74% in 1992 to approximately 80% in 1993
and 1994, which was accomplished by increasing the loan portfolio at a greater
pace than deposits.
Growth in net interest income was achieved as discussed above, despite
modest declines in the yield on interest-earning assets resulting from slightly
greater declines in interest yield compared to interest paid, as shown in the
following table.
<TABLE>
<CAPTION>
For the Years
Ended December 31,
----------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Yield on interest - average earning assets 7.92 8.00 9.02
Interest paid - average earning assets 3.33 3.36 4.24
----- ----- -----
Net yield on interest-earning assets 4.59 4.64 4.78
===== ===== =====
</TABLE>
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses represents additions charged against
earnings, less loan charge-offs net of recoveries, and is the amount available
to absorb losses on loans. The provision for loan losses charged to earnings
is the amount which, in the judgment of management, is necessary to establish
the allowance at a level that is adequate to absorb known and inherent risks in
the loan portfolio.
Provision for loan losses in 1994 was $71,500 compared to $78,000 in
each of 1993 and 1992. Net charge-offs were $3,033 in 1994, $157,024 in 1993,
and $72,395 in 1992. Please refer to the tables below for details of the
amounts and nature of charge-offs and related recoveries. Management's
determination of the provision for loan losses is based on several factors,
including evaluation of the loan portfolio, current domestic economic
conditions, loan volumes, loan growth, loan portfolio composition, levels of
nonperforming loans, trends in past due loans, and evaluation of various
problem loans for loss potential.
Although loan to deposit ratios and average loans outstanding are
significantly higher in 1995 than in earlier years, nonaccrual and problem
loans are at low levels, reflecting good economic conditions and stability in
the market area, as compared to prior years.
D-3
<PAGE> 103
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
For each period ended shown, the allowance for loan 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.
<TABLE>
<CAPTION>
(In thousands, except ratios)
September 30, December 31, December 31, December 31,
1995 1994 1993 1992
---------------------- ------------------------- ------------------------- -----------------------
Percent of Percent of Percent of Percent of
loans in each loans in each loans in each loans in each
Balance at end of category to category to category to category to
period applicable to: Amount total loans Amount total loans Amount total loans Amount total loans
- --------------------- ------ -------------- -------- -------------- -------- -------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Real estate - mortgage $ 137 58.5 $ 137 56.5 $ 122 60.5 $ 139 57.7
Real estate - construction -- 6.5 -- 6.4 -- 3.6 -- 1.8
Loans to farmers 137 7.8 136 8.7 122 8.2 138 8.5
Commercial/industrial loans 206 15.1 204 15.9 184 15.6 207 18.9
Consumer loans 206 10.2 204 11.0 184 10.1 207 10.7
Lease financing/other loans -- 1.9 -- 1.5 -- 2.0 -- 2.4
----- ------ ----- ------ ------ ------ ------ -----
Total $ 686 100.0 $ 681 100.0 $ 612 100.0 $ 691 100.0
===== ====== ===== ====== ====== ======= ======= =====
</TABLE>
D-4
<PAGE> 104
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the daily average loan balances at the
end of each period; changes in the allowance for loan 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>
(In thousands, except ratios)
December 31,
September 30, ------------------------------------
1995 1994 1993 1992
--------------- --------- --------- --------
<S> <C> <C> <C> <C>
Daily average amount of loans $ 46,366 $ 43,862 $ 40,701 $ 36,433
========= ========= ======== ========
Balance of allowance for loan losses
at beginning of period $ 681 $ 612 $ 691 $ 686
Loans charged off:
Commercial/industrial loans -- 11 134 --
Consumer loans 11 20 48 21
Lease financing/other loans -- -- -- 60
--------- --------- --------- --------
Total loans charged off 11 31 182 81
Recoveries of loans previously charged off:
Commercial/industrial loans -- 8 -- --
Consumer loans 8 20 25 8
--------- --------- --------- --------
Total recoveries 8 28 25 8
Net loans charged off 3 3 157 73
Additions to allowance for loan losses
charged to operating expense 8 72 78 78
--------- --------- --------- --------
Balance of allowance for loan losses
at end of period $ 686 $ 681 $ 612 $ 691
========= ========= ======== ========
Ratio of net charge-offs during period
to average loans outstanding 0.01% 0.01% 0.39% 0.20%
</TABLE>
D-5
<PAGE> 105
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> December 31,
September 30, -----------------------------------
1995 1994 1993 1992
--------------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Nonaccrual loans $ 64,567 $ 276,416 $ 18,486 $ 159,572
Troubled debt restructurings 100,055 100,888 -- --
---------- ---------- -------- ----------
Total $ 164,622 $ 377,304 $ 18,486 $ 159,572
========== ========== ======== ==========
If the nonaccrual loans had been
current throughout their terms,
interest income recorded in income
would have been: $ 9,036 $ 30,537 $ 1,934 $ 23,267
Interest income recorded in income
only as received: $ 6,045 $ 22,680 $ 1,143 $ 25,677
Interest income recorded in income
for troubled debt restructurings: $ 7,178 $ 8,837 $ -- $ --
</TABLE>
Loans are placed on nonaccrual status when they are 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 the collectibility of principal or interest on loans, it is the practice
of management to place such loans on a nonaccrual status immediately rather
than waiting until the loans become 90 days past due. Previously accrued and
uncollected interest on such loans is reversed and income is recorded only to
the extent that interest payments are subsequently received on a cash basis and
a determination has been made that the loan's principal is collectible. If the
loan collectibility of principal is doubtful, payments are applied to loan
principal. As of September 30, 1995, management believes that there are no
potential problem loans which would require disclosure.
Loan concentrations exceeding 10% of the total loan portfolio consist
only of residential real estate mortgages which approximate 31% of total loans
as of September 30, 1995.
D-6
<PAGE> 106
NONINTEREST INCOME
The following table summarizes noninterest income for 1992 through 1994:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Service charges on deposit accounts $ 192,486 $ 193,524 $ 205,380
Premium on loans sold to FHLMC 86,581 334,077 221,426
Other service charges and fees 110,262 122,527 109,161
Other income 50,247 56,013 40,626
----------- ----------- -----------
$ 439,576 $ 706,141 $ 576,593
=========== =========== ===========
</TABLE>
Service charges and other income remained steady for all three years,
varying from $353,000 to $372,000. Premium on loans sold to FHLMC varied for
reasons described above.
NONINTEREST EXPENSE
The following table summarizes noninterest expenses for 1992 through
1994:
<TABLE>
<CAPTION>
1994 1993 1992
------------- ------------- --------------
<S> <C> <C> <C>
Salaries and employee benefits $ 962,054 $ 944,650 $ 785,018
Occupancy expense 184,897 178,235 187,549
FDIC assessment 115,160 111,050 106,119
Equipment expense 128,050 164,765 127,148
Other 427,743 445,682 344,304
------------- ------------- --------------
$ 1,817,904 $ 1,844,382 $ 1,550,138
============= ============= ==============
</TABLE>
Salaries and employee benefits increased significantly from 1992 to
1993, which was attributable to adding additional staff and increasing year-end
bonus payments. Other noninterest expenses also increased in 1993 due
primarily to legal and other costs associated with formation of the holding
company and the Bank's investment subsidiary.
D-7
<PAGE> 107
FUNDING AND LIQUIDITY
The deposit base of the bank has traditionally provided the major source
of funding. Deposits grew significantly (by 8.6%) in 1994, attributable to
increased tax deposits from municipalities on top of greater than normal growth
due to good economic conditions. Most of the deposit growth has been in the
interest bearing accounts, which results in a lesser contribution towards net
interest income. The decrease of approximately 26% in noninterest bearing
deposits from December 31, 1994 to September 30, 1995 was attributable to
normal seasonal fluctuations. The following tabulation reflects the deposit
trends from 1992 through September 30, 1995, and the classifications of
deposits for the same period.
<TABLE>
<CAPTION>
(In thousands)
September 30, December 31, December 31, December 31,
1995 1994 1993 1992
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Noninterest bearing deposits
Individuals, partnerships,
and corporations $ 3,686 $ 4,992 $ 4,612 $ 4,632
U.S. government, states,
and political subdivisions 955 943 539 800
Other 145 560 483 13
-------- -------- -------- ---------
Total noninterest
bearing 4,786 6,495 5,634 5,445
-------- -------- -------- ---------
Interest bearing deposits
Individuals, partnerships,
and corporations 51,188 46,479 42,912 42,435
U.S. government, states,
and political subdivisions 2,475 1,997 2,086 1,586
-------- -------- -------- ---------
Total interest bearing 53,663 48,476 44,998 44,021
-------- -------- -------- ---------
Total deposits $ 58,449 $ 54,971 $ 50,632 $ 49,466
======== ======== ======== =========
</TABLE>
D-8
<PAGE> 108
Liquidity is the ability of a bank to meet readily the needs of its
customers and its financial commitments. The Bank ensures liquidity through
pricing of earning assets at market rates, developing a stable base of deposits
and maintaining a pool of money market assets which can readily be redeployed
into other earning assets or used to meet depositors' demands. Cash, federal
funds sold, and investment securities available for sale comprise 11.0% of
total deposits on December 31, 1994, and 14.1% on September 30, 1995. The
following table summarizes the liquidity calculation for December 31, 1994, and
September 30, 1995.
<TABLE>
<CAPTION>
(In thousands)
September 30, December 31,
1995 1994
----------------- -----------------
<S> <C> <C>
Cash and due from banks $ 1,963 $ 3,555
Investment securities available for sale
U.S. government and agencies 3,614 1,642
States and political subdivisions 673 823
--------- ---------
Total investment securities available
for sale 4,287 2,465
Federal funds sold 1,995 --
--------- ---------
Total liquid assets $ 8,245 $ 6,020
========= =========
Total deposits $ 58,449 $ 54,971
Liquid assets as a percentage of total deposits 14.1% 11.0%
</TABLE>
D-9
<PAGE> 109
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-------------
<S> <C>
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1994, 1993 AND 1992
Consolidated Statements of Condition D-11 - D-12
Consolidated Statements of Income D-13
Consolidated Statements of Stockholder Equity D-14
Consolidated Statements of Cash Flows D-15 - D-16
Notes to Consolidated Financial Statements D-17 - D-34
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1994
Consolidated Statements of Condition D-35 - D-36
Consolidated Statements of Income D-37
Consolidated Statements of Cash Flows D-38 - D-39
Notes to Consolidated Financial Statements D-40 - D-41
</TABLE>
D-10
<PAGE> 110
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
December 31
<TABLE>
<CAPTION>
1994 1993
--------------- ---------------
<S> <C> <C>
ASSETS
Cash and due from banks (Note 2) $ 3,554,722 $ 2,090,808
Investment securities available for sale
(at fair value) (Note 3) 2,465,378 --
Investment securities held to maturity
(fair value of $11,615,092) (Note 3) 11,928,044 --
Marketable equity securities (at fair
value) (Note 3) -- 505,454
Investment securities held for investment
(fair value of $13,843,802) (Note 3) -- 13,685,580
Loans (Note 4) 43,861,816 40,701,009
Less: Allowance for loan losses (680,803) (612,336)
--------------- ---------------
Loans, net of allowance for loan losses 43,181,013 40,088,673
Bank premises and equipment (Note 5) 1,503,975 1,668,622
Accrued interest receivable 436,514 430,030
Income tax refund receivable -- 2,300
Deferred income taxes (Note 14) 235,718 184,640
Other assets (Note 6) 98,474 230,430
--------------- ---------------
Total assets $ 63,403,838 $ 58,886,537
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-11
<PAGE> 111
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF CONDITION
(Continued)
(Unaudited)
December 31
<TABLE>
<CAPTION>
1994 1993
--------------- ---------------
<S> <C> <C>
LIABILITIES
Domestic deposits
Noninterest bearing $ 6,495,003 $ 5,633,960
Interest bearing
NOW 6,702,461 6,179,558
Savings 14,949,167 14,260,173
Time, $100,000 and over 2,600,535 1,755,902
Other time 24,223,509 22,802,039
--------------- ---------------
Total interest bearing 48,475,672 44,997,672
--------------- ---------------
Total deposits 54,970,675 50,631,632
Short-term borrowings (Note 7)
Federal funds purchased 750,000 1,315,000
Income taxes payable 10,560 --
Accrued expenses and other liabilities 247,814 213,821
Dividends payable 154,440 154,440
Long-term debt (Note 8) 482,000 332,000
--------------- ---------------
Total liabilities 56,615,489 52,646,893
--------------- ---------------
COMMITMENTS AND CONTINGENT LIABILITIES
(Note 11)
STOCKHOLDER EQUITY
Common stock $.10 par value - 9,000 shares
authorized; 1,404 shares issued and outstanding 140 140
Capital surplus 5,465,333 5,465,333
Net unrealized loss on investment securities
available for sale, net (30,753) (1,010)
Retained earnings 1,353,629 775,181
--------------- ---------------
Total stockholder equity 6,788,349 6,239,644
--------------- ---------------
Total liabilities and stockholder equity $ 63,403,838 $ 58,886,537
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-12
<PAGE> 112
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Years Ended December 31
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $ 3,553,739 $ 3,348,282 $ 3,463,951
Interest on investment securities
Taxable 558,929 638,267 803,410
Exempt from federal income taxes 226,098 194,367 113,574
------------ ------------ ------------
Total interest income 4,338,766 4,180,916 4,380,935
------------ ------------ ------------
Interest expense
Interest on deposits 1,789,601 1,750,099 2,057,865
Interest on short-term borrowings 9,647 3,549 927
Interest on long-term debt 26,182 2,362 --
------------ ------------ ------------
Total interest expense 1,825,430 1,756,010 2,058,792
------------ ------------ ------------
Net interest income 2,513,336 2,424,906 2,322,143
Provision for loan losses (Note 4) 71,500 78,000 78,000
------------ ------------ ------------
Net interest income after provision for
loan losses 2,441,836 2,346,906 2,244,143
------------ ------------ ------------
Other income
Fees for other services to customers 426,409 693,211 563,707
Investment securities gains (losses) (26,184) -- 1,003
Other income 13,167 12,930 12,886
------------ ------------ ------------
Total other income 413,392 706,141 577,596
------------ ------------ ------------
Other expenses
Salaries and employee benefits 962,054 944,650 785,018
Occupancy expense 184,897 178,235 187,549
Equipment expense 128,050 164,765 127,148
Data processing and courier 57,855 30,873 27,078
Other real estate owned expense (Note 6) 5,745 -- (3,422)
Other operating expenses 479,303 525,859 426,767
------------ ------------ ------------
Total other expenses 1,817,904 1,844,382 1,550,138
------------ ------------ ------------
Income before income taxes 1,037,324 1,208,665 1,271,601
Income tax expense (Note 14) 304,436 355,045 440,650
------------ ------------ ------------
NET INCOME $ 732,888 $ 853,620 $ 830,951
============ ============ ============
Earnings per common share (Note 15) $522 $593 $554
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-13
<PAGE> 113
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF STOCKHOLDER EQUITY
(Unaudited)
For the Years Ended December 31
<TABLE>
<CAPTION>
Net
Unrealized
Loss on
Investment
Common Stock Securities
-------------------- Capital Available Retained
Shares Amount Surplus for Sale Earnings
-------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
1992
Balance - January 1, 1992 1,500 $ 150 $ 5,465,333 $ -- $ (358,336)
Net income for the year -- -- -- -- 830,951
Cash dividends declared
($100 per share) -- -- -- -- (150,000)
------ ----- ------------ --------- ------------
Balance - December 31, 1992 1,500 150 5,465,333 -- 322,615
1993
Net income for the year -- -- -- -- 853,620
Cash dividends declared
($110 per share) -- -- -- -- (154,440)
Write-down to market value
of equity investment -- -- -- (1,010) --
Repurchase of stock at time of
formation of holding company (96) (10) -- -- (246,614)
------ ----- ------------ --------- ------------
Balance - December 31, 1993 1,404 140 5,465,333 (1,010) 775,181
1994
Net income for the year -- -- -- -- 732,888
Cash dividends declared
($110 per share) -- -- -- -- (154,440)
Change in net unrealized loss on
investment securities available
for sale at December 31, 1994,
net of $22,178 of deferred
income taxes -- -- -- (29,743) --
------ ----- ------------ --------- ------------
Balance - December 31, 1994 1,404 $ 140 $ 5,465,333 $ (30,753) $ 1,353,629
====== ===== ============ ========= ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-14
<PAGE> 114
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Years Ended December 31
<TABLE>
<CAPTION>
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 732,888 $ 853,620 $ 830,951
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 195,202 190,813 172,700
Provision for losses on loans 71,500 78,000 78,000
Amortization of premium on investments 22,498 28,544 13,500
Accretion of discount on investments (4,506) (3,784) (8,838)
Net loss (gain) from disposal of other
real estate 5,745 -- (3,422)
(Gain) loss on sale of investment
securities 26,184 -- (1,003)
Deferred income taxes (30,321) (338) (119,567)
Changes in assets and liabilities:
Interest receivable (6,484) (24,979) 81,037
Prepaids and other assets (44,015) (27,205) (110,947)
Interest payable 5,152 (33,227) (77,880)
Income taxes payable/receivable 12,860 (145,830) 35,280
Other liabilities 30,262 940 (5,809)
------------- ------------- -------------
Net cash provided by operating activities 1,016,965 916,554 884,002
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment securities 498,569 -- 295,335
Principal payments received on investments 5,693,534 5,320,047 5,157,304
Purchase of investments (6,490,588) (6,765,445) (8,124,008)
Proceeds from sale of other real estate owned 170,226 -- --
Net (increase) decrease in federal funds sold -- 2,063,000 (132,000)
Net (increase) decrease in loans (3,163,840) (4,424,708) 561,831
Purchases of bank premises and equipment (30,555) (189,041) (39,899)
------------- ------------- -------------
Net cash used in investing activities $ (3,322,654) $ (3,996,147) $ (2,281,437)
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-15
<PAGE> 115
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Unaudited)
For the Years Ended December 31
<TABLE>
<CAPTION>
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW
accounts, and savings accounts $ 2,072,940 $ 827,086 $ 3,741,197
Net increase (decrease) in short-term
borrowings (565,000) 1,315,000 --
Proceeds from long-term debt 150,000 332,000 --
Net increase (decrease) in time deposits 2,266,103 340,847 (1,398,641)
Stock reacquired -- (246,624) --
Dividends paid (154,440) (150,000) (150,000)
------------- ------------- -------------
Net cash provided by financing activities 3,769,603 2,418,309 2,192,556
------------- ------------- -------------
Net increase (decrease) in cash and
due from banks 1,463,914 (661,284) 795,121
Cash and due from banks, January 1 2,090,808 2,752,092 1,956,971
------------- ------------- -------------
Cash and due from banks, December 31 $ 3,554,722 $ 2,090,808 $ 2,752,092
============= ============= =============
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 1,820,278 $ 1,789,237 $ 2,136,673
Income taxes paid 321,492 517,554 512,497
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-16
<PAGE> 116
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INFORMATION ABOUT THE COMPANY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The consolidated financial statements of SBL Capital Bank Shares,
Inc. (the "Company") include the accounts of the Company, its
wholly-owned subsidiary, State Bank of Lodi (the "Bank"), and the
wholly-owned subsidiaries of the Bank, SBL Management Corporation
and Lodi Insurance Agency, Inc. All significant intercompany items
and transactions have been eliminated.
On May 17, 1993, the Company was formed as a one bank holding
company. An exchange of stock in the Company was made for
substantially all of the stock outstanding of the Bank. Stock of
Bank shareholders not wanting to own stock of the Company was
purchased for cash. The 1992 statements of income, stockholder
equity and cash flows represent the consolidated statements of the
Bank and its subsidiary, Lodi Insurance Agency, Inc. For
comparability, all 1992 amounts have been restated as if the
pooling of interests had already occurred.
During 1993, the Bank established SBL Management Corporation as a
wholly-owned subsidiary, which was established to manage certain
Bank assets available for investment.
The Bank grants commercial, personal, mortgage and agricultural
loans to customers, substantially all of whom are located in the
Lodi, Wisconsin area. Although the Bank has a diversified
portfolio, debtors' ability to honor their contracts is dependent
upon the economic condition of the local industrial businesses, and
commercial and agricultural industries.
Investment securities classified as held to maturity are those
securities which the Company has both the intent and the ability to
hold until maturity. Under this classification, securities are
stated at cost, adjusted for amortization of premiums and accretion
of discounts which are recognized as adjustments to interest
income. Gains or losses on disposition are based on the net
proceeds and the adjusted carrying amount of the securities sold,
using the specific identification method.
Investment securities classified as available for sale are those
securities which the Company has determined might be sold to manage
interest rate risk or in response to changes in interest rates or
other economic factors. While the Company has no current intention
of selling these securities, they may not be held to maturity.
D-17
<PAGE> 117
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INFORMATION ABOUT THE COMPANY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Marketable equity securities were carried at the lower of amortized
cost or market at December 31, 1993. Adjustments down to market
value were recorded as a separate component of equity if the
adjustment was considered temporary. Debt securities at December
31, 1993, were carried at cost. As of January 1, 1994, the Company
adopted Statement of Financial Accounting Standards No. 115 (SFAS
115) "Accounting for Certain Investments in Debt and Equity
Securities." Accordingly, investment securities available for sale
at December 31, 1994, are carried at fair value.
Adjustments up or down to market value at December 31, 1994, are
recorded as a separate component of equity, net of tax. Under both
SFAS 115 and prior to adoption, premium amortization and discount
accretion are recognized as adjustments to interest income.
Realized gains or losses on disposition are based on the net
proceeds and the adjusted carrying amount of the securities sold,
using the specific identification method.
Loans are stated at the principal amount outstanding. Interest on
loans is calculated using the simple interest method on daily
balances of the principal amount outstanding.
The allowance for loan losses is maintained at a level believed
adequate by management to absorb potential losses in the loan
portfolio. Management's determination of the adequacy of the
allowance is based on an evaluation of the portfolio, past loan
loss experience, current domestic and international economic
conditions, volume, growth and composition of the loan portfolio,
and other relevant factors. The allowance is increased by
provisions for loan losses charged against income.
The accrual of interest income is discontinued when a loan becomes
90 days past due as to principal or interest. When interest
accruals are discontinued, interest credited to income in the
current year is reversed, and interest accrued in the prior year is
charged to the allowance for loan losses.
Depreciable assets are stated at cost less accumulated
depreciation. Depreciation is charged to operating expense over
the estimated useful lives of the assets, using the straight-line
and accelerated methods.
D-18
<PAGE> 118
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INFORMATION ABOUT THE COMPANY AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Other real estate, which is included in other assets, comprises
properties acquired through a foreclosure proceeding or acceptance
of a deed in lieu of foreclosure. These properties are carried at
the lower of cost or fair value minus estimated costs to sell,
based on appraised value at the date acquired. Loan losses arising
from the acquisition of such property are charged against the
allowance for loan losses. An allowance for losses on other real
estate is maintained if subsequent valuation adjustments on a
specific property basis are required.
In January 1993 the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109) "Accounting for Income
Taxes." The adoption of SFAS 109 changes the method of accounting
for income taxes from the deferred method to an asset and liability
approach. Previously the Company deferred the past tax effects of
timing differences between financial reporting and taxable income.
The asset and liability approach requires the recognition of
deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the carrying amounts
and the tax bases of other assets and liabilities.
The cumulative effect of the change in accounting for income taxes
as of January 1, 1993, and for the year ended December 31, 1993,
was not material.
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently
due plus deferred taxes related primarily to differences between
the basis of the allowance for loan losses, deferred compensation,
market value adjustments of securities, and interest on nonaccrual
loans for financial and income tax reporting. The deferred tax
assets and liabilities represent the future tax return consequences
of those differences, which will either be taxable or deductible
when the assets and liabilities are recovered or settled.
The Company and its subsidiaries file a consolidated federal income
tax return. Each entity provides for income taxes on a
separate-return basis, and remits to the Company amounts determined
to be currently payable, if any.
Earnings per share are based on the weighted average number of
shares outstanding during each year.
For purposes of the statement of cash flows, the Company considers
cash and due from banks as cash and cash equivalents.
D-19
<PAGE> 119
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS
The Company is required to maintain average reserve balances by the
Federal Reserve Bank. The average amount of those reserve balances
for the year ended December 31, 1994, was approximately $196,000.
NOTE 3 - INVESTMENT SECURITIES
The amortized cost and estimated market values of investment
securities are as follows:
<TABLE>
<CAPTION>
December 31, 1994
-----------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Available for sale
U.S. government and
agencies $ 1,686,292 $ -- $ 44,047 $ 1,642,245
Obligations of states and
political subdivisions 832,017 242 9,126 823,133
------------- ---------- ---------- -------------
$ 2,518,309 $ 242 $ 53,173 $ 2,465,378
============= ========== ========== =============
Held to maturity
U.S. government and
agencies $ 3,483,987 $ 755 $ 60,157 $ 3,424,585
Obligations of states and
political subdivisions 3,486,856 15,045 107,874 3,394,027
Mortgage-backed securities 3,873,328 744 150,869 3,723,203
Other 1,083,873 -- 10,596 1,073,277
------------- ---------- ---------- -------------
$ 11,928,044 $ 16,544 $ 329,496 $ 11,615,092
============= ========== ========== =============
</TABLE>
D-20
<PAGE> 120
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - INVESTMENT SECURITIES (continued)
<TABLE>
<CAPTION>
December 31, 1993
-----------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Marketable equity securities
Mutual fund $ 506,464 $ -- $ 1,010 $ 505,454
------------- ---------- ---------- -------------
$ 506,464 $ -- $ 1,010 $ 505,454
============= ========= ========== =============
Held for investment
U.S. government and
agencies $ 4,258,673 $ 51,125 $ 1,128 $ 4,308,670
Obligations of states and
political subdivisions 4,237,773 75,137 19,126 4,293,784
Mortgage-backed securities 3,491,194 45,646 7,840 3,529,000
Other 1,697,940 14,408 -- 1,712,348
------------- ---------- ---------- -------------
$ 13,685,580 $ 186,316 $ 28,094 $ 13,843,802
============= ========= ========== =============
</TABLE>
Results of sales of securities available for sale were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Proceeds $ 498,569 $ -- $ 295,335
Realized gains -- -- 3,563
Realized losses 26,184 -- 2,560
</TABLE>
D-21
<PAGE> 121
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - INVESTMENT SECURITIES (continued)
The amortized cost and estimated market value of investments at
December 31, 1994, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities of
mortgage-backed securities because borrowers may have the right to
call or prepay the mortgages underlying the securities with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
--------------------------- ------------------------------
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Due in one year or less $ 545,647 $ 544,102 $ 2,480,391 $ 2,463,538
Due after one year to five years 1,862,662 1,811,040 4,011,398 3,922,519
Due after five years to ten years 110,000 110,236 1,080,931 1,030,319
Due after ten years 481,996 475,513
------------ ------------ ------------- -------------
2,518,309 2,465,378 8,054,716 7,891,889
Mortgage-backed securities -- -- 3,873,328 3,723,203
------------ ------------ ------------- -------------
$ 2,518,309 $ 2,465,378 $ 11,928,044 $ 11,615,092
============ ============ ============= =============
</TABLE>
Securities pledged to secure public and trust deposits and
borrowed funds had a carrying value of $2,571,638 and a market value
of $2,581,535 at December 31, 1994, and a carrying value of $199,964
and a market value of $201,440 at December 31, 1993.
Investment securities (other than U.S. government or its
agencies) whose book value exceeds ten percent of stockholder equity
follow:
<TABLE>
<CAPTION>
Book Market
Value Value
----------- -----------
<S> <C> <C>
December 31, 1994
Lodi, Wisconsin revenue sewer, waterworks,
and electric $ 690,102 $ 666,540
December 31, 1993
Lodi, Wisconsin revenue sewer, waterworks,
and electric 690,266 687,342
</TABLE>
D-22
<PAGE> 122
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4 - LOANS
Major classifications of loans are as follows (in thousands):
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
----------------- ----------------
<S> <C> <C>
Commercial, financial, and agricultural $ 11,420 $ 10,470
Real estate - construction 2,807 1,464
Real estate - mortgage 24,798 24,662
Installment and other consumer 4,837 4,105
---------- ----------
Total loans $ 43,862 $ 40,701
========== ==========
</TABLE>
Certain directors and executive officers of the Bank, including
their immediate families, companies in which they are principal
owners, and trusts in which they are involved, were loan customers
of the Bank during 1994 and 1993. Such loans were made in the
ordinary course of business at normal credit terms, including
interest rate and collateralization, and do not represent more than
a normal risk of collection. The aggregate dollar amount of these
loans was $693,000 and $254,000 at December 31, 1994 and 1993,
respectively. During 1994, $1,147,000 of new loans were made and
repayments totalled $708,000.
Loans on which the accrual of interest has been discontinued or
reduced amounted to $276,416 and $18,420 at December 31, 1994 and
1993, respectively. If these loans had been current throughout
their terms, interest income for the nonaccrual period would have
approximated $30,537, $1,934, and $23,267 for 1994, 1993, and 1992,
respectively. Interest income which has been recorded only as
received amounted to $22,680, $1,143, and $25,677 for 1994, 1993,
and 1992, respectively, for these nonaccrual loans.
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ------------ -----------
<S> <C> <C> <C>
Balance at beginning of year $ 612,336 $ 691,360 $ 685,755
Provision charged to operations 71,500 78,000 78,000
Recoveries 28,183 25,337 8,411
Loans charged off (31,216) (182,361) (80,806)
----------- ------------ -----------
Balance at end of year $ 680,803 $ 612,336 $ 691,360
=========== ============ ===========
</TABLE>
D-23
<PAGE> 123
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - BANK PREMISES AND EQUIPMENT
<TABLE>
<CAPTION>
1994 1993
-------------- -------------
<S> <C> <C>
Land $ 182,000 $ 182,000
Buildings and improvements 1,607,655 1,601,207
Equipment 871,739 847,632
-------------- -------------
2,661,394 2,630,839
Less accumulated depreciation 1,157,419 962,217
-------------- -------------
$ 1,503,975 $ 1,668,622
============== =============
</TABLE>
Depreciation expense aggregated $195,202 in 1994, $190,813 in 1993,
and $172,700 in 1992.
NOTE 6 - OTHER REAL ESTATE
Other real estate (none in 1994, $175,971 in 1993, and $152,530 in
1992) is included in other assets.
Net cost of other real estate held for disposition is summarized
below:
<TABLE>
<CAPTION>
1994 1993 1992
-------- --------- ---------
<S> <C> <C> <C>
Loss on disposition of properties
and other costs $ 5,745 $ -- $ --
Gain on disposition of properties
and expense recoveries -- -- (3,422)
-------- --------- ---------
Net costs (gains) $ 5,745 $ -- $ (3,422)
======== ========= =========
</TABLE>
NOTE 7 - SHORT-TERM BORROWINGS
Short-term borrowings at December 31, 1994 and 1993, consisted of
federal funds purchased.
The maximum amount outstanding at any month end during 1994 was
$1,580,000, and during 1993 was $1,800,000.
D-24
<PAGE> 124
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 7 - SHORT-TERM BORROWINGS (continued)
The average outstanding balance of short-term borrowings amounted
to $229,000 in 1994 and $97,000 in 1993. The weighted average
interest rate on these borrowings was 4.2% for 1994 and 3.2% for
1993. 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 8 - LONG-TERM DEBT
Long-term debt consisted of the following advances from the Federal
Home Loan Bank (FHLB) as of December 31:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Interest payable monthly at a fixed rate of 5.08%;
principal due in single payment on September 20,
1998. $ 92,000 $ 92,000
Interest payable monthly at a fixed rate of 6.15%;
principal due in single payment on December 7,
2003. 240,000 240,000
Interest payable monthly at a fixed rate of 6.24%;
principal due in single payment on January 26,
2004. 150,000 --
----------- -----------
$ 482,000 $ 332,000
=========== ===========
</TABLE>
The Company has pledged U.S. treasury notes with a carrying value
of approximately $700,000 as security. The Company is also
required to purchase stock in the FHLB as part of the agreement.
The Company owned $177,200 and $166,000 of FHLB stock at December
31, 1994 and 1993, respectively.
NOTE 9 - DIVIDEND RESTRICTIONS
As of December 31, 1994, undistributed earnings of the subsidiary
available for distribution to the Company as dividends without
prior approval of regulatory authorities was $1,802,000.
D-25
<PAGE> 125
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 10 - REGULATORY CAPITAL
The Federal Reserve Board has issued standards for measuring
capital adequacy for U.S. banking organizations. These standards
are designed to provide more risk-responsive capital guidelines for
financial institutions in the U.S. and to incorporate a consistent
framework for use by financial institutions operating in the major
international financial markets.
In general, the standards require banks and bank holding companies
to maintain capital based on "risk-adjusted" assets so that
categories of assets with potentially higher credit risk will
require more capital backing than assets with lower risk. In
addition, banks and bank holding companies are required to maintain
capital to support, on a risk-adjusted basis, certain off-
balance-sheet activities such as loan commitments and interest rate
swaps.
The Federal Reserve Board standards classify capital into two
tiers, referred to as Tier 1 and Tier 2. Tier 1 capital consists
of common shareholders' equity, noncumulative and, for bank holding
companies only, cumulative perpetual preferred stock, and minority
interests less goodwill. Tier 2 capital consists of allowance for
loan and lease losses, perpetual preferred stock (not included in
Tier 1), hybrid capital instruments, term subordinated debt, and
intermediate-term preferred stock. At December 31, 1993, all banks
were required to meet a minimum ratio of 8% of qualifying total
capital to risk-adjusted total assets and a ratio of at least 4% of
Tier 1 capital to risk-adjusted assets. Capital that qualifies as
Tier 2 capital is limited to 100% of Tier 1 capital. The minimum
leverage ratio requirement is to maintain Tier 1 capital of at
least 3% of average quarterly assets.
The Tier 1 capital, total (Tier 1 and Tier 2) capital, and leverage
ratios for the company at December 31, 1994, were 15.5%, 16.8%, and
10.7%, respectively.
NOTE 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
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, standby letters of credit,
and financial guarantees.
D-26
<PAGE> 126
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 11 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (continued)
The Company's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit and
financial guarantees written is represented by the contract or
notional 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 financial instruments with
off-balance sheet risk at December 31:
<TABLE>
<CAPTION>
Contract or Notional Amount
---------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit $ 5,920,000 $ 3,441,000
Standby letters of credit and
financial guarantees written 874,000 323,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in
the contract. 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
creditworthiness 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
counter-party. Collateral held varies but may include accounts
receivable, inventory, property, plant, and equipment, and
income-producing commercial properties.
Standby letters of credit and financial guarantees written are
conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. Those guarantees are
primarily issued to support private borrowing arrangements. The
guarantees expire in decreasing amounts through 1998, with the
majority expiring within one year. The credit risk involved in
issuing letters of credit is essentially the same as that involved
in extending loan facilities to customers. The Company does not
require collateral as support for the commitments. Collateral is
obtained based on loan policies upon use of a commitment by a
customer.
D-27
<PAGE> 127
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 12 - PENSION PLAN
The Company has a defined contribution money purchase pension plan
covering all employees who qualify as to age and length of service.
The plan requires an annual contribution by the Company equal to
7.01% of a participant's annual compensation, plus 5.7% of a
participant's compensation in excess of $10,000. The employer
contributions paid and expensed for 1994, 1993, and 1992, totalled
$68,000, $57,000, and $48,000, respectively.
NOTE 13 - STOCK OPTION PLAN
In 1993, the Company adopted a nonqualified stock option plan.
Under the plan, certain officers and directors may purchase shares
of the Company's stock at an established price. Unless earlier
terminated, these options will expire ten years from when they
first become exercisable. The options can be exercised at any
time. Options may also be granted with stock appreciation rights
that can only be exercised upon exercising the related options, and
only to the extent necessary to pay the option price and any
related income tax liability.
A tax offset bonus may also be granted. The bonus entitles the
participant to receive cash from the Company, as calculated under
the agreement, to provide amounts necessary to pay income taxes
related to the exercise of the stock options.
Activity in the plan during the year is summarized as follows:
<TABLE>
<CAPTION>
1994 1993
------------------------------------- -------------------------------------
Number Option Appreciation Number Option Appreciation
of Shares Price Rights of Shares Price Rights
---------- -------- ------------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning
of year 39 $ 2,569 39 -- $ -- --
Granted 51 2,901 51 39 2,569 39
--- --- --- ---
Outstanding at
end of year 90 90 39 39
=== === === ===
</TABLE>
No options or appreciation rights had been exercised as of December
31, 1994. See Note 18 for subsequent event.
D-28
<PAGE> 128
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 14 - INCOME TAX EXPENSE
The components of income tax expense for the years ended December
31 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- ------------
<S> <C> <C> <C>
Taxes currently payable
Federal $ 289,372 $ 310,274 $ 426,446
State 45,385 45,109 133,771
----------- ----------- ------------
334,757 355,383 560,217
----------- ----------- ------------
Deferred income taxes
Federal (26,300) (293) (102,053)
State (4,021) (45) (17,514)
----------- ----------- ------------
(30,321) (338) (119,567)
----------- ----------- ------------
Total expense $ 304,436 $ 355,045 $ 440,650
=========== =========== ============
</TABLE>
Income tax expense (benefit) associated with realized securities
gains (losses) was $(10,264) for 1994 and $393 for 1992.
Deferred income tax provisions are as follows:
<TABLE>
<CAPTION>
Liability Liability Deferred
Method Method Method
1994 1993 1992
----------- --------- ------------
<S> <C> <C> <C>
Provision for loan losses $ (25,427) $ -- $ (6,803)
Leasing activities -- -- (109,805)
Cash to accrual adjustments -- -- (7,368)
Other (4,894) (338) 4,409
----------- -------- ------------
$ (30,321) $ (338) $ (119,567)
=========== ======== ============
</TABLE>
D-29
<PAGE> 129
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 14 - INCOME TAX EXPENSE (continued)
Deferred tax assets (liabilities) are comprised of the following at
December 31:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Allowance for loan losses $ 213,526 $ 188,099
Other 14 (3,459)
----------- -----------
Gross deferred tax assets 213,540 184,640
Change in unrealized loss on investment
securities available for sale 22,178 --
----------- -----------
Total deferred tax assets $ 235,718 $ 184,640
=========== ===========
</TABLE>
The provision for income taxes differs from the amount of income
tax determined by applying the statutory federal income tax rate to
pretax income as a result of the following differences:
<TABLE>
<CAPTION>
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
Income tax based on statutory rate $ 352,690 $ 410,946 $ 432,344
State income taxes, net of federal
tax benefit 57,053 66,477 69,938
Interest exempt from federal taxes (81,338) (75,209) (66,193)
Other (23,969) (47,169) 4,561
------------ ----------- -----------
Provision based on effective
tax rates $ 304,436 $ 355,045 $ 440,650
============ =========== ===========
</TABLE>
NOTE 15 - EARNINGS PER COMMON SHARE
Earnings per share are based on weighted average shares outstanding
of 1,404 in 1994, 1,440 in 1993, and 1,500 in 1992. The dilutive
effect of stock options is not included as it would reduce earnings
per share less than 3% and therefore is not material.
D-30
<PAGE> 130
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 16 - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY
ONLY
SBL CAPITAL BANK SHARES, INC.
(Parent Company Only)
CONDENSED BALANCE SHEETS
December 31
<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
ASSETS
Cash in bank $ 163,439 $ 907
Due from subsidiary 16,167 3,568
Dividend receivable -- 155,000
Investment in subsidiary 6,763,208 6,238,259
------------- -------------
Total assets $ 6,942,814 $ 6,397,734
============= =============
LIABILITIES AND STOCKHOLDER
EQUITY
Liabilities
Dividends payable $ 154,440 $ 154,440
Accrued expenses 25 3,650
------------- -------------
Total liabilities 154,465 158,090
Stockholder equity 6,788,349 6,239,644
------------- -------------
Total liabilities and stockholder equity $ 6,942,814 $ 6,397,734
============= =============
</TABLE>
D-31
<PAGE> 131
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 16 - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY
ONLY (continued)
SBL CAPITAL BANK SHARES, INC.
(Parent Company Only)
CONDENSED STATEMENTS OF INCOME
For the Years Ended December 31
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Income
Dividends from State Bank of Lodi $ 187,500 $ 485,000
----------- -----------
Total income 187,500 485,000
----------- -----------
Expenses
Other 22,604 86,095
Income tax benefit (13,300) (3,543)
----------- -----------
Total expenses 9,304 82,552
----------- -----------
Income before equity in undistributed
net income of subsidiary 178,196 402,448
Equity in undistributed net income of subsidiary 554,692 143,233
----------- -----------
NET INCOME $ 732,888 $ 545,681
=========== ===========
</TABLE>
D-32
<PAGE> 132
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 16 - CONDENSED FINANCIAL INFORMATION - PARENT COMPANY
ONLY (continued)
SBL CAPITAL BANK SHARES, INC.
(Parent Company Only)
CONDENSED STATEMENT OF CASH FLOWS
For the Years Ended December 31
<TABLE>
<CAPTION>
1994 1993
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 732,888 $ 545,681
Adjustments to reconcile net income to net
cash provided by operating activities:
Undistributed earnings of subsidiary (554,692) (143,233)
Change in dividends receivable 155,000 (155,000)
Change in due from subsidiary (12,599) (3,568)
Change in accrued expenses (3,625) 3,650
------------- ------------
Net cash provided by operating activities 316,972 247,530
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock repurchased -- (246,623)
Dividends paid (154,440) --
------------- ------------
Net cash used in financing activities (154,440) (246,623)
------------- ------------
Net increase in cash 162,532 907
Cash at beginning of year 907 --
------------- ------------
Cash at end of year $ 163,439 $ 907
============= ============
</TABLE>
D-33
<PAGE> 133
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 17 - MERGER
Effective November 10, 1995, the Company signed a merger agreement
involving the merger of the Company with and into a wholly-owned
subsidiary of Associated Banc-Corp. Pursuant to the merger, each
share of Company common stock will be converted into 222.892 shares
of Associated Banc-Corp common stock, and is expected to be
completed in the first quarter of 1996, subject to certain
regulatory approvals and approval by shareholders of the Company
who hold a majority of the outstanding shares of the Company. It
is intended that the merger will be accounted for as a pooling of
interests.
NOTE 18 - SUBSEQUENT EVENTS
On December 20, 1995, the Company paid a dividend to shareholders
of record as of December 6, 1995, of $55 per share for a total
dividend of $77,220.
On December 29, 1995, all 90 stock options outstanding (see Note
13) were exercised, and the related tax offset bonuses in the
amount of $380,000 were paid.
D-34
<PAGE> 134
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
September 30
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,963,274 $ 2,240,567
Investment securities available for sale
(at fair value) (Note 2) 4,287,006 2,901,742
Investment securities held to maturity
(fair value of $9,170,171 and $11,311,066) 9,636,586 11,490,149
Loans (Note 3) 47,441,064 42,878,090
Less: Allowance for loan losses (Note 4) (686,020) (681,258)
--------------- ---------------
Loans, net of allowance for loan losses 46,755,044 42,196,832
Federal funds sold 1,995,000 --
Bank premises and equipment 1,422,598 1,553,391
Accrued interest receivable 586,352 489,679
Deferred income taxes 199,748 184,639
Other assets 82,601 92,327
--------------- ---------------
Total assets $ 66,928,209 $ 61,149,326
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-35
<PAGE> 135
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF CONDITION
(Continued)
(Unaudited)
September 30
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
LIABILITIES
Domestic deposits
Noninterest bearing $ 4,786,272 $ 5,502,811
Interest bearing
NOW 6,629,725 6,430,721
Savings 17,096,005 14,652,565
Time, $100,000 and over 2,749,661 3,092,724
Other time 27,187,217 23,839,165
-------------- ---------------
Total interest bearing 53,662,608 48,015,175
--------------- ---------------
Total deposits 58,448,880 53,517,986
Income taxes payable 36,150 18,264
Accrued expenses and other liabilities 476,225 402,225
Long-term debt 482,000 482,000
--------------- ---------------
Total liabilities 59,443,255 54,420,475
--------------- ---------------
STOCKHOLDER EQUITY
Common stock $.10 par value - 9,000 shares authorized;
1,404 shares issued and outstanding 140 140
Capital surplus 5,465,333 5,465,333
Net unrealized gain (loss) on investment securities
available for sale, net 22,140 (33,337)
Retained earnings 1,997,341 1,296,715
--------------- ---------------
Total stockholder equity 7,484,954 6,728,851
--------------- ---------------
Total liabilities and stockholder equity $ 66,928,209 $ 61,149,326
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-36
<PAGE> 136
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Nine Months Ended September 30
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Interest income
Interest and fees on loans $ 3,164,337 $ 2,622,815
Interest on investment securities
Taxable 432,654 422,876
Exempt from federal income taxes 181,211 159,342
------------ ------------
Total interest income 3,778,202 3,205,033
------------ ------------
Interest expense
Interest on deposits 1,782,193 1,316,642
Interest on short-term borrowings 8,218 9,122
Interest on long-term borrowings 53,062 18,853
------------ ------------
Total interest expense 1,843,473 1,344,617
------------ ------------
Net interest income 1,934,729 1,860,416
Provision for loan losses 8,000 58,500
------------ ------------
Net interest income after provision for
loan losses 1,926,729 1,801,916
------------ ------------
Other income
Fees for other services to customers 302,843 340,047
Investment securities losses -- (18,682)
Other income 9,388 9,490
------------ ------------
Total other income 312,231 330,855
------------ ------------
Other expenses
Salaries and employee benefits 755,560 711,200
Occupancy expense 147,813 147,430
Equipment expense 89,268 84,802
Data processing and courier 38,390 44,158
Other real estate owned expense -- 5,745
Other operating expenses 304,581 350,898
------------ ------------
Total other expenses 1,335,612 1,344,233
------------ ------------
Income before income taxes 903,348 788,538
Income tax expense 259,636 267,274
------------ ------------
NET INCOME $ 643,712 $ 521,264
============ ============
Earnings per common share $458 $371
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-37
<PAGE> 137
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended September 30
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 643,712 $ 521,264
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 123,735 135,879
Provision for losses on loans and real estate owned 8,000 58,500
Amortization of premium on investments 12,981 18,744
Accretion of discount on investments (8,923) (2,625)
Net loss from disposal of other real estate -- 5,745
Loss on sale of investment securities -- 10,194
Deferred income taxes 4,691 --
Changes in assets and liabilities:
Interest receivable (149,838) (59,649)
Prepaids and other assets 15,873 (37,868)
Interest payable 120,524 70,288
Income taxes payable/receivable 25,590 20,564
Other liabilities 107,887 118,387
-------------- --------------
Net cash provided by operating activities 904,232 859,423
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investment securities -- 208,496
Principal payments received on investments 2,557,139 4,550,103
Purchase of investments (2,007,195) (5,018,096)
Proceeds from sale of other real estate owned -- 170,226
Net increase in federal funds sold (1,995,000) --
Net increase in loans (3,582,031) (2,166,659)
Purchases of bank premises and equipment (42,358) (20,648)
-------------- --------------
Net cash used in investing activities $ (5,069,445) $ (2,276,578)
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-38
<PAGE> 138
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Unaudited)
For the Nine Months Ended September 30
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts,
and savings accounts $ 365,371 $ 512,406
Net decrease in short-term borrowings (750,000) (1,315,000)
Proceeds from long-term debt -- 150,000
Net increase in time deposits 3,112,834 2,373,948
Dividends paid (154,440) (154,440)
-------------- --------------
Net cash provided by financing activities 2,573,765 1,566,914
-------------- --------------
Net increase (decrease) in cash and
due from banks (1,591,448) 149,759
Cash and due from banks, January 1 3,554,722 2,090,808
-------------- --------------
Cash and due from banks, September 30 $ 1,963,274 $ 2,240,567
============== ==============
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 1,722,949 $ 1,274,329
Income taxes paid 252,390 250,569
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
D-39
<PAGE> 139
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INFORMATION ABOUT THE FINANCIAL STATEMENTS
The accompanying consolidated SBL Capital Bank Shares, Inc.'s (the
"Company") financial statements should be read in conjunction with
1994 and 1993 unaudited financial statements. The financial
information included in this report reflects all adjustments
(consisting only of normal recurring accruals), which are necessary
for a fair statement of the financial position as of September 30,
1995 and 1994, and results of operations for the nine months ended
September 30, 1995 and 1994. The results of operations for the
nine months ended September 30, 1995 and 1994, are not necessarily
indicative of results to be expected for the entire year.
NOTE 2 - INVESTMENT SECURITIES
Investment securities, by type, held by the company at September
30 are as follows:
<TABLE>
<CAPTION>
1995 1994
------------- ---------------
<S> <C> <C>
Available for sale (at market)
Equity securities $ -- $ 279,605
U.S. government and agency 3,613,583 1,666,430
Obligations of state and political subdivisions 673,423 855,277
Other -- 100,430
------------- ---------------
$ 4,287,006 $ 2,901,742
============= ===============
Held to maturity (at cost)
U.S. government and agency securities $ 3,236,420 $ 4,604,001
Obligations of state and political subdivisions 3,283,951 3,521,040
Mortgage-backed securities 2,123,456 2,280,325
Other 992,759 1,084,783
------------- ---------------
$ 9,636,586 $ 11,490,149
============= ===============
</TABLE>
D-40
<PAGE> 140
SBL CAPITAL BANK SHARES, INC.
Lodi, Wisconsin
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - LOANS
At September 30, 1995 and 1994, loans are as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Commercial, financial, and agricultural $ 11,763 $ 11,802
Real estate - construction 3,072 2,513
Real estate - mortgage 27,774 23,997
Installment and other consumer 4,832 4,566
---------- ----------
Total loans $ 47,441 $ 42,878
========== ==========
</TABLE>
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Balance at January 1 $ 680,803 $ 612,336
Provisions charged to operations 8,000 58,500
Recoveries 8,306 17,504
Loans charged off (11,089) (7,082)
----------- -----------
Balance at September 30 $ 686,020 $ 681,258
=========== ===========
</TABLE>
NOTE 5 - EARNINGS PER COMMON SHARE
Earnings per share are based on weighted average shares outstanding
of 1,404 in 1994 and 1993. The dilutive effect of stock options is
not included as it would reduce earnings per share less than three
percent and therefore is not material.
NOTE 6 - SUBSEQUENT EVENT
On December 20, 1995, the Company paid a dividend to shareholders
of record as of December 6, 1995, of $55 per share for a total
dividend of $77,220.
On December 29, 1995, all outstanding stock options were exercised,
and the related tax offset bonuses in the amount of $380,000 were
paid.
D-41
