<PAGE>
As filed with the Securities and Exchange Commission on September 4, 1997
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
ASSOCIATED BANC-CORP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WISCONSIN 6711 39-1098068
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION CODE NUMBERS) IDENTIFICATION NUMBER)
112 NORTH ADAMS STREET
P.O. BOX 13307
GREEN BAY, WI 54307-3307
(920) 433-3166
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
BRIAN R. BODAGER
ASSOCIATED BANC-CORP
112 NORTH ADAMS STREET
P.O. BOX 13307
GREEN BAY, WI 54307-3307
(920) 433-3166
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
COPIES TO:
CREIGHTON O'M. CONDON STUART G. STEIN
SHEARMAN & STERLING HOGAN & HARTSON L.L.P.
599 LEXINGTON AVENUE 555 13TH STREET, N.W.
NEW YORK, NY 10022 WASHINGTON, DC 20004
(212) 848-4000 (202) 637-8575
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the merger referred to herein.
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
==================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED BE REGISTERED(1) PER SECURITY(2) OFFERING PRICE(2) FEE(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share 28,627,148 Not Applicable $1,171,748,475.56 $355,075.30
</TABLE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(1) Based on the maximum number of shares to be issued in connection with the
Merger calculated as the product of (a) 37,421,109, the aggregate number
of shares of First Financial Common Stock, par value $1.00 per share
("First Financial Common Stock"), outstanding on August 28, 1997 or
issuable pursuant to employee options prior to the date the Merger is
expected to be consummated and (b) an exchange ratio of .765 shares of
Associated Common Stock for each share of First Financial Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933, as amended and
calculated pursuant to Rule 457(f)(1), the registration fee was computed
based on the average of the high ($31.50) and low ($31.125) sales prices
of First Financial Corporation common stock on the Nasdaq on August 27,
1997, multiplied by 37,421,109 the aggregate number of shares of First
Financial Corporation common stock outstanding on August 28, 1997 or
issuable pursuant to outstanding employee options prior to the date the
Merger is expected to be consummated.
(3) Pursuant to Rule 457(b) under the Securities Act, $215,453.17 of the
registration fee was paid on June 20, 1997 and July 14, 1997 in
connection with the filing of the preliminary proxy materials.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
LOGO
112 NORTH ADAMS STREET
P.O. BOX 13307
GREEN BAY, WI 54307-3307
September 4, 1997
Dear Associated Shareholder,
You are cordially invited to attend our special meeting of shareholders on
October 27, 1997 at F.K. Bemis International Center, Saint Norbert College,
100 Grant Street, De Pere, WI 54115 at 10:00 a.m. At the special meeting, you
will vote on a proposal to amend the Associated Articles of Incorporation to
increase the number of authorized shares of Associated common stock and to
approve issuing shares of Associated common stock in the proposed merger of
Associated and First Financial Corporation.
We believe the merger will join two institutions that have distinguished
track records in serving our markets and creating value for our shareholders.
The resources and expertise of our premier financial institutions are highly
complementary. Our merger will further serve the best interests of the
customers and shareholders of the combined company. By integrating the
strengths of each company, we believe our future prospects far exceed what we
could accomplish on an individual basis. Our combined organization will be
called Associated Banc-Corp.
In the merger, each outstanding share of First Financial common stock will
be converted into the right to receive .765 shares of Associated common stock.
After the merger is completed, Associated shareholders will own approximately
45% of Associated and First Financial shareholders will own approximately 55%
of Associated.
ASSOCIATED'S BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE
BEST INTERESTS OF ASSOCIATED AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD HAS
BY UNANIMOUS VOTE APPROVED THE MERGER AGREEMENT AND THE MERGER AND RECOMMENDS
THAT YOU VOTE IN FAVOR OF AMENDING ASSOCIATED'S ARTICLES TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF ASSOCIATED COMMON STOCK AND ISSUING SHARES OF
ASSOCIATED COMMON STOCK IN CONNECTION WITH THE MERGER.
Your participation in the special meeting, in person or by proxy, is
especially important because the items to be voted on are very important to
Associated and its shareholders. Whether or not you plan to attend the special
meeting, we urge you to complete, date, sign and return the enclosed proxy
card promptly in the enclosed postage-paid envelope to ensure that your shares
will be represented at the special meeting.
Thank you, and I look forward to seeing you at the special meeting.
/s/ Harry B. Conlon, Jr.
Harry B. Conlon, Jr.
Chairman and Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE MERGER DESCRIBED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS OR THE ASSOCIATED COMMON STOCK TO BE ISSUED IN CONNECTION
WITH THE MERGER, NOR HAVE THEY DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Joint Proxy Statement/Prospectus is dated September 4, 1997 and
is first being mailed to shareholders on or about September 9, 1997.
<PAGE>
ASSOCIATED BANC-CORP
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
September 4, 1997
A Special Meeting of Shareholders of Associated Banc-Corp, a Wisconsin
corporation ("Associated"), will be held on October 27, 1997 at 10:00 a.m., at
F.K. Bemis International Center, Saint Norbert College, 100 Grant Street, De
Pere, WI 54115 (the "Associated Special Meeting"), to consider and vote upon
the following proposals:
1. to amend the Associated Articles of Incorporation to increase the number
of authorized shares of Associated common stock to 100,000,000 shares.
2. to issue up to 28,627,148 shares of common stock of Associated pursuant
to the Agreement and Plan of Merger, dated as of May 14, 1997, among
Associated, Badger Merger Corp. and First Financial Corporation (the "Merger
Agreement").
3. to transact such other business as may properly come before the
Associated Special Meeting or any adjournments or postponements thereof,
including, without limitation, a motion to adjourn the Associated Special
Meeting to another time and/or place for the purpose of soliciting additional
proxies in order to approve an amendment to Associated's Articles of
Incorporation and/or issuing additional shares of Associated common stock.
Only shareholders of record at the close of business on September 2, 1997
(the "Record Date") will be entitled to vote at the Associated Special Meeting
or any adjournments or postponements thereof. On the Record Date, there were
22,470,492 shares of Associated Common Stock outstanding (excluding treasury
shares), each of which is entitled to one vote with respect to each matter to
be voted on at the Associated Special Meeting.
THE BOARD OF DIRECTORS OF ASSOCIATED HAS DETERMINED THAT THE MERGER IS FAIR
TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF ASSOCIATED, HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER, AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE TO AMEND THE ASSOCIATED ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF ASSOCIATED COMMON
STOCK AND TO APPROVE ISSUING SHARES OF ASSOCIATED COMMON STOCK IN CONNECTION
WITH THE MERGER. The affirmative vote of a majority of outstanding shares of
Associated common stock on the Record Date is required to adopt the amendment
to Associated's Articles of Incorporation. The affirmative vote of a majority
of votes cast is required to approve issuing shares of Associated common stock
in connection with the merger.
Detailed information concerning the Merger Agreement and the merger is
contained in the attached Joint Proxy Statement/Prospectus which you are urged
to read carefully.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ASSOCIATED SPECIAL MEETING IN
PERSON, PLEASE COMPLETE, SIGN AND RETURN THE PROXY CARD. A SHAREHOLDER WHO
EXECUTES A PROXY MAY REVOKE IT AT ANY TIME BEFORE IT IS EXERCISED BY GIVING
WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF ASSOCIATED, BY SUBSEQUENTLY
FILING ANOTHER PROXY OR BY ATTENDING THE ASSOCIATED SPECIAL MEETING AND VOTING
IN PERSON.
By Order of the Board of Directors,
/s/ Brian R. Bodager
Brian R. Bodager
Secretary and General Counsel
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY.
HOLDERS OF ASSOCIATED COMMON STOCK SHOULD
NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
<PAGE>
LOGO
September 4, 1997
Dear First Financial Shareholder,
You are cordially invited to attend our special meeting of shareholders to
be held on October 27, 1997 at the Holiday Inn Convention Center, 1501 North
Point Drive, Stevens Point, WI 54481, at 10:00 a.m. (the "First Financial
Special Meeting"). At the special meeting, you will vote upon a proposal to
approve an agreement for the merger of Associated Banc-Corp and First
Financial.
In the merger, each outstanding share of First Financial common stock will
be converted into the right to receive .765 shares of Associated common stock.
After the merger is completed, Associated shareholders will own approximately
45% of Associated and First Financial shareholders will own approximately 55%
of Associated.
We believe the merger will join two institutions that have distinguished
track records in serving our markets and creating value for our shareholders.
The resources and expertise of our premier financial institutions are highly
complementary. Our merger will further serve the best interests of the
customers and shareholders of the combined company. By integrating the
strengths of each company, we believe our future prospects far exceed what we
could accomplish on an individual basis.
Our combined organization will be called Associated Banc-Corp. We decided to
retain the "Associated" name to reflect the new organization's identity as a
commercial banking company.
FIRST FINANCIAL'S BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN
THE BEST INTERESTS OF FIRST FINANCIAL AND ITS SHAREHOLDERS. ACCORDINGLY, THE
BOARD HAS BY UNANIMOUS VOTE APPROVED THE MERGER AGREEMENT AND THE MERGER AND
RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE MERGER AGREEMENT.
Your participation in the special meeting, in person or by proxy, is
especially important because the items to be voted on are very important to
First Financial and its shareholders. Whether or not you plan to attend the
special meeting, we urge you to complete, date, sign and return the enclosed
proxy card promptly in the enclosed postage-paid envelope to ensure that your
shares will be represented at the special meeting.
Thank you, and I look forward to seeing you at the special meeting.
/s/ John C. Seramur
John C. Seramur
President and Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE MERGER DESCRIBED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS OR THE ASSOCIATED COMMON STOCK TO BE ISSUED IN CONNECTION
WITH THE MERGER, NOR HAVE THEY DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Joint Proxy Statement/Prospectus is dated September 4, 1997 and
is first being mailed to shareholders on or about September 9, 1997.
<PAGE>
FIRST FINANCIAL CORPORATION
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
September 4, 1997
A Special Meeting of Shareholders of First Financial Corporation, a
Wisconsin corporation ("First Financial"), will be held on October 27, 1997 at
10:00 a.m., at The Holiday Inn Convention Center, 1501 North Point Drive,
Stevens Point, WI 54481 (the "First Financial Special Meeting"), to consider
and vote upon the following proposals:
1. to approve the Agreement and Plan of Merger, dated as of May 14, 1997
(the "Merger Agreement"), pursuant to which First Financial and Associated
Banc-Corp ("Associated") will merge, as described in the accompanying Joint
Proxy Statement/Prospectus.
2. to transact such other business as may properly come before the First
Financial Special Meeting or any adjournments or postponements thereof,
including, without limitation, a motion to adjourn the First Financial Special
Meeting to another time and/or place for the purpose of soliciting additional
proxies in order to approve the Merger Agreement.
Only shareholders of record at the close of business on September 2, 1997
(the "Record Date") will be entitled to vote at the First Financial Special
Meeting or any adjournments or postponements thereof. On the Record Date,
there were 36,240,841 shares of First Financial common stock outstanding
(excluding treasury shares), each of which is entitled to one vote with
respect to each matter to be voted on at the First Financial Special Meeting.
THE BOARD OF DIRECTORS OF FIRST FINANCIAL HAS DETERMINED THAT THE MERGER IS
FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF FIRST FINANCIAL,
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER, AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE THE MERGER AGREEMENT. The
affirmative vote of two-thirds of the outstanding shares of First Financial
common stock on the Record Date is required to approve the Merger Agreement.
Detailed information concerning the Merger Agreement and the merger is
contained in the attached Joint Proxy Statement/Prospectus which you are urged
to read carefully.
WHETHER OR NOT YOU EXPECT TO ATTEND THE FIRST FINANCIAL SPECIAL MEETING IN
PERSON, PLEASE COMPLETE, SIGN AND RETURN THE PROXY CARD. A SHAREHOLDER WHO
EXECUTES A PROXY MAY REVOKE IT AT ANY TIME BEFORE IT IS EXERCISED BY GIVING
WRITTEN NOTICE OF REVOCATION TO THE SECRETARY OF FIRST FINANCIAL, BY
SUBSEQUENTLY FILING ANOTHER PROXY OR BY ATTENDING THE FIRST FINANCIAL SPECIAL
MEETING AND VOTING IN PERSON.
By Order of the Board of Directors,
/s/ Robert M. Salinger
Robert M. Salinger
Secretary and General Counsel
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY.
HOLDERS OF FIRST FINANCIAL COMMON STOCK SHOULD
NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................... 1
SUMMARY.................................................................... 4
HISTORICAL PER SHARE MARKET PRICE AND DIVIDEND INFORMATION................. 12
THE SHAREHOLDERS' MEETINGS................................................. 14
Date, Times and Places.................................................... 14
Matters to Be Considered at the Shareholders' Meetings.................... 14
Record Date; Stock Entitled to Vote; Quorum............................... 14
Votes Required............................................................ 15
Voting of Proxies......................................................... 15
Revocability of Proxies................................................... 15
Solicitation of Proxies................................................... 16
THE MERGER................................................................. 17
Background to the Merger.................................................. 17
Merger Discussions........................................................ 17
Reasons for the Merger and Board Recommendations.......................... 19
Opinions of Financial Advisors............................................ 21
Accounting Treatment...................................................... 32
Form of the Merger........................................................ 32
Merger Consideration...................................................... 32
Conversion of Shares; Procedures for Exchange of Certificates; Fractional
Shares................................................................... 32
Effective Time............................................................ 33
Stock Exchange Listings................................................... 33
Material Federal Income Tax Consequences.................................. 33
Regulatory Approvals Required............................................. 35
Other Consents............................................................ 37
General................................................................... 37
Treatment of Stock Options Outstanding Under First Financial Stock Plans.. 37
Certain Transactions; Conflicts of Interest............................... 37
Appraisal and Dissenters' Rights.......................................... 39
Resale of Associated Common Stock......................................... 39
CERTAIN PROVISIONS OF THE MERGER AGREEMENT................................. 40
General................................................................... 40
Conditions to the Consummation of the Merger.............................. 40
No Solicitation........................................................... 41
</TABLE>
<TABLE>
<S> <C>
Termination............................................................... 42
Conduct of Business Pending the Merger.................................... 43
Employee Benefits and Plans............................................... 44
Amendment and Waiver...................................................... 45
Expenses.................................................................. 45
Representations and Warranties............................................ 45
Indemnification and Insurance............................................. 46
RECIPROCAL STOCK OPTION AGREEMENTS......................................... 47
THE COMPANIES.............................................................. 49
Associated................................................................ 49
First Financial........................................................... 49
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION........................ 50
DIRECTORS AND OFFICERS OF ASSOCIATED FOLLOWING THE MERGER.................. 58
Directors................................................................. 58
Executive Officers........................................................ 58
Stock Ownership of Directors, Executive Officers and Five Percent
Shareholders............................................................. 58
DESCRIPTION OF ASSOCIATED COMMON STOCK ISSUABLE IN THE MERGER.............. 58
COMPARISON OF SHAREHOLDERS' RIGHTS......................................... 59
Authorized Capital Stock.................................................. 59
Amendment of Articles of Incorporation; Amendment of Bylaws............... 60
Classified Board of Directors............................................. 60
Removal of Directors for Cause............................................ 60
Newly Created Directorships and Vacancies on the Board of Directors....... 61
Certain Business Combinations............................................. 61
Advance Notice of Proposals to Be Brought at the Annual Meeting........... 62
Advance Notice of Nominations of Directors................................ 62
LEGAL MATTERS.............................................................. 62
EXPERTS.................................................................... 62
FUTURE SHAREHOLDER PROPOSALS............................................... 63
WHERE YOU CAN FIND MORE INFORMATION........................................ 64
LIST OF DEFINED TERMS...................................................... 66
</TABLE>
i
<PAGE>
Annex I Agreement and Plan of Merger, as amended
Annex II Associated Stock Option Agreement
Annex III First Financial Stock Option Agreement
Annex IV Opinion of Sandler O'Neill & Partners, L.P.
Annex V Opinion of McDonald & Company Securities, Inc.
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE THE TWO COMPANIES PROPOSING TO MERGE? HOW WILL I BENEFIT?
A: We believe you will benefit from the merger because the potential for the
combined company exceeds, in our opinion, what either company could
accomplish individually.
We believe the complementary financial products and services offered by us
will contribute to the future performance of the combined company. We
expect that the merger will further serve the best interests of the
customers and shareholders of the combined company.
Q: WHAT DO I NEED TO DO NOW?
A: If you are an Associated shareholder:
Just indicate on your proxy card how you want to vote, and sign, date and
return it as soon as possible. If you sign and send in your proxy and do
not indicate how you want to vote, your proxy will be voted in favor of
amending Associated's articles of incorporation to increase the number of
authorized shares of common stock and issuing common stock in connection
with the merger.
If you are a First Financial shareholder:
Just indicate on your proxy card how you want to vote, and sign, date and
return it as soon as possible. If you sign and send in your proxy and do
not indicate how you want to vote, your proxy will be voted in favor of
the merger. If you do not return your proxy or if you do not vote or you
abstain at the meeting, it will have the effect of a vote not to approve
the merger agreement.
If you are either an Associated shareholder or a First Financial
shareholder:
You may attend your shareholders' meeting and vote your shares in person,
rather than completing and returning your proxy card. If you do complete
and return your proxy card, you may revoke it at any time up to and
including the day of your shareholders' meeting by following the
directions on pages 15 and 16.
PLEASE REMEMBER THAT THE REQUIRED VOTE OF SHAREHOLDERS (EXCEPT IN THE CASE
OF ISSUING ADDITIONAL SHARES OF ASSOCIATED COMMON STOCK) IS BASED ON THE
TOTAL NUMBER OF OUTSTANDING SHARES, AND NOT UPON THE NUMBER OF SHARES
WHICH ARE ACTUALLY VOTED. IN ORDER FOR THE MERGER TO BE COMPLETED, ALL THE
PROPOSALS BEING SUBMITTED TO SHAREHOLDERS OF ASSOCIATED AND FIRST
FINANCIAL MUST BE APPROVED.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE
MY SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions to your
broker on how you want your shares voted.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, we will send First Financial
shareholders instructions on how to receive their new certificates.
Associated shareholders will keep their certificates.
Q: WHAT WILL SHAREHOLDERS RECEIVE IN THE MERGER?
A: First Financial shareholders will receive .765 shares of Associated stock
in exchange for each share of First Financial stock (plus cash for any
fractional shares). Associated shareholders will retain their existing
shares. As a result, following the merger, the former First Financial
shareholders will own approximately 55% of Associated.
1
<PAGE>
Q: WHY WILL FIRST FINANCIAL SHAREHOLDERS RECEIVE SHARES OF ASSOCIATED, BUT
ASSOCIATED SHAREHOLDERS WILL NOT RECEIVE ANY NEW SHARES?
A: Based on the structure of the merger, Associated will continue as the
parent holding company.
Q: HOW WILL THE "NEW" ASSOCIATED BE OPERATED AFTER THE MERGER?
A: Associated will continue to be a diversified multi-bank holding company,
owning each of the banks and other financial service companies we presently
own separately.
The merger agreement provides that the new Board of Directors of Associated
will consist of 14 members, made up of seven persons from each of our
current boards.
The Associated banks, along with First Financial Bank, will continue as
subsidiaries of the new organization, which will have total assets in
excess of $10 billion, and over 200 banking offices throughout Wisconsin
and Illinois. In the longer term, we intend to integrate certain back-
office functions of our subsidiary banks into a more efficient banking
company, while maintaining our local roots and presence in the communities
we serve.
Q: WHAT HAPPENS TO MY FUTURE DIVIDENDS?
A: Before the merger is completed, we expect to continue to declare and pay
dividends at current levels. After the merger, we presently anticipate that
Associated will pay dividends at the current quarterly rate of $0.29 per
share. However, the directors will use their discretion to decide whether
to declare dividends and the amount of any dividends.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working toward completing the merger as quickly as possible. In
addition to shareholder approvals, we must obtain regulatory approvals. We
expect the merger to be completed shortly after the special meetings.
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO ME?
A: The merger will be tax-free for federal income tax purposes. However, First
Financial shareholders will have to pay taxes on any cash received for
fractional shares. To review the tax consequences to shareholders in
greater detail, see pages 34 and 35.
2
<PAGE>
WHO CAN HELP ANSWER YOUR QUESTIONS
If you have more questions about the merger you should contact:
ASSOCIATED BANC-CORP SHAREHOLDERS
112 North Adams Street
P.O. Box 13307
Green Bay, Wisconsin 54307-3307
Attention: Office of Investor Relations
Phone Number: (920) 433-3166 or
(800) 236-ASBC (2722)
FIRST FINANCIAL SHAREHOLDERS
First Financial Corporation
1305 Main Street
Stevens Point, Wisconsin 54481
Attention: Investor Relations
Phone Number: (715) 345-4352
If you would like additional copies of the Joint Proxy Statement/Prospectus,
you should contact:
ASSOCIATED SHAREHOLDERS FIRST FINANCIAL SHAREHOLDERS
Morrow & Co., Inc. D. F. King & Co., Inc.
909 Third Avenue 77 Water Street
New York, New York 10022-4799 20th Floor
(800) 662-5200 (Toll Free) New York, New York 10005
or (800) 628-8509 (Toll Free)
(212) 754-8000 or
(212) 269-5550 (Call Collect)
web site: http://www.dfking.com
3
<PAGE>
SUMMARY
This summary highlights selected information from this document and does not
contain all the information that is important to you. To understand the merger
fully and for a more complete description of the legal terms of the merger, you
should read carefully this entire document and the documents to which we have
referred you. See "Where You Can Find More Information" (page 64). We have
included page references parenthetically to direct you to a more complete
description of the topics presented in this Summary.
THE COMPANIES (PAGE 49)
ASSOCIATED BANC-CORP
112 North Adams Street
P.O. Box 13307
Green Bay, WI 54307
(920) 433-3166
Associated Banc-Corp is headquartered in Green Bay, Wisconsin. At June 30,
1997, the diversified multi-bank holding company had $4.6 billion in assets
with more than 2,000 employees and over 96 banking locations in Wisconsin and
northern Illinois. Associated offers a variety of financial products and
services to complement its traditional line of banking products.
FIRST FINANCIAL CORPORATION
1305 Main Street
Stevens Point, WI 54481
(715) 345-4352
First Financial Corporation, headquartered in Stevens Point, Wisconsin, is the
largest thrift holding company headquartered in Wisconsin, and one of the
largest thrift holding companies in the country. It provides a broad range of
financial products, including commercial and residential mortgages, appraisals,
consumer and home equity loans, insurance and credit cards. At June 30, 1997,
First Financial had assets of $5.9 billion, approximately 1,775 employees, and
128 banking offices in Wisconsin and Illinois.
THE SHAREHOLDERS' MEETINGS (PAGE 14)
The Associated Special Meeting will be held at F.K. Bemis International Center,
Saint Norbert College, 100 Grant Street, De Pere, WI 54115, at 10:00 a.m.
on October 27, 1997. At the special meeting, Associated shareholders are being
asked to:
. approve amending the Associated Articles of Incorporation to increase the
number of authorized shares of common stock; and
. approve issuing Associated common stock in connection with the merger.
Associated shareholders are not required to approve the merger agreement,
however, approval of both the amendment to the Articles and issuing Associated
common stock is required to complete the merger.
The First Financial Special Meeting will be held at The Holiday Inn Convention
Center, 1501 North Point Drive, Stevens Point, WI 54481, at 10:00 a.m. on
October 27, 1997. At the special meeting, First Financial shareholders are
being asked to:
. approve the merger agreement.
OUR RECOMMENDATION TO SHAREHOLDERS
(PAGES 19-21)
To Associated Shareholders:
The Associated Board believes the merger is fair to you and in your best
interest and unanimously recommends that you vote "for" amending
Associated's Articles of Incorporation and issuing Associated common stock
in connection with the merger.
To First Financial Shareholders:
The First Financial Board believes the merger is fair to you and in your
best interest and unanimously recommends that you vote "for" approving the
merger agreement.
RECORD DATE; VOTING POWER (PAGES 14-15)
You are entitled to vote at your shareholders' meeting if you owned shares on
September 2, 1997, the Record Date. Each shareholder is entitled to one vote
for each share of common stock.
4
<PAGE>
On the Record Date, there were outstanding 22,470,492 shares of Associated
common stock and 36,240,841 shares of First Financial common stock.
VOTES REQUIRED (PAGE 15)
Associated shareholders:
. The affirmative vote by shareholders owning at least a majority of the
outstanding Associated common stock is required to approve the amendment to
Associated Articles to increase the number of authorized shares of
Associated common stock.
. The affirmative vote of the majority of the votes cast is required to
approve issuing Associated common stock in connection with the merger.
First Financial shareholders:
. The affirmative vote by shareholders owning at least two-thirds of the
outstanding First Financial common stock is required to approve the merger
agreement.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS (PAGES 14-15)
At the close of business on the Record Date, directors and executive officers
of Associated owned and were entitled to vote 43,382 shares of Associated
common stock which represented approximately 1.9% of the outstanding shares.
At the close of business on the Record Date, directors and executive officers
of First Financial owned and were entitled to vote 1,296,159 shares of First
Financial common stock which represented approximately 3.5% of the outstanding
shares.
THE MERGER (PAGE 17)
The merger will combine our businesses under a single holding company. As a
result of the merger, Associated will become the holding company for First
Financial's banking subsidiary, First Financial Bank, and First Financial's
other subsidiaries and will remain the holding company of Associated's current
banks and subsidiaries. Associated will continue to be named "Associated Banc-
Corp."
The merger agreement is attached as Annex I to this document. We encourage you
to read the merger agreement. It is the legal document governing the merger.
WHAT SHAREHOLDERS WILL RECEIVE IN THE MERGER (PAGE 32)
As a result of the merger, First Financial shareholders will receive:
. .765 shares of Associated common stock for each share of First Financial
common stock that you own; and
. a cash payment instead of any fractional share you would have received
based on the market value of Associated common stock.
Associated shareholders will continue to hold their existing stock in
Associated.
DIVIDEND POLICY OF ASSOCIATED AFTER THE MERGER
After the merger, it is presently expected that dividends will continue at the
current Associated quarterly dividend rate of $.29 per share. Associated's
Board of Directors determines the level of dividends to be declared each
quarter based on various economic and financial factors.
FEDERAL INCOME TAX CONSIDERATIONS (PAGE 33)
We must receive an opinion from Associated's outside counsel stating that, as
a general matter, First Financial shareholders will not recognize gain or loss
for federal income tax purposes as a result of the merger, except if they
receive cash for fractional shares.
Associated shareholders will not be taxed as a result of the merger.
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES TO YOU OF THE MERGER
WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR TAX
ADVISORS FOR A FULL EXPLANATION OF THE TAX CONSEQUENCES TO YOU OF THE MERGER.
FAIRNESS OPINIONS OF FINANCIAL ADVISORS (PAGE 21)
In deciding to approve the merger,
. the Associated Board considered the opinion of its financial advisor,
Sandler O'Neill & Partners, L.P., as to the fairness from a financial point
of view of the exchange ratio of .765 shares of
5
<PAGE>
Associated common stock for each share of First Financial common stock; and
. the First Financial Board considered the opinion of its financial advisor,
McDonald & Company Securities, Inc., as to the fairness of the merger to its
shareholders from a financial point of view.
The financial advisors performed several analyses in connection with delivering
their opinions, including the following:
. comparing Associated and First Financial historical stock prices;
. comparing Associated and First Financial to other publicly traded companies;
and
. estimating the relative values and contributions of Associated and First
Financial based on past and estimated future performances.
These opinions are attached as Annexes IV and V to this document. WE ENCOURAGE
YOU TO READ THESE OPINIONS CAREFULLY.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGES 37-38)
Our shareholders should note that a number of our directors and executive
officers have interests in the merger as employees and/or directors that are
different from, or in addition to, yours as a shareholder.
If we complete the merger, certain of our directors and members of existing
senior management will be designated as members of the new board of directors
and senior management of post-merger Associated.
Also, the change of control arrangements for First Financial's officers and
directors will be triggered upon completion of the merger. As a result:
. 10 directors of First Financial each will be eligible to receive payments
under the director's retirement plan of up to a maximum of $378,000;
. the payments will be reduced to the extent any of the payments would
constitute an excess parachute payment for federal income tax purposes; and
. the payments will be made in a lump sum payment at the time of the merger,
or, at the discretion of any director whose payment is reduced because of
tax considerations, in monthly installments having a present value equal to
the reduced amount.
In addition, six executive officers of First Financial may receive severance
payments aggregating $4.7 million.
One First Financial director is expected to enter into a three year consulting
agreement to provide real estate appraisal related services for an annual
consulting fee of $45,000.
Certain indemnification arrangements for our existing directors and officers
will be continued after completing the merger.
DIRECTORS OF ASSOCIATED FOLLOWING THE MERGER (PAGE 58)
The merger agreement provides that if we complete the merger, the new board of
directors of Associated will consist of fourteen members, seven each from the
existing directors of Associated (including Harry B. Conlon Jr. and Robert C.
Gallagher) and First Financial (including John C. Seramur).
LISTING OF ASSOCIATED STOCK (PAGE 33)
Associated will file an application to list the shares of Associated common
stock to be issued in the merger on the Nasdaq Stock Market under Associated's
current symbol "ASBC."
CONDITIONS TO THE MERGER (PAGE 40)
We will complete the merger only if several conditions are satisfied, including
the following:
. Associated shareholders approve amending Associated's Articles to increase
the number of authorized shares of common stock and issuing Associated
common stock in connection with the merger;
. First Financial shareholders vote in favor of the merger agreement;
. no legal restraints or prohibitions exist which prevent the merger from
being completed;
. we receive all necessary regulatory approvals;
6
<PAGE>
. Associated's counsel delivers an opinion concerning certain federal income
tax consequences of the merger; and
. our independent accountants deliver letters stating that the merger will
qualify for pooling of interests accounting treatment.
TERMINATION OF THE MERGER AGREEMENT (PAGE 42)
Our boards of directors can jointly agree to terminate the merger agreement at
any time without completing the merger. In addition, we can terminate the
merger agreement if:
. we do not complete the merger by March 31, 1998;
. the shareholders of Associated do not approve amending the Associated
Articles to increase the number of authorized shares of common stock or
issuing Associated common stock in connection with the merger;
. the shareholders of First Financial do not vote in favor of the merger
agreement;
. either party breaches or does not materially comply with the
representations or warranties it made or obligations it has under the
merger agreement, and, as a result, the conditions to completing the merger
cannot be satisfied; or
. either company's board of directors withdraws or modifies its
recommendation for the merger as a result of certain takeover proposals or
other business transactions that are prohibited by the merger agreement.
RECIPROCAL STOCK OPTION AGREEMENTS (PAGE 47)
We each signed a stock option agreement under which we granted to the other
party an option to purchase 19.9% of our stock (after giving effect to the
exercise of the option) under certain circumstances relating to third-party
offers and an acquisition of shares or assets of the issuer of the option. The
reciprocal options are intended to discourage third parties from proposing a
competing offer to either of Associated or First Financial.
REGULATORY APPROVALS (PAGE 35)
The merger is subject to prior approval by certain regulatory authorities
including the Federal Reserve Board and the Wisconsin Department of Financial
Institutions.
APPRAISAL RIGHTS (PAGE 39)
Shareholders of Associated and First Financial are not entitled to appraisal
rights under Wisconsin law.
ACCOUNTING TREATMENT (PAGE 32)
The merger agreement provides that we must each receive an opinion from KPMG
Peat Marwick LLP, Associated's accountants, and Ernst & Young LLP, First
Financial's accountants, confirming that the merger will qualify for "pooling
of interests" accounting treatment.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
We have made forward-looking statements in this document, and in documents
that we incorporate by reference, that are subject to risks and uncertainties.
Forward-looking statements include the information concerning possible or
assumed future results of operations of Associated, First Financial or the
combined company. When we use words such as "believes," "expects,"
"anticipates" or similar expressions, we are making forward-looking
statements.
Shareholders should note that many factors, some of which are discussed
elsewhere in this document and in the documents that we incorporate by
reference, could affect the future financial results of Associated, First
Financial or the combined company and could cause those results to differ
materially from those expressed in our forward-looking statements contained or
incorporated by reference in this document. These factors include the
following:
. operating, legal and regulatory risks;
. economic, political and competitive forces affecting our banking,
securities, asset management and credit services businesses; and
. the risk that our analyses of these risks and forces could be incorrect
and/or that the strategies developed to address them could be unsuccessful.
7
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA OF ASSOCIATED AND FIRST
FINANCIAL
We are providing the following financial information to aid in your analysis
of the financial aspects of the merger. We derived this information from
audited financial statements for 1992 through 1996 and unaudited financial
statements for the six months ended June 30, 1997. The information is only a
summary and you should read it in conjunction with our historical financial
statements (and related notes) contained in the annual reports and other
information that we file with the SEC and the Pro Forma Statements included in
this document. See "Where You Can Find More Information" and "Unaudited Pro
Forma Condensed Financial Information."
We expect that the merger will be accounted for as a "pooling of interests"
which means that for accounting and financial reporting purposes we will treat
our companies as if they have always been combined. See "The Merger--Accounting
Treatment."
The per share date in the following information is adjusted retroactively for
stock splits and stock dividends. Earnings per share are calculated based upon
the weighted average shares outstanding.
The unaudited pro forma earnings do not reflect any potential savings or
revenue enhancements which are expected to result from the consolidation of
operations of Associated and First Financial and are not necessarily indicative
of the results expected of the future combined operations. While the combined
company expects to achieve substantial merger benefits, no assurances can be
given with respect to the ultimate level of cost savings or revenue
enhancements to be realized.
The results of Associated and First Financial for the six months ended June
30, 1997 are not necessarily indicative of results expected for the entire
year. Also, pro forma amounts are not necessarily indicative of results of
operations or the combined financial position that would have resulted had the
merger been consummated at the beginning of the earliest period indicated.
8
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF
ASSOCIATED BANC-CORP
(In thousands, except for per share data)
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS
ENDED JUNE 30, AS OF AND FOR THE YEAR ENDED DECEMBER 31,
----------------- ------------------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CONDENSED STATEMENT OF
INCOME
Net Interest Income..... $ 89,713 $ 169,255 $ 154,279 $ 143,348 $ 134,762 $ 129,351
Provision for Possible
Loan Losses............. 2,209 4,665 4,291 2,211 5,871 10,707
Non-Interest Income..... 34,646 65,083 55,350 50,861 50,955 49,073
Non-Interest Expense.... 76,009 140,385 130,033 124,943 121,354 120,913
Income Before Income
Taxes and Extraordinary
Item................... 46,141 89,288 75,305 67,055 58,492 46,804
Income Tax Expense...... 15,892 32,044 27,277 23,487 19,620 14,692
Extraordinary Item...... -- -- -- -- -- 1,006
Net Income.............. 30,249 57,244 48,028 43,568 38,872 33,118
SHARE DATA
Net Income Per Share
Before Extraordinary
Item................... $ 1.35 $ 2.60 $ 2.29 $ 2.08 $ 1.89 $ 1.61
Extraordinary Item...... -- -- -- -- -- 0.06
Net Income Per Share.... 1.35 2.60 2.29 2.08 1.89 1.67
Cash Dividends Per
Share................... 0.53 0.95 0.81 0.71 0.62 0.51
Weighted Average Shares
Outstanding............. 22,448 22,035 20,967 20,939 20,394 19,916
SELECTED BALANCE SHEET
DATA
(PERIOD END)
Assets.................. $4,595,386 $4,419,079 $3,922,501 $3,628,698 $3,266,696 $3,246,022
Long-Term Borrowings.... 66,672 21,130 22,064 8,819 12,848 19,706
Shareholders' Equity.... 419,929 393,145 340,294 299,286 280,079 235,567
Shareholders' Equity Per
Share................... 18.70 17.84 16.22 14.28 13.65 11.75
SELECTED BALANCE SHEET
AVERAGES
Assets.................. $4,421,661 $4,156,440 $3,662,269 $3,355,147 $3,256,733 $3,148,606
Shareholders' Equity.... 407,388 371,911 319,451 288,284 252,001 220,696
</TABLE>
9
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF
FIRST FINANCIAL CORPORATION
(In thousands, except for per share data)
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS
ENDED JUNE 30, AS OF AND FOR THE YEAR ENDED DECEMBER 31,
----------------- -------------------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CONDENSED STATEMENT OF
INCOME
Net Interest Income..... $ 95,786 $ 187,309 $ 183,137 $ 177,642 $ 164,218 $ 126,999
Provision for Possible
Loan Losses............. 4,350 9,030 9,738 6,824 10,570 15,779
Non-Interest Income..... 24,144 46,394 44,291 33,294 44,758 38,023
Non-Interest Expense.... 54,751 148,772 118,602 120,367 118,964 101,540
Income Before Income
Taxes and Extraordinary
Item/Cum Effect of Acctg
Chg..................... 60,829 75,901 99,088 83,745 79,442 47,703
Income Tax Expense...... 21,739 25,443 35,104 30,716 29,691 17,327
Extraordinary Item/Cum
Effect of Acctg Chg .... -- (686) -- -- -- 6,600
Net Income.............. $ 39,090 $ 49,772 $ 63,984 $ 53,029 $ 49,751 $ 36,976
SHARE DATA
Primary Net Income Per
Share Before
Extraordinary Item/Cum
Effect of Acctg Chg..... $ 1.05 $ 1.33 $ 1.70 $ 1.42 $ 1.38 $ 0.92
Extraordinary Item/Cum
Effect of Acctg Chg..... -- (0.02) -- -- -- 0.22
Primary Net Income Per
Share................... 1.05 1.31 1.70 1.42 1.38 1.14
Fully Diluted Net Income
Per Share Before
Extraord Item/Cum
Effect of Acctg Chg.... 1.05 1.32 1.69 1.42 1.37 0.91
Extraordinary Item/Cum
Effect of Acctg Chg.... -- (0.02) -- -- -- 0.21
Fully Diluted Net Income
Per Share.............. 1.05 1.30 1.69 1.42 1.37 1.12
Cash Dividends Per
Share.................. 0.300 0.510 0.384 0.320 0.280 0.176
Primary Weighted Average
Shares Outstanding..... 37,286 38,093 37,732 37,319 36,064 30,844
Fully Diluted Weighted
Average Shares
Outstanding............ 37,319 38,220 37,917 37,358 36,397 31,296
SELECTED BALANCE SHEET
DATA (PERIOD END)
Assets.................. $5,931,501 $5,700,431 $5,471,108 $5,501,824 $5,181,772 $4,309,067
Long-Term Borrowings.... 11,124 11,566 14,843 85,718 237,554 164,788
Shareholders' Equity.... 422,725 410,511 384,917 327,308 280,643 239,979
Shareholders' Equity Per
Share.................. 11.67 11.15 10.38 8.99 8.06 6.86
SELECTED BALANCE SHEET
AVERAGES
Assets.................. $5,791,874 $5,519,745 $5,461,712 $5,382,084 $5,023,087 $4,010,512
Shareholders' Equity.... 413,123 404,307 354,917 308,081 259,736 210,508
</TABLE>
10
<PAGE>
UNAUDITED PRO FORMA SELECTED COMBINED FINANCIAL DATA OF
ASSOCIATED BANC-CORP
AND FIRST FINANCIAL CORPORATION
(In thousands, except for per share data)
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS
ENDED JUNE 30, AS OF AND FOR THE YEAR ENDED DECEMBER 31,
----------------- --------------------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CONDENSED STATEMENT OF
INCOME
Net Interest Income..... $ 185,499 $ 356,564 $ 337,416 $ 320,990 $ 298,980 $ 256,350
Provision for Possible
Loan Losses............ 6,559 13,695 14,029 9,035 16,441 26,486
Non-Interest Income..... 58,790 111,477 99,641 84,155 95,713 87,096
Non-Interest Expense.... 130,760 289,157 248,635 245,310 240,318 222,453
Income Before Income
Taxes and Extraordinary
Item................... 106,970 165,189 174,393 150,800 137,934 94,507
Income Tax Expense...... 37,631 57,487 62,381 54,203 49,311 32,019
Extraordinary Item/Cum
Effect of Acctg Chg.... -- (686) -- -- -- 7,606
Net Income.............. $ 69,339 $ 107,016 $ 112,012 $ 96,597 $ 88,623 $ 70,094
SHARE DATA
Net Income Per Share
Before Extraordinary
Item/Cum Effect of
Acctg Chg.............. $ 1.38 $ 2.13 $ 2.28 $ 1.99 $ 1.88 $ 1.45
Extraordinary Item/Cum
Effect of Acctg Chg.... -- (0.01) -- -- -- 0.18
Net Income Per Share.... 1.38 2.12 2.28 1.99 1.88 1.63
Cash Dividends Per
Share.................. 0.53 0.95 0.81 0.71 0.62 0.51
Weighted Average Shares
Outstanding............ 50,353 50,565 49,111 48,600 47,206 43,173
SELECTED BALANCE SHEET
DATA
(PERIOD END)
Assets.................. $10,530,099 $10,119,510 $9,393,609 $9,130,522 $8,448,468 $7,555,089
Long-Term Borrowings.... 48,979 32,696 36,907 94,537 250,402 184,494
Shareholders' Equity.... 811,366 803,656 725,211 626,594 560,722 475,546
Shareholders' Equity Per
Share.................. 16.18 16.01 14.69 12.84 11.89 10.16
SELECTED BALANCE SHEET
AVERAGES
Assets.................. $10,213,535 $ 9,676,185 $9,123,981 $8,737,231 $8,279,820 $7,159,118
Shareholders' Equity.... 820,511 776,218 674,368 596,365 511,737 431,204
</TABLE>
11
<PAGE>
HISTORICAL PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
Associated Common Stock is listed on the Nasdaq National Market under the
ticker symbol "ASBC" and First Financial Common Stock is listed on the Nasdaq
National Market under the ticker symbol "FFHC".
The tables below set forth, for the calendar quarters indicated, the reported
high and low sale prices per share of Associated Common Stock and First
Financial Common Stock as reported on the Nasdaq National Market, in each case
based on published financial sources, and the dividends declared on such stock.
All market prices and cash dividends declared for Associated and First
Financial have been retroactively adjusted for stock splits and stock
dividends.
<TABLE>
<CAPTION>
ASSOCIATE BANC-CORP FIRST FINANCIAL CORPORATION
----------------------- --------------------------------
MARKET PRICE CASH MARKET PRICE CASH
------------------------ DIVIDENDS ------------------- DIVIDENDS
HIGH LOW DECLARED HIGH LOW DECLARED
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1994
First Quarter........... $24 $20 53/64 $.166 $13 19/32 $11 13/32 $.08
Second Quarter.......... 25 1/2 20 53/64 .18 13 51/64 11 19/32 .08
Third Quarter........... 25 11/64 23 .18 13 51/64 11 19/32 .08
Fourth Quarter.......... 23 53/64 20 53/64 .18 13 51/64 10 19/32 .08
1995
First Quarter........... 25 5/64 22 53/64 .18 13 10 51/64 .096
Second Quarter.......... 25 53/64 23 43/64 .18 14 13/32 12 13/64 .096
Third Quarter........... 31 3/64 25 5/16 .225 17 19/64 13 19/32 .096
Fourth Quarter.......... 34 11/64 30 13/64 .225 19 16 13/64 .096
1996
First Quarter........... 33 3/4 29 3/8 .228 18 13/32 15 19/32 .12
Second Quarter.......... 33 1/8 31 1/4 .241 19 19/64 16 19/32 .12
Third Quarter........... 33 3/4 31 49/64 .241 19 19/64 17 13/64 .12
Fourth Quarter.......... 36 29/64 32 59/64 .241 24 3/4 18 51/64 .15
1997
First Quarter........... 40 3/4 34 37/64 .241 28 7/8 23 .15
Second Quarter.......... 39 5/8 35 1/2 .290 29 1/2 24 1/4 .15
Third Quarter........... 42 5/8 38 3/4 -- 32 9/16 29 .15
(through September 2,
1997)...................
</TABLE>
On May 14, 1997, the trading day on the Nasdaq National Market on which the
public announcement of the proposed combination was announced after the close
of Nasdaq trading, Associated Common Stock closed at $37 3/4 per share and
First Financial Common Stock closed at $27 1/2 per share. On May 14, 1997, the
First Financial equivalent per share would have been $28 7/8, which represents
the closing price of Associated common stock on that date multiplied by the
exchange ratio of .765.
12
<PAGE>
COMPARATIVE UNAUDITED PER SHARE DATA
We have summarized below the per share information for our respective
companies on a historical, unaudited pro forma combined and pro forma
equivalent per share basis.
The unaudited pro forma comparative per share data reflects the merger as
being accounted for as a "pooling of interests" and assumes the merger had been
effected as of the beginning of the earliest reporting period presented.
Earnings per share are calculated based upon earnings before extraordinary
items divided by the weighted average shares outstanding. Unaudited pro forma
information is adjusted retroactively for any stock splits and stock dividends.
Associated pro forma dividends per share amounts represent historical
dividends as adjusted retroactively for the stock splits and the stock
dividends. Since it was not material, Associated's historical average shares
outstanding used to calculate earnings per share do not include the dilutive
effect of outstanding stock options. The Associated pro forma per share amounts
give effect to the merger.
First Financial's historical data includes a one-time charge for
recapitalization of SAIF in 1996 of $28.8 million before taxes and $18.4
million net of taxes, or $0.48 per share. The First Financial pro forma
equivalent amounts are presented with respect to each set of pro forma
information, and have been calculated by multiplying the corresponding pro
forma combined amounts per share by the exchange ratio of 0.765 shares.
We derived the following information from audited financial statements for
1994 through 1996 and unaudited financial statements for the six months ended
June 30, 1997. The information should be read in conjunction with our
historical financial statements (and related notes) contained in the annual
reports and other information that we file with the SEC and the Pro Forma
Statements included in this document. See "Where You Can Find More Information"
and "Unaudited Pro Forma Condensed Financial Information."
<TABLE>
<CAPTION>
AS OF AND FOR THE
SIX MONTHS AS OF AND FOR THE YEAR
ENDED JUNE 30, ENDED DECEMBER 31,
----------------- ------------------------
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSOCIATED
Net Income Per Share:
Historical................... $ 1.35 $ 2.60 $ 2.29 $ 2.08
Pro forma.................... 1.38 2.13 2.28 1.99
Dividends Per Share:
Historical................... $ 0.53 $ 0.95 $ 0.81 $ 0.71
Pro forma.................... 0.53 0.95 0.81 0.71
Book Value Per Share:
Historical................... $18.70 $ 17.84
Pro forma.................... 16.18 16.01
FIRST FINANCIAL
Primary Net Income Per Share:
Historical................... $ 1.05 $ 1.33 $ 1.70 $ 1.42
Pro forma equivalent......... 1.06 1.63 1.74 1.52
Fully Diluted Net Income Per
Share:
Historical................... $ 1.05 $ 1.32 $ 1.69 $ 1.42
Pro forma equivalent......... 1.06 1.63 1.74 1.52
Dividends Per Share:
Historical................... $ 0.30 $ 0.51 $ 0.38 $ 0.32
Pro forma equivalent......... 0.41 0.73 0.62 0.54
Book Value Per Share:
Historical................... $11.67 $ 11.15
Pro forma equivalent......... 12.38 12.25
</TABLE>
13
<PAGE>
THE SHAREHOLDERS' MEETINGS
This Joint Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies (i) from holders of Associated common stock by the
Associated Board of Directors (the "Associated Board") for use at the Special
Meeting of Associated shareholders (the "Associated Special Meeting") and (ii)
from holders of First Financial common stock by the First Financial Board of
Directors (the "First Financial Board") for use at the Special Meeting of
First Financial shareholders (the "First Financial Special Meeting"). This
Joint Proxy Statement/Prospectus and accompanying form of proxy are first
being mailed to the respective shareholders of Associated and First Financial
on or about September 9, 1997.
Date, Times and Places
Associated. The Associated Special Meeting will be held at F.K. Bemis
International Center, Saint Norbert College, 100 Grant Street, De Pere, WI
54115, at 10:00 a.m. on October 27, 1997.
First Financial. The First Financial Special Meeting will be held at The
Holiday Inn Convention Center, 1501 North Point Drive, Stevens Point, WI
54481, at 10:00 a.m. on October 27, 1997.
Matters to Be Considered at the Shareholders' Meetings
Associated. At the Associated Special Meeting, shareholders of Associated
will be asked to consider and vote upon (i) a proposal to amend the Associated
Articles of Incorporation to increase the number of authorized shares of
Associated common stock, (ii) a proposal to issue additional shares of
Associated common stock in connection with the merger and (iii) such other
matters as may properly come before the Associated Special Meeting. THE
ASSOCIATED BOARD BELIEVES THE MERGER IS FAIR TO YOU AND IN YOUR BEST INTEREST
AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT TO THE ASSOCIATED
ARTICLES AND "FOR" THE ISSUANCE OF SHARES OF ASSOCIATED COMMON STOCK IN
CONNECTION WITH THE MERGER.
First Financial. At the First Financial Special Meeting, shareholders of
First Financial will be asked to consider and vote upon (i) a proposal to
approve the merger agreement and (ii) such other matters as may properly come
before the First Financial Special Meeting. THE FIRST FINANCIAL BOARD BELIEVES
THE MERGER IS FAIR TO YOU AND IN YOUR BEST INTEREST AND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" THE PROPOSAL TO ADOPT THE MERGER AGREEMENT.
Record Date; Stock Entitled to Vote; Quorum
Associated. The Associated Board has fixed the close of business on
September 2, 1997 as the record date for the Associated Special Meeting (the
"Associated Record Date"). Only holders of record of shares of Associated
common stock on the Associated Record Date are entitled to notice of and to
vote at the Associated Special Meeting. On the Associated Record Date, there
were 22,470,492 shares of Associated common stock outstanding and entitled to
vote at the Associated Special Meeting, held by approximately 5,900
shareholders of record.
Each holder of record of Associated common stock on the Associated Record
Date is entitled to cast one vote per share on each proposal being presented
at the Associated Special Meeting. The presence, in person or by proxy, of
holders of a majority of the outstanding shares of Associated common stock
entitled to vote is necessary to constitute a quorum at the Associated Special
Meeting. As of the Associated Record Date, all executive officers and
directors of Associated were entitled to vote approximately 1.9% of the
outstanding Associated common stock.
First Financial. The First Financial Board has fixed the close of business
on September 2, 1997 as the record date for the First Financial Special
Meeting (the "First Financial Record Date"). Only holders of record of shares
of First Financial common stock on the First Financial Record Date are
entitled to notice of and to
14
<PAGE>
vote at the First Financial Special Meeting. On the First Financial Record
Date, there were 36, 240, 841 shares of First Financial common stock
outstanding and entitled to vote at the First Financial Special Meeting, held
by 4,212 shareholders of record.
Each holder of record of First Financial common stock on the First Financial
Record Date is entitled to cast one vote per share. The presence, in person or
by proxy, of the holders of a majority of the outstanding shares of First
Financial common stock entitled to vote is necessary to constitute a quorum at
the First Financial Special Meeting. As of the First Financial Record Date,
all executive officers and directors of First Financial were entitled to vote
approximately 3.5% of the outstanding First Financial common stock.
Votes Required
Associated. The affirmative vote of the holders of a majority of outstanding
shares of Associated common stock entitled to vote at the Associated Special
Meeting is required to adopt the amendment to Associated's Articles to
increase the number of shares of authorized common stock. The affirmative vote
of a majority of votes cast is required to approve the issuance of shares of
Associated common stock in connection with the merger.
First Financial. The affirmative vote of the holders of two-thirds of the
outstanding shares of First Financial common stock entitled to vote at the
First Financial Special Meeting is required to approve the merger agreement.
Voting of Proxies
Shares represented by all properly executed proxies for Associated common
stock received in time for the Associated Special Meeting will be voted at the
Associated Special Meeting in the manner specified by the holders thereof.
Shares represented by all properly executed proxies for First Financial common
stock received in time for the First Financial Special Meeting will be voted
at the First Financial Special Meeting in the manner specified by the holders
thereof. Proxies which do not contain voting instructions will be voted FOR
approval of the respective proposals at the Associated Special Meeting and the
First Financial Special Meeting.
It is not expected that any matters other than those referred to herein will
be brought before the Associated Special Meeting or the First Financial
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.
Abstentions and broker non-votes will be included in the calculation of the
number of shares represented at the Special Meetings for purposes of
determining whether a quorum has been achieved. Neither abstentions nor broker
non-votes are counted in determining whether a matter has been approved.
THEREFORE, SINCE APPROVAL OF THE AMENDMENT TO THE ASSOCIATED ARTICLES REQUIRES
THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST A MAJORITY OF THE OUTSTANDING
SHARES OF ASSOCIATED COMMON STOCK AND APPROVAL OF THE MERGER AGREEMENT
REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF THE
OUTSTANDING SHARES OF FIRST FINANCIAL COMMON STOCK, ABSTENTIONS AND BROKER
NON-VOTES WILL HAVE THE SAME EFFECT AS A VOTE AGAINST SUCH PROPOSALS.
Revocability of Proxies
The grant of a proxy on the enclosed form of proxy does not preclude a
shareholder from voting in person.
An Associated shareholder may revoke a proxy at any time prior to its
exercise by delivering to the Secretary of Associated a duly executed proxy or
revocation of proxy bearing a later date or by voting in person at the
Associated Special Meeting. Attendance at the Associated Special Meeting will
not of itself constitute revocation of a proxy.
A First Financial shareholder may revoke a proxy at any time prior to its
exercise by delivering to the Secretary of First Financial a duly executed
proxy or revocation of proxy bearing a later date or by voting in
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person at the First Financial Special Meeting. Attendance at the First
Financial Special Meeting will not of itself constitute revocation of a proxy.
Solicitation of Proxies
Each of Associated and First Financial will bear the cost of the
solicitation of proxies from its own shareholders, except that Associated and
First Financial will share equally the cost of printing this Joint Proxy
Statement/Prospectus and the applicable fees associated with the filing of
this Joint Proxy Statement/Prospectus with the Securities and Exchange
Commission (the "Commission"). In addition to solicitation by mail, the
directors, officers and employees of each of Associated and First Financial
and its subsidiaries may solicit proxies from shareholders of such company by
telephone or telegram or in person. Arrangements will also be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by such persons, and Associated and First Financial will reimburse such
custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses in connection therewith.
Morrow & Co. will assist in the solicitation of proxies by Associated and
D.F. King & Co., Inc. will assist in the solicitation of proxies by First
Financial. Each such firm will receive customary fees for its services.
Neither the Associated Board nor the First Financial Board is aware of any
matter other than those set forth in this Joint Proxy Statement/Prospectus
which will be brought before the Associated Special Meeting or the First
Financial Special Meeting, respectively. If, however, other matters are
properly presented at either the Associated Special Meeting or the First
Financial Special Meeting, proxies will be voted in accordance with the
discretion of the holders of such proxies.
SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY CARDS.
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THE MERGER
We are furnishing this Joint Proxy Statement/Prospectus to holders of common
stock, par value $.01 per share, of Associated ("Associated Common Stock") and
holders of common stock, par value $1.00 per share, of First Financial ("First
Financial Common Stock") in connection with the respective proposals to be
voted upon at the Associated Special Meeting and the First Financial Special
Meeting pursuant to the Agreement and Plan of Merger, dated as of May 14,
1997, among Associated, Badger Merger Corp., a wholly owned subsidiary of
Associated, and First Financial (the "Merger Agreement"). The Merger Agreement
provides for the merger of Associated and First Financial (the "Merger"). The
Merger will be effected by merging Badger Merger Corp. with First Financial.
As a result of the Merger, Associated will become the holding company for
First Financial's banking subsidiary, First Financial Bank ("FF Bank"), and
First Financial's other subsidiaries, and will remain the holding company of
Associated's current banks and subsidiaries.
The discussion in this Joint Proxy Statement/Prospectus of the Merger and
the principal terms of the Merger Agreement is subject to, and qualified in
its entirety by, reference to the Merger Agreement, a copy which is attached
to this Joint Proxy Statement/Prospectus as Annex I and is incorporated herein
by reference.
Background to the Merger
Both Associated and First Financial have historically focused on strategic
alternatives based upon mergers and acquisitions as a means for expansion. In
early 1996 First Financial contacted various financial institutions in order
to explore possible business combinations. In the course of those exploratory
contacts, First Financial, through its financial advisor, contacted Mr. H.B.
Conlon, Associated's Chairman, President and Chief Executive Officer, to
explore whether Associated would be interested in entering into a business
combination with First Financial.
On August 29, 1996, Mr. Conlon and John C. Seramur, First Financial's
President and Chief Executive Officer, along with First Financial's financial
advisor, met to explore a possible business combination of the two companies.
The meeting was exploratory in nature and did not involve substantive
transaction negotiations. Given the preliminary nature of the exploratory
discussions, no immediate plan for further meetings was discussed.
In September 1996, federal legislation was enacted which, among other
things, reduced the disparity between deposit assessment rates of the Bank
Insurance Fund and the Savings Association Insurance Fund, and addressed tax
bad debt recapture issues facing thrift institutions such as FF Bank. Shortly
after this legislation was enacted, Associated and First Financial resumed
informal contacts.
In October 1996, Mr. Conlon and Robert C. Gallagher, Associated's Vice
Chairman, met with Mr. Seramur and Thomas H. Neuschaefer, First Financial's
Vice President and Treasurer, for general discussions regarding the financial
condition and general business and operations of their respective
institutions.
In November 1996, Associated's and First Financial's Chief Financial
Officers met to continue discussions regarding their respective institution's
financial condition. Both parties continued to have interest in further
discussions. As they considered their respective positions, no meetings or
other discussions were held until after the 1996 year-end holidays. Also,
during that time period, First Financial management was focused on
participating in the bidding on a potential acquisition of a large mid-western
financial institution. First Financial was not able to justify paying the
price at which that institution eventually sold, and thus the transaction did
not materialize.
Merger Discussions
In January of 1997, First Financial's financial advisors contacted
Associated's financial advisors to resume discussions regarding a possible
business combination.
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On February 6, 1997, Mr. Conlon and Mr. Seramur met to discuss the
possibility of a combination of the two companies. They agreed during the
meeting that the companies' philosophical visions were similar, and that their
respective strengths would be complementary. These strengths included the
strong business lending and trust/asset management services of Associated, and
the retail customer franchise of First Financial.
On February 26, 1997, the Chief Financial Officers of Associated and First
Financial, along with their respective financial advisors, met to discuss
various financial and accounting issues, including the current performance of
each of the companies, possible cost savings that could result from a
combination of the two companies and valuation issues.
On March 10, 1997, the two Chief Financial Officers again met to continue
discussions regarding valuation issues and possible cost savings that could be
realized from a combination of the two companies.
On March 12, 1997, Mr. Conlon and Mr. Gallagher met with Mr. Seramur and Mr.
Neuschaefer to explore strategic and social issues of a business combination,
as well as possible terms for a transaction.
On March 26, 1997, the Chief Executive Officers of Associated and First
Financial, along with their respective financial advisors, met to discuss a
proposal formulated by Associated with respect to a business combination of
the two companies. The proposal was for a merger of equals, using the
Associated corporate structure as the surviving commercial bank holding
company. Under that proposal, First Financial shareholders would receive a
fixed exchange ratio for First Financial common stock.
In April 1997, Associated's and First Financial's financial advisors met to
discuss their respective analyses of a possible combination of the two
companies. The financial advisors discussed the valuation of First Financial,
the pro forma impact on Associated at different price levels and other
structural issues involving management, social issues and the integration of
Associated and First Financial.
At the regular board meeting on April 23, 1997 of the Associated Board, a
detailed presentation was made by Associated's financial advisors as well as
certain members of management and officers of Associated regarding a possible
business combination between Associated and First Financial and the current
status of the discussions between the two companies. The Associated Board
authorized representatives of Associated to engage in further negotiations
with respect to a possible business combination of Associated and First
Financial, subject to the Associated Board's final approval of any such terms.
On April 28, 1997, representatives and advisors of Associated and First
Financial met again to propose possible terms for a combination of the two
companies.
On the morning of April 29, 1997, the Chief Executive Officers spoke further
about terms of a proposed merger, and thereafter Mr. Seramur advised the First
Financial Board and members of senior management regarding the discussions
that were taking place between First Financial and Associated, including the
then current status of the negotiations and the then proposed terms of the
transaction.
From April 29, 1997 through May 14, 1997, representatives and advisors of
the two companies held meetings and had various telephone conversations
regarding the terms of a possible business combination. Due diligence was
conducted by both parties on financial, legal, accounting, and credit issues.
The legal advisors of both companies began drafting and negotiating
documentation in connection with a possible business combination.
At a special meeting of the First Financial Board held on May 7, 1997, the
First Financial Board reviewed in detail the discussions held to date between
Associated and First Financial, the due diligence investigation conducted by
management and draft merger documentation. The First Financial Board also
received a presentation from its legal and financial advisors regarding the
proposed merger and possible alternatives. The legal presentation focused on
the Board's fiduciary responsibilities and the terms and conditions of the
draft
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documentation. The financial advisor presentation focused on evaluations of
Associated and First Financial and analyses of First Financial strategic
alternatives, including remaining independent and other merger and acquisition
opportunities. Although no conclusion was reached as to the best strategic
alternative, the First Financial Board authorized management to continue with
negotiations.
On May 14, 1997, upon completion of negotiations, the Boards of Directors of
Associated and First Financial each held special meetings to consider the
terms of a merger of the two companies. Following detailed presentations of
their respective legal counsel and financial advisors, the First Financial
board determined the Merger was in the best long-term interests of its
shareholders and superior to other strategic alternatives and both the First
Financial and Associated Boards of Directors approved the Merger, the Merger
Agreement and the Stock Option Agreements (as defined below). The Merger
Agreement and the Option Agreements were then executed and a public
announcement of the proposed Merger was made.
Reasons for the Merger and Board Recommendations
Recommendation of the Associated Board and Reasons for the Merger. THE
ASSOCIATED BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, ASSOCIATED AND THE SHAREHOLDERS OF ASSOCIATED. THE ASSOCIATED
BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF ASSOCIATED VOTE FOR
APPROVAL OF (I) THE AMENDMENT TO THE ARTICLES OF INCORPORATION INCREASING THE
NUMBER OF SHARES OF AUTHORIZED ASSOCIATED COMMON STOCK TO 100,000,000 SHARES AND
(II) THE ISSUANCE OF SHARES OF ASSOCIATED COMMON STOCK IN CONNECTION WITH THE
MERGER.
The Associated Board believes that the Merger joins two institutions which
have had distinguished track records in serving their respective markets and
creating value for their shareholders. The Associated Board believes that the
Merger will serve the best interests of the shareholders and that following
the Merger Associated will have an enhanced ability to provide a wide range of
high quality financial services to its customers and the businesses in the
communities which Associated and First Financial serve.
In reaching its conclusion to approve the Merger Agreement and the Stock
Option Agreements and the transactions contemplated thereby, the Associated
Board consulted with Associated's management, as well as its legal counsel and
its financial advisors, and considered a number of factors, including the
following:
(i) The structure of the Merger and the terms and conditions of the Merger
Agreement and the Stock Option Agreements, including the fact that the
fixed Exchange Ratio provides certainty as to the number of shares of
Associated Common Stock to be issued in the Merger, and that the Merger is
intended to qualify for pooling of interests accounting treatment.
(ii) The complementary nature of Associated's and First Financial's
respective businesses (including, without limitation, the markets served
and the products provided by each), management, strategic objectives and
competitive positions.
(iii) The presentation of Sandler O'Neill & Partners, L.P., Associated's
financial advisors, including their written opinion that, as of the date of
the Associated Board meeting, the Exchange Ratio was fair from a financial
point of view to the holders of Associated Common Stock.
(iv) The expectation that the Merger would result in cost synergies for
the combined operations.
(v) The ongoing trend toward consolidation in the financial institutions
market and the recent federal legislation that appears to have begun the
process for the eventual merger of the banking and thrift deposit insurance
funds.
(vi) The likelihood of the Merger being approved by the appropriate
regulatory authorities.
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The foregoing discussion of information and factors considered and given
weight by the Associated Board is not intended to be exhaustive, but includes
all material factors considered by the Associated Board. In reaching its
decision with respect to the Merger, the Associated Board did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the foregoing factors in reaching their determinations. In
addition, individual members of the Associated Board may have given different
weights to different factors.
Recommendation of the First Financial Board and Reasons for the Merger. THE
FIRST FINANCIAL BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, THE SHAREHOLDERS OF FIRST FINANCIAL. THE FIRST FINANCIAL BOARD
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT THE FIRST
FINANCIAL SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
The Board of Directors of First Financial has approved the Merger Agreement
and has determined that the Merger is fair to, and in the best interests of,
First Financial and its shareholders. THE FIRST FINANCIAL BOARD OF DIRECTORS
RECOMMENDS THAT HOLDERS OF FIRST FINANCIAL COMMON STOCK VOTE TO APPROVE AND
ADOPT THE MERGER AGREEMENT AND THE MERGER PROVIDED FOR THEREIN. The First
Financial Board of Directors believes that the Merger will enable holders of
First Financial Common Stock to realize increased value over time as part of
the combination with Associated. The Board believes the combined company will
have a greater earnings and expansion potential than either company would have
individually. In that regard, the Board believes that the Merger may enable
First Financial shareholders to participate in opportunities for appreciation
of Associated Common Stock as a result of being part of a larger commercial
banking franchise, as well as a result of potential increases in market
interest in the Associated Common Stock because of greater potential liquidity
and market capitalization. In reaching its decision to approve the Merger
Agreement, the Board consulted with its outside counsel regarding the legal
terms of the Merger and the Board's fiduciary obligations in its consideration
of the proposed merger, its financial advisor, McDonald & Company Securities,
Inc. ("McDonald"), regarding the financial aspects and fairness of the
proposed Merger Agreement, as well as with management of First Financial and,
without assigning any relative or specific weight, considered the following,
which are all of the material factors considered, both from a short-term and
long-term perspective:
(i) The First Financial Board's familiarity with, and review of, the
business, financial condition, results of operations and prospects of First
Financial, including, but not limited to, its potential growth,
development, productivity and profitability, and the business risks
associated therewith;
(ii) The current and prospective environment in which First Financial
operates, including national and local economic conditions, the highly
competitive environment for financial institutions generally, the increased
regulatory burden on financial institutions, and the trend toward
consolidation in the financial services industry;
(iii) The potential appreciation in market and book value of First
Financial Common Stock on both a short- and long-term basis, as a stand-
alone entity;
(iv) Information concerning the business, financial condition, results of
operations, asset quality and prospects of Associated, including the long-
term growth potential of Associated Common Stock and the future prospects
of Associated, combined with First Financial following the proposed Merger,
and the business risks associated therewith;
(v) The competitive position and future growth prospects of Associated as
a large regional banking company with operations in Wisconsin and Illinois
following the Merger;
(vi) The ability of First Financial to further its efforts to convert to
a "banking" company from a "thrift" company;
(vii) The perceived efficiencies of First Financial, and the potential
benefits to First Financial shareholders of the synergies and related cost
savings which may result from consolidation of certain back office
functions of the subsidiary banking companies of Associated after the
Merger;
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(viii) The combined business strengths of Associated (e.g., commercial
business lending, trust and asset management) and First Financial (e.g.,
consumer banking, including deposits, mortgages, credit cards and other
consumer loans) and the combined financial resources of Associated and
First Financial;
(ix) The geographic diversity, and lack of substantial overlap of First
Financial's and Associated's respective markets throughout Wisconsin and
Illinois, the compatibility of the business and management philosophies of
First Financial and Associated, and Associated's strong commitment to the
communities it serves;
(x) The fact that the exchange of Associated Common Stock for First
Financial Common Stock can be effected on a tax-free basis for First
Financial shareholders, and the potential for appreciation and growth for
the market value of Associated Common Stock following the proposed Merger;
(xi) The oral presentation and opinion of McDonald that the terms of the
Merger Agreement are fair to the holders of First Financial Common Stock
from a financial point of view (see "--Opinion of the Financial Advisor to
the First Financial Board" below);
(xii) The advantages and disadvantages of First Financial remaining as an
independent institution or affiliating with another institution; and
(xiii) The short- and long-term interests of First Financial and its
shareholders, the interests of First Financial's employees, customers and
creditors, and the interests of the communities that will be served by the
affiliation with Associated which creates a more diversified commercial
banking company with greater resources to meet the changing needs of the
constituencies served in such communities.
On the basis of these considerations, the Merger Agreement was approved, and
FIRST FINANCIAL'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT FIRST
FINANCIAL SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AND THE
MERGER.
Opinions of Financial Advisors
Opinion of the Financial Advisor to the Associated Board. Pursuant to a
letter agreement dated as of March 26, 1997 (the "Sandler O'Neill Agreement"),
Associated retained Sandler O'Neill Partners, L.P. ("Sandler O'Neill") as an
independent financial advisor in connection with strategic planning and merger
and acquisition transactions. Sandler O'Neill is a nationally recognized
investment banking firm whose principal business specialty is banks and
savings institutions and is regularly engaged in the valuation of such
businesses and their securities in connection with mergers and acquisitions
and other corporate transactions.
Pursuant to the terms of the Sandler O'Neill Agreement, Sandler O'Neill
acted as financial advisor to Associated in connection with the Merger. In
connection therewith, at the May 14, 1997 meeting at which the Associated
Board approved and adopted the Merger Agreement, Sandler O'Neill delivered a
written opinion to the Associated Board that, as of May 14, 1997, the Exchange
Ratio was fair from a financial point of view to the holders of Associated
Common Stock. Sandler O'Neill delivered a written opinion dated the date of
this Joint Proxy Statement/Prospectus (the "Fairness Opinion") to Associated's
Board of Directors confirming that, as of such date, the Exchange Ratio was
fair from a financial point of view to the holders of Associated's Common
Stock. THE FULL TEXT OF THE FAIRNESS OPINION, WHICH SETS FORTH THE PROCEDURES
FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX IV TO THIS JOINT
PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF SUCH OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO ANNEX IV. HOLDERS OF ASSOCIATED COMMON STOCK ARE URGED TO READ
THE FAIRNESS OPINION IN ITS ENTIRETY IN CONNECTION WITH THEIR CONSIDERATION OF
THE PROPOSED MERGER. SANDLER O'NEILL'S FAIRNESS OPINION SHOULD NOT BE
CONSTRUED BY THE HOLDERS OF SHARES OF ASSOCIATED COMMON STOCK AS A
RECOMMENDATION AS TO HOW THEY SHOULD VOTE AT THE ASSOCIATED SPECIAL MEETING.
In preparation for the Fairness Opinion, Sandler O'Neill performed a variety
of financial analyses. The following paragraphs provide a summary of all
material analyses performed by Sandler O'Neill, but does not
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purport to be a complete description of Sandler O'Neill's analysis. The
preparation of a fairness opinion is a complex process involving subjective
judgments and is not necessarily susceptible to a partial analysis or summary
description. Sandler O'Neill believes that its analyses must be considered as
a whole and that selecting portions of such analyses and the factors
considered therein, without considering all factors and analyses, could create
an incomplete view of the analyses and processes underlying the Fairness
Opinion. In performing its analyses, Sandler O'Neill made numerous assumptions
with respect to industry performance, business and economic conditions and
various other matters, many of which cannot be predicted and are beyond the
control of Associated, First Financial and Sandler O'Neill. Any estimates
contained in Sandler O'Neill's analyses are not necessarily indicative of
future results or values, which may be significantly more or less favorable
than such estimates. Estimates on the values of companies do not purport to be
appraisals or necessarily reflect the prices at which companies or their
securities may actually be sold. Because such estimates are inherently subject
to uncertainty, neither Associated nor Sandler O'Neill assumes responsibility
if future results or actual values are materially different from these
estimates.
In connection with rendering its Fairness Opinion, Sandler O'Neill, among
other things: (i) analyzed certain publicly available financial statements and
other information of Associated and First Financial, respectively; (ii)
analyzed certain internal financial statements and other financial and
operating data concerning First Financial prepared by the management of First
Financial; (iii) analyzed certain financial projections prepared by the
management of First Financial; (iv) discussed the past and current operations
and financial condition and the prospects of First Financial with senior
executives of First Financial; (v) analyzed certain internal financial
statements and other financial and operating data concerning Associated
prepared by the management of Associated; (vi) analyzed certain financial
projections prepared by the management of Associated; (vii) discussed the past
and current operations and financial condition and the prospects of Associated
with senior executives of Associated, and analyzed the pro forma impact of the
Merger on Associated's earnings per share, consolidated capitalization and
financial ratios; (viii) reviewed the reported prices and trading activity for
the Associated Common Stock and First Financial Common Stock; (ix) compared
the financial performance of Associated and First Financial and the prices and
trading activity of the Associated Common Stock and First Financial Common
Stock with that of certain other comparable publicly traded companies and
their securities; (x) discussed with independent auditors of First Financial
their review of the financial and accounting affairs of First Financial and
with the independent auditors of Associated their review of the financial and
accounting affairs of Associated; (xi) discussed the strategic objectives of
the Merger and the plans for the combined company with senior executives of
Associated and First Financial; (xii) analyzed certain pro forma financial
projections of the combined company prepared by Associated and First
Financial; (xiii) reviewed the financial terms, to the extent publicly
available, of certain comparable precedent transactions; (xiv) participated in
discussions and negotiations among representatives of Associated and First
Financial and their financial and legal advisors; (xv) reviewed the draft
Merger Agreement and certain related documents; and (xvi) reviewed such other
information, financial studies, analyses and investigations and financial,
economic and market criteria as Sandler O'Neill considered relevant.
Stock Trading History. Sandler O'Neill examined the history of the trading
prices and the volume of Associated Common Stock and First Financial Common
Stock, and the relationship between the movements in the prices of Associated
Common Stock and First Financial Common Stock, respectively, to movements in
certain stock indices, including the Standard & Poor's 500 Index, the NASDAQ
Banking Index and a composite group of publicly traded commercial banks (in
the case of Associated) and publicly traded savings institutions (in the case
of First Financial) in geographic proximity and of similar asset size.
Summary Contribution Analysis. Sandler O'Neill computed the contribution to
the combined equity's pro forma financial results attributable to each of
Associated and First Financial. The computation showed, among other things,
that Associated and First Financial would contribute to the combined entity
approximately 49.1% and 50.9%, respectively of tangible equity as of March 31,
1997, 44.2% and 55.8%, respectively, of earnings for the twelve months ended
March 31, 1997, and 43.6% and 56.4%, respectively of total assets for the
period ended March 31, 1997. Sandler O'Neill calculated that the Exchange
Ratio would result in an allocation between the
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holders of Associated Common Stock and First Financial Common Stock of pro
forma ownership of the combined entity equal to 45% and 55%, respectively.
Analysis of Selected Publicly Traded Companies. In preparing its
presentation, Sandler O'Neill used publicly available information to compare
selected financial and market trading information, including book value,
tangible book value, earnings, asset quality ratios, loan loss reserve levels,
profitability and capital adequacy for Associated and certain other
institutions. The 12 publicly-traded regional commercial banks (the "Regional
Bank Group") to which Sandler O'Neill compared Associated were: Citizens
Banking Corporation, CNB Bankshares Inc., Commerce Bancshares Inc., Community
First Bankshares, First Midwest Bancorp Inc., FirstMerit Corporation, Fort
Wayne National Corp., Magna Group Inc., Old National Bancorp, Provident
Bancorp Inc., TCF Financial Corp., and UMB Financial Corporation. Sandler
O'Neill also compared Associated to a group of 14 publicly-traded commercial
banks which were considered to be highly-valued (the "Highly-Valued Bank
Group" ) by investors because their price to tangible book value was greater
than 250%. The Highly-Valued Bank Group institutions were: City National
Corp., Community First Bankshares, Cullen/Frost Bankers Inc., First Commercial
Corporation, National Commerce Bancorp, North Fork Bancorporation Inc.,
Provident Bancorp Inc., Synovus Financial Corp., TCF Financial Corp., TrustCo
Bank Corp NY, U.S. Trust Corporation, Valley National Bancorp, Wilmington
Trust Corporation, and Zions Bancorporation. The analysis compared publicly
available year-end financial information as of and for the years ending
December 31, 1992 through December 31, 1996, and for the three months ended
March 31, 1997. The following comparisons are based upon the March 31, 1997,
financial information. The data described below with respect to the Region
Bank Group and the Highly-Valued Bank Group consists of the median data for
such groups.
The total assets of Associated were approximately $4.46 billion, compared to
approximately $5.23 billion for the Regional Bank Group and approximately
$5.32 billion for the Highly-Valued Bank Group. The annual growth rate of
assets for Associated was positive 13.46%, compared to a positive growth rate
of approximately 6.74% for the Regional Bank Group and approximately 9.32% for
the Highly-Valued Bank Group. The total equity of Associated was approximately
$407.6 million, compared to approximately $453.3 million for the Regional Bank
Group and approximately $466.3 million for the Highly-Valued Bank Group. The
tangible equity to total assets ratio was 9.14% for Associated, compared to
approximately 8.78% for the Regional Bank Group and approximately 7.88% for
the Highly-Valued Bank Group. The net loans to assets ratio for Associated was
approximately 71.9%, compared to approximately 66.4% for the Regional Bank
Group and approximately 63.6% for the Highly-Valued Bank Group. The cash and
securities to total assets ratio was approximately 23.8% for Associated,
compared to approximately 28.5% for the Regional Bank Group and approximately
28.7% for the Highly-Valued Bank Group. Total deposits were approximately
$3.49 billion for Associated, compared to approximately $4.12 billion for the
Regional Bank Group and approximately $4.32 billion for the Highly-Valued Bank
Group. Associated had a gross loans to total deposits ratio of approximately
93.2%, compared to approximately 84.0% for the Regional Bank Group and
approximately 79.3% for the Highly-Valued Bank Group. The total borrowings to
total asset ratio for Associated was approximately 11.3%, compared to
approximately 12.0% for the Regional Bank Group and approximately 9.3% for the
Highly-Valued Bank Group. The ratio of non-performing assets to total assets
for Associated was 0.41%, compared to approximately 0.50% for the Regional
Bank Group and approximately 0.51% for the Highly-Valued Bank Group. The ratio
of loan loss reserves to gross loans for Associated was 1.52%, compared to
approximately 1.39% for the Regional Bank Group and approximately 1.52% for
the Highly-Valued Bank Group. The net interest margin of Associated was 4.52%,
compared to approximately 4.44% for the Regional Bank Group and 4.63% for the
Highly-Valued Bank Group. The ratio of non-interest income to average assets
for Associated was 1.53%, compared to approximately 1.25% for the Regional
Bank Group and approximately 1.77% for the Highly-Valued Bank Group. The ratio
of non-interest expense to average assets was 3.37% for Associated, compared
to approximately 3.37% for the Regional Bank Group and approximately 3.53% for
the Highly-Valued Bank Group. The efficiency ratio of Associated was 57.5%,
compared to approximately 57.5% for the Regional Bank Group and approximately
55.6% for the Highly-Valued Bank Group. The return on average assets for
Associated was 1.38%, compared to approximately 1.17% for the Regional Bank
Group and approximately 1.39% for the Highly-Valued Bank Group. The return on
average equity for Associated was 15.31%, compared to approximately 13.56% for
the
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Regional Bank Group and approximately 18.06% for the Highly-Valued Bank Group.
The price to tangible book value for Associated was 220.8%, compared to
approximately 234.6% for the Regional Bank Group and approximately 318.8% for
the Highly-Valued Bank Group. The price to earnings per share multiple for
Associated was 14.1x, compared to approximately 16.3x for the Regional Bank
Group and 17.4x for the Highly-Valued Bank Group.
Sandler O'Neill also used publicly available information to perform a
similar comparison of selected financial and market trading information for
First Financial Corporation and certain other institutions. The five publicly-
traded regional savings institutions (the "Peer Group") to which Sandler
O'Neill compared First Financial Corporation were: CitFed Bancorp Inc.,
Commercial Federal Corporation, Great Financial Corporation, MAF Bancorp Inc.,
and St. Paul Bancorp Inc. Sandler O'Neill also compared First Financial to a
group of six publicly-traded savings institutions which were considered to be
highly valued (the "Highly-Valued Savings Institutions") by investors because
their price to tangible book value was greater than 150%. The Highly-Valued
Savings Institutions were: Commercial Federal Corporation, MAF Bancorp Inc.,
New York Bancorp Inc., Peoples Heritage Financial Group, TR Financial Corp,
and Washington Federal Inc. The analysis compared publicly available year-end
financial information as of and for the years ending December 31, 1992 through
December 31, 1996, and for the three months ended March 31, 1997. The
following comparisons are based upon the March 31, 1997, financial
information. The data described below with respect to the Peer Group and the
Highly-Valued Savings Institutions consists of the median data for such
groups.
The total assets of First Financial were approximately $5.81 billion,
compared to $3.86 billion for the Peer Group and $5.46 billion, for the
Highly-Valued Savings Institutions. The annual growth rate of assets for First
Financial was positive 7.18%, compared to a positive growth rate of
approximately 8.26% for the Peer Group and approximately 14.34% for the
Highly-Valued Savings Institutions. The total equity of First Financial was
approximately $405.7 million, compared to approximately $335.5 million for the
Peer Group and approximately $405.7 million for the Highly-Valued Savings
Institutions. The tangible equity to total assets ratio was 6.78% for First
Financial, compared to approximately 6.81% for the Peer Group and
approximately 6.78% for the Highly-Valued Savings Institutions. The net loans
to total assets ratio for First Financial was approximately 60.3%, compared to
approximately 65.2% for the Peer Group and approximately 67.9% for the Highly-
Valued Savings Institutions. The cash and securities to total assets ratio was
approximately 37.1% for First Financial, compared to approximately 31.2% for
the Peer Group and approximately 26.5% for the Highly-Valued Bank Group. Total
deposits were approximately $4.49 billion for First Financial, compared to
approximately $2.84 billion for the Peer Group and approximately $2.83 billion
for the Highly-Valued Savings Institutions. First Financial had a gross loans
to total deposits ratio of approximately 78.5%, compared to approximately
103.7% for the Peer Group and approximately 108.9% for the Highly-Valued
Savings Institutions. The total borrowings to total assets ratio for First
Financial was approximately 14.3%, compared to approximately 23.3% for the
Peer Group and approximately 21.1% for the Highly-Valued Savings Institutions.
The non-performing assets to total assets ratio for First Financial was 0.29%,
compared to approximately 0.38% for the Peer Group and approximately 0.90% for
the Highly-Valued Savings Institutions. The ratio of loan loss reserves to
gross loans for First Financial was 0.65%, compared to approximately 0.84% for
the Peer Group and approximately 0.83% for the Highly-Valued Savings
Institutions. The net interest margin of First Financial was 3.53%, compared
to approximately 2.97% for the Peer Group and approximately 3.53% for the
Highly-Valued Savings Institutions. The ratio of non-interest income to
average assets for First Financial was 0.86%, compared to approximately 0.83%
for the Peer Group and approximately 0.49% for the Highly-Valued Savings
Institutions. The ratio of non-interest expense to average assets was 2.04%
for First Financial, compared to approximately 2.12% for the Peer Group and
approximately 1.72% for the Highly-Valued Savings Institutions. The efficiency
ratio of First Financial was 47.3%, compared to approximately 54.9% for the
Peer Group and approximately 47.3% for the Highly-Valued Savings Institutions.
The return on average assets for First Financial was 1.33%, compared to
approximately 1.06% for the Peer Group and approximately 1.26% for the Highly-
Valued Savings Institutions. The return on average equity for First Financial
was 18.5%, compared to approximately 14.0% for the Peer Group and
approximately 15.7% for the Highly-Valued Savings Institutions. The price to
tangible book value for First Financial was 253.2%, compared to approximately
182.6% for the Peer Group and approximately
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206.4% for the Highly-Valued Savings Institutions. The price to earnings per
share multiple for First Financial was 13.4x, compared to approximately 12.9x
for the Peer Group and approximately 11.7x for the Highly-Valued Savings
Institutions.
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed 60
transactions announced from January 1, 1996 to May 12, 1997, involving public
savings institutions nationwide as targets with transaction values over $100
million ("All Transactions"), twenty one transactions announced from January
1, 1996, to May 12, 1997, involving midwestern (Illinois, Indiana, Iowa,
Kentucky, Michigan, Missouri, Ohio, and Wisconsin) public savings institutions
as targets with transaction values over $15 million ("Regional Transactions"),
and twenty one highly-valued public savings institution deals nationwide,
where the return on average equity ratio exceeded 12%, announced from January
1, 1996, to May 12, 1997, with transaction values over $15 million ("Highly-
Valued Transactions"). Sandler O'Neill reviewed the ratios of price to
earnings, price to book value, price to tangible book value, price to
deposits, price to assets, and deposit premium paid in each such transaction
and computed high, low, mean, and median ratios and premiums for the
respective groups of transaction. Based upon the median multiples for All
Transactions, Sandler O'Neill derived an imputed range of values per share of
First Financial Common Stock of $18.98 to $32.13. Based upon the median
multiples for Regional Transactions, Sandler O'Neill derived an imputed range
of values per share of First Financial Common Stock of $17.06 to $40.59. Based
upon the median multiples for Highly-Valued Transactions, Sandler O'Neill
derived an imputed range of values per share of First Financial Common Stock
of $19.43 to $27.39.
No merger transaction used in the analysis of selected merger transactions
is identical to the proposed transaction. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value or
the acquisition value of the companies to which they are being compared.
Mathematical analysis (such as determining the average or median) is not, in
itself, a meaningful method of using comparable data.
Discounted Dividend Stream and Terminal Value Analysis (Stand-Alone
Valuation of First Financial). Sandler O'Neill also performed an analysis
which estimated the future stream of after-tax dividend flows of First
Financial through 2001 under various circumstances, assuming First Financial
performed in accordance with information regarding Sandler O'Neill's estimates
of First Financial's potential future earnings provided by its management and
certain variations thereof (including variation with respect to the levels of
assets, net interest spread, non-interest income, non-interest expense and
dividend payout ratio). To approximate the terminal value of First Financial
Common Stock at the end of the five-year period, Sandler O'Neill applied price
to earnings multiples ranging from 10x to 19x and applied multiples of book
value ranging from 100.0% to 280.0%. The dividend income streams and terminal
values were then discounted to present values using different discount rates
(ranging from 9.0% to 14.0%) chosen to reflect different assumptions regarding
required rates of return of holders of prospective buyers of First Financial
Common Stock. This analysis, assuming the current dividend payout ratio,
indicated an imputed range of values per share of First Financial Common Stock
between $18.02 and $38.86 when applying the price to earnings multiples, and
an imputed range of values per share of First Financial Common Stock between
$12.91 and $37.63 when applying multiples of book value. In connection with
its analysis, Sandler O'Neill extensively used sensitivity analyses to
estimate the effects changes in the underlying assumptions could have on the
resulting present value.
Analysis of Combined Company. Sandler O'Neill evaluated the deposit market
share for each of Associated, First Financial and the combined company in
Wisconsin and Illinois and certain pro forma balance sheet ratios,
capitalization and reserve levels for Associated, First Financial and the
combined company. Sandler O'Neill analyzed the contribution of each of
Associated and First Financial to the assets, market value, tangible common
equity, nonperforming assets, and net income of the combined company. Sandler
O'Neill also analyzed each of Associated, First Financial and the combined
company's position within the industry (based on market value, assets,
tangible common equity, profitability, and price to earnings).
Pro Forma Merger Analysis. Sandler O'Neill used the Exchange Ratio in
analyzing the projections of the combined company's earnings per share.
Sandler O'Neill's method of analysis indicates that the Merger would
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be accretive to Associated's projected earnings per share beginning in fiscal
1998, the first full year of consolidation. This analysis is based on
estimates of expected cost savings and numerous other assumptions, including
assumptions with respect to the projected restructuring charge to be recorded
by Associated. The actual results achieved by the combined company will vary
from the projected results and the variations may be material.
Because of the inherent uncertainties associated with merging two companies,
there can be no assurance that the combined company will be able to realize
the full cost savings Associated currently expects to realize as a result of
the Merger and the consolidation of the operations of Associated and First
Financial or that such savings will be realized at the times currently
anticipated. Furthermore, there can be no assurance that cost savings which
are realized will not be offset by increases in other expenses, operating
losses, other charges to earnings or losses of revenue, including losses due
to problems in integrating the two companies.
In performing its review, Sandler O'Neill assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information reviewed by and discussed with
Sandler O'Neill (relying, where relevant, on the analyses and estimates of
Associated and First Financial), and Sandler O'Neill did not make an
independent evaluation or appraisal of the specific assets, the collateral
securing assets or the liabilities of Associated or First Financial or any of
their subsidiaries, or the collectibility of any such assets. With respect to
the information regarding potential future financial performance provided by
each of Associated's and First Financial's management, Sandler O'Neill assumed
that they have been reasonably prepared on bases reflecting reasonable
estimates and judgments of the respective managements. Sandler O'Neill also
assumed the following: (i) that there has been no material change in
Associated's and First Financial's assets, financial condition, results of
operations, business or prospects since the date of the last financial
statements noted above and (ii) that First Financial will remain as a going
concern for all periods relevant to our analyses and that the conditions
precedent in the Agreement are not waived.
The Sandler O'Neill Agreement. Associated has agreed to pay Sandler O'Neill
a transaction fee in connection with the Merger, a substantial portion of
which is contingent upon the consummation of the Merger. Under the terms of
the Sandler O'Neill Agreement, Associated has agreed to pay Sandler O'Neill a
transaction fee equal to $3,000,000. Associated paid Sandler O'Neill $250,000
upon the execution of the Merger Agreement. An additional $250,000 will be
payable upon shareholder approval at the Associated Special Meeting with the
balance due upon closing of such transaction. Associated has also agreed to
reimburse Sandler O'Neill for its reasonable out-of-pocket expenses incurred
in connection with its engagement and to indemnify Sandler O'Neill and its
affiliates and their respective partners, directors, officers, employees,
agents, and controlling persons against certain expenses and liabilities,
including liabilities under securities laws.
Opinion of the Financial Advisor to the First Financial Board. Pursuant to
an engagement letter between First Financial and McDonald, First Financial
retained McDonald to act as its sole financial advisor in connection with the
Merger and related matters. As part of its engagement, McDonald agreed to
render an opinion with respect to the fairness from a financial point of view
to First Financial shareholders of the consideration to be received by First
Financial in the Merger. McDonald is a nationally recognized specialist in the
financial services industry in general and in Midwestern banks and thrifts in
particular. McDonald is regularly engaged in evaluations of similar businesses
and in advising institutions with regard to merger and acquisitions, as well
as raising debt and equity capital for such institutions. First Financial
selected McDonald as its financial advisor based upon its qualifications,
expertise and reputation in such capacity.
At the May 14 meeting of the First Financial Board, McDonald delivered its
opinion that the consideration to be received by First Financial in the Merger
(the amount of which was determined by First Financial and Associated on the
basis of arm's-length negotiation between First Financial and Associated) was
fair to First Financial shareholders from a financial point of view as of May
14, 1997. McDonald subsequently delivered to the First Financial Board a
written opinion dated as of the date of this Joint Proxy Statement/Prospectus
confirming its opinion. No limitations were imposed by First Financial on
McDonald with respect to the investigations made or the procedures followed in
rendering its opinion.
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THE FULL TEXT OF MCDONALD'S WRITTEN OPINION TO THE FIRST FINANCIAL BOARD,
DATED AS OF THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS, WHICH SETS
FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND EXTENT OF REVIEW BY
MCDONALD, IS ATTACHED HERETO AS ANNEX V AND IS INCORPORATED HEREIN BY
REFERENCE AND SHOULD BE READ CAREFULLY AND IN ITS ENTIRETY IN CONJUNCTION WITH
THIS JOINT PROXY STATEMENT/PROSPECTUS. THE FOLLOWING SUMMARY OF MCDONALD'S
OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
OPINION. MCDONALD'S OPINION IS ADDRESSED TO THE FIRST FINANCIAL BOARD AND DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER OF FIRST FINANCIAL AS TO
HOW SUCH SHAREHOLDER SHOULD VOTE AT THE FIRST FINANCIAL SHAREHOLDERS MEETING.
In connection with its opinion, McDonald has, among other things: (i)
reviewed the Merger Agreement and other related documents and this Joint Proxy
Statement/Prospectus; (ii) reviewed certain historical business and financial
information relating to First Financial and Associated; (iii) reviewed other
pertinent internally-generated reports with regard to the separate businesses
and prospects of First Financial and Associated including, among other things,
the strategic objectives of each corporation and the potential benefits which
might be realized through consummation of the Merger; (iv) participated in
senior management discussions between First Financial and Associated with
regard to said strategic objectives which might be realized through
consummation of the Merger; (v) reviewed public information regarding other
selected comparable publicly-traded companies deemed relevant to the proposed
business combination; (vi) reviewed the financial terms and data of selected
comparable combinations between banks, thrifts and bank and thrift holding
companies deemed relevant to the proposed business combination; (vii) reviewed
the historical market performance and trading volume of First Financial Common
Stock and Associated Common Stock; (viii) reviewed certain information
pertaining to prospective cost savings and/or revenue enhancements relative to
the proposed business combination; (ix) reviewed and evaluated the current
stock distribution and ownership of First Financial Common Stock and
Associated Common Stock, as well as the pro forma distribution and ownership
following consummation of the Merger, based upon the contribution of, among
other things, First Financial's assets, liabilities, shareholders' equity and
earnings to the combined entity; and (x) conducted such other financial
studies, analyses and investigations as McDonald deemed appropriate. The oral
and written opinions provided by McDonald to First Financial were necessarily
based upon economic, monetary, financial market and other relevant conditions
as of the dates thereof.
In connection with its review and arriving at its opinion, McDonald relied
upon the accuracy and completeness of the financial information and other
pertinent information provided by First Financial to McDonald for purposes of
rendering its opinion. McDonald did not assume any obligation to independently
verify any of the provided information as being complete and accurate in all
material respects. With regard to the financial forecasts established and
developed for First Financial and Associated with the input of the respective
managements, as well as projections of cost savings, revenue enhancements and
operating synergies, McDonald assumed that these materials had been reasonably
prepared on bases reflecting the best available estimates and judgments of
First Financial and Associated as to the future performance of the separate
and combined entities and that the projections provided a reasonable basis
upon which McDonald could form its opinion. Neither First Financial nor
Associated publicly discloses such internal management projections of the type
utilized by McDonald in connection with McDonald's role as financial advisor
to First Financial with respect to review of the Merger. Therefore, such
projections cannot be assumed to have been prepared with a view towards public
disclosure. The projections were based upon numerous variables and assumptions
that are inherently uncertain, including, but notwithstanding, factors
relative to the general economic and competitive conditions facing First
Financial and Associated. Accordingly, actual results could vary significantly
from those set forth in the respective projections.
McDonald does not claim to be an expert in the evaluation of loan portfolios
or the allowance for loan losses with respect thereto and therefore assumes
that such allowances for First Financial and Associated are adequate to cover
such losses. In addition, McDonald does not assume responsibility for the
review of individual credit files, did not make an independent evaluation,
appraisal or physical inspection of the assets or individual properties of
First Financial or Associated, nor was McDonald provided with such appraisals.
Furthermore, McDonald assumes that the Merger will be consummated in
accordance with the terms set forth in the Merger
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Agreement, without any waiver of any material terms or conditions by First
Financial and that obtaining the necessary regulatory approvals for the Merger
will not have an adverse effect on either separate institution or combined
entity. Moreover, in each analysis that involves per share data for First
Financial, McDonald adjusted the data to reflect full dilution, i.e., the
exercise of all outstanding options and/or warrants. In particular, McDonald
assumes that the Merger will be recorded as a "pooling-of-interests" in
accordance with generally accepted accounting principles.
In connection with rendering its opinion to the First Financial Board,
McDonald performed a variety of financial and comparative analyses the
material ones of which are briefly summarized below. Such summary of analyses
does not purport to be a complete description of the analyses performed by
McDonald. Moreover, McDonald believes that these analyses must be considered
as a whole and that selecting portions of such analyses and the factors
considered by it, without considering all such analyses and factors, could
create an incomplete understanding of the scope of the process underlying the
analyses and, more importantly, the opinion derived from them. The preparation
of a financial advisor's opinion is a complex process involving subjective
judgments and is not necessarily susceptible to partial analyses or a summary
description of such analyses. In its full analysis, McDonald also accounted
for the assessment of general economic, financial market and other financial
conditions. Furthermore, McDonald drew from its past experience in similar
transactions, as well as its experience in the valuation of securities and its
general knowledge of the banking industry as a whole. Any estimates in
McDonald's analyses were not necessarily indicative of future results or
values which may significantly diverge more or less favorably from such
estimates. Estimates of company valuations do not purport to be appraisals or
necessarily reflect the prices at which companies or their respective
securities actually may be sold. Most notably, none of the analyses performed
by McDonald were assigned a greater significance by McDonald than any other in
deriving its opinion.
Comparable Company Analysis: McDonald reviewed and compared actual stock
market data and actual and estimated selected financial information for First
Financial with corresponding information for 10 publicly-traded midwestern
thrifts with assets between $1 billion and $15 billion and with returns on
average assets ("ROAA") ranging from 0.90% to 1.60% (the "First Financial Peer
Group"). The First Financial Peer Group included: Anchor BanCorp Wisconsin,
Inc., Madison, WI; Charter One Financial, Inc., Cleveland, OH; Commercial
Federal Corporation, Omaha, NE; D & N Financial Corporation, Hancock, MI;
First Federal Capital Corp., La Crosse, WI; First Indiana Corporation,
Indianapolis, IN; FirstFederal Financial Services Corp, Wooster, OH; Great
Financial Corporation, Louisville, KY; MAF Bancorp, Inc., Clarendon Hills, IL,
and St. Paul Bancorp, Inc., Chicago, IL.
The analysis of the First Financial Peer Group indicated, among other
things, that, based on market prices as of May 12, 1997 and the latest
publicly-available financial data, (i) the mean and median multiples of price
to respective last twelve months' earnings were 13.7 and 12.9, respectively,
as compared to 14.1 for First Financial, (ii) the mean and median multiples of
price to estimated 1997 earnings were 12.3 and 11.9, respectively, as compared
to 12.5 for First Financial, (iii) the mean and median multiples of price to
tangible book value were 194% and 183%, respectively, as compared to 253% for
First Financial, (vi) the mean and median dividend yields were 1.5% and 1.6%,
respectively, as compared to 2.2% for First Financial, (v) the mean and median
ROAA ratios were 1.04% and 1.00%, respectively, as compared to 1.31% for First
Financial, (vi) the mean and median return on average equity ("ROAE") ratios
were 14.81% and 14.89%, respectively, as compared to 17.98% for First
Financial, (vii) the mean and median ratios of tangible equity to assets were
7.04% and 6.63%, respectively, as compared to 6.79% for First Financial,
(viii) the mean and median ratios of non-performing assets plus 90-days past
due loans to assets were .90% and .49%, respectively, as compared to .29% for
First Financial, (ix) the mean and median ratios of loan loss reserve to non-
performing loans plus 90-day past due loans were 186% and 136%, respectively,
as compared to 186% for First Financial, and (x) the mean and median
efficiency ratios were 57% and 60%, respectively, as compared to 47% for First
Financial.
McDonald also reviewed and compared actual stock market data and actual and
estimated selected financial information for Associated with corresponding
information for twenty five publicly-traded midwestern banks with assets
between $1 billion and $15 billion and with ROAA, ranging from 1.0% to 1.7%
(the "Associated
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Peer Group"). The Associated Peer Group included: Area Bancshares Corporation,
Owensboro, KY; Chemical Financial Corporation, Midland, MI; Citizens Banking
Corporation, Flint, MI; Commerce Bancshares, Inc., Kansas City, MO; Community
First Bankshares, Inc., Fargo, ND; Community Trust Bancorp., Inc., Pikeville,
KY; F&M Bancorporation, Inc., Kaukauna, WI; First Commerce Bancshares, Inc.,
Lincoln, NE; First Financial Bancorp., Hamilton, OH; First Financial
Corporation, Terre Haute, IN; First Midwest Bancorp Inc., Itasca, IL;
Firstbank of Illinois Co., Springfield, IL; FirstMerit Corporation, Akron, OH;
Fort Wayne National Corporation, Fort Wayne, IN; Heritage Financial Services,
Inc., Tinley Park, IL; Magna Group, Inc., St. Louis, MO; Mid-America Bancorp,
Louisville, KY; Mid Am, Inc., Bowling Green, OH; Mississippi Valley
Bancshares, St. Louis, MO; National City Bancshares, Inc., Evansville, IN; Old
National Bancorp, Evansville, IN; Peoples First Corporation, Paducah, KY;
Provident Bancorp, Inc., Cincinnati, OH; Republic Bancorp Inc., Owosso, MI;
and TCF Financial Corp., Minneapolis, MN.
The analysis of the Associated Peer Group indicated, among other things,
that, based on market prices as of May 12, 1997 and the latest publicly-
available financial data, (i) the mean and median multiples of price to
respective last twelve months' earnings were 15.5 and 15.1, respectively, as
compared to 14.2 for Associated, (ii) the mean and median multiples of price
to estimated 1997 earnings were 13.9 and 13.4, respectively, as compared to
13.6 for Associated, (iii) the mean and median multiples of price to book
value were 206% and 196%, respectively, as compared to 208% for Associated,
(vi) the mean and median dividend yields were both 2.5%, as compared to 3.1%
for Associated, (v) the mean and median ROAA ratios were 1.27% and 1.29%,
respectively, as compared to 1.38% for Associated, (vi) the mean and median
ROAE ratios were 13.9% and 13.7%, respectively, as compared to 15.3% for
Associated, (vii) the mean and median ratios of equity to assets were 9.30%
and 9.22%, respectively, as compared to 9.14% for Associated, (viii) the mean
and median ratios of non-performing assets plus 90-days past due loans to
assets were .58% and .60%, respectively, as compared to .46% for Associated,
(ix) the mean and median ratios of loan loss reserve to non-performing loans
plus 90-day past due loans were 238% and 198%, respectively, as compared to
259% for Associated, and (x) the mean and median efficiency ratios were 57%
and 56%, respectively, as compared to 57% for Associated.
McDonald also reviewed and compared actual stock market data and actual and
estimated selected financial information for twenty three publicly-traded
midwestern banks with ROAEs greater than 16.0% (the "High-performance Peer
Group"). Based on pro forma earnings and equity levels, excluding one-time
merger related charges, the post-merger Associated will have an ROAE of
greater than 16.0%. The High-performance Peer Group included: Banc One
Corporation, Columbus, OH; Belmont Bancorp., Bridgeport, OH; Citizens
Bancshares, Inc., Salineville, OH; Comerica Incorporated, Detroit, MI; Corus
Bankshares, Inc., Chicago, IL; Fifth Third Bancorp, Cincinnati, OH; First Bank
System, Inc., Minneapolis, MN; First Chicago NBD Corporation, Chicago, IL;
Firstar Corporation, Milwaukee, WI; Huntington Bancshares Incorporated,
Columbus, OH; Irwin Financial Corporation, Columbus, IN; KeyCorp, Cleveland,
OH; Marshall & Ilsley Corporation, Milwaukee, WI; Mississippi Valley
Bancshares, St. Louis, MO; National City Corporation, Cleveland, OH; Northern
Trust Corporation, Chicago, IL; Norwest Corporation, Minneapolis, MN; Old Kent
Financial Corporation, Grand Rapids, MI; Park National Corporation, Newark,
OH; Provident Bancorp, Inc., Cincinnati, OH; S.Y. Bancorp, Inc., Louisville,
KY; Star Banc Corporation, Cincinnati, OH; and TCF Financial Corp.,
Minneapolis, MN.
The analysis of the High-performance Peer Group indicated, among other
things, that, based on market prices as of May 12, 1997 and the latest
publicly-available financial data, (i) the mean and median multiples of price
to respective last twelve months' earnings were 16.2 and 15.7, respectively,
(ii) the mean and median multiples of price to estimated 1997 earnings were
14.7 and 13.9, respectively, (iii) the mean and median multiples of price to
book value were 283% and 279%, (iv) the mean and median dividend yields were
both 2.3%, (v) the mean and median ROAA ratios were 1.52% and 1.49%,
respectively, (vi) the mean and median ROAE ratios were 18.2% and 18.0%,
respectively, (vii) the mean and median ratios of equity to assets were 8.2%
and 8.1%, respectively, (viii) the mean and median ratios of non-performing
assets plus 90-days past due loans to assets were .61% and .54%, respectively,
(ix) the mean and median ratios of loan loss reserve to non-
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performing loans plus 90-day past due loans were 264% and 248%, respectively,
and (x) the mean and median efficiency ratios were 54% and 55%, respectively.
Comparable Transactions Analysis: McDonald reviewed and compared actual
information for comparable pending or closed transactions it deemed pertinent
to the Merger, including (i) 10 merger-of-equals transactions (the "MOE
Transactions"), and (ii) 25 transactions involving thrift sellers with assets
greater than $1 billion (the "Thrift Transactions").
The MOE Transactions were: Pinnacle Financial Services, Inc., St. Joseph,
MI/Indiana Federal Corporation, Valparaiso, IN; Hinsdale Financial
Corporation, Hinsdale, IL/Liberty Bancorp, Inc., Chicago, IL; Northern
Illinois Financial Corporation, Wauconda, IL/Premier Financial Services, Inc.,
Freeport, IL; Chemical Banking Corporation, New York, NY/Chase Manhattan
Corporation, New York, NY; First Chicago Corporation, Chicago, IL/NBD Bancorp,
Inc., Detroit, MI; Charter One Financial, Inc., Cleveland, OH/FirstFed
Michigan Corporation, Detroit, MI; Southern National Corporation, Winston-
Salem, NC/BB&T Financial Corporation, Wilson, NC; Dime Bancorp, Inc., New
York, NY/Anchor Bancorp, Inc., Hewlett, NY; American Federal Bank, Greenville,
SC/United Financial Corporation-SC, Greenwood, SC; KeyCorp, Cleveland,
OH/Society Corporation, Cleveland, OH.
The analysis of the MOE Transactions indicated, among other things, that,
based on the announced transaction value, (i) the average and median multiples
of transaction value to respective last twelve months earnings were 11.5 and
10.8 times, respectively, as compared to an implied valuation of 20.9 times
First Financial earnings in this transaction (15.2 times if the impact of the
one-time SAIF assessment is excluded); (ii) the average and median ratios of
transaction value to book value were 137% and 136%, respectively, as compared
to an implied valuation of 263% of First Financial book value; (iii) the
average and median ratios of transaction value to tangible book value were
160% and 145%, respectively, as compared to an implied valuation of 270% of
First Financial tangible book; and (iv) the average and median ratios of
transaction value to total assets were 9.9% and 9.6%, respectively, as
compared to an implied valuation of 18.4% of First Financial total assets.
The Thrift Transactions were (seller in italics): Astoria Financial
Corporation, Lake Success, NY/Greater New York Savings Bank, New York, NY; TCF
Financial Corporation, Minneapolis, MN/Standard Financial, Inc., Chicago, IL;
Marshall & Ilsley Corporation, Milwaukee, WI/Security Capital Corporation,
Milwaukee, WI; Summit Bancorp, Inc., Princeton, NJ/Collective Bancorp, Inc.,
Egg Harbor, NJ; CCB Financial Corporation, Durham, NC/American Federal Bank,
Greenville, SC; Sovereign Bancorp, Inc., Wyomissing, PA/Bankers Corporation,
Perth Amboy, NJ; Mercantile Bancorporation, Inc., St. Louis, MO/Roosevelt
Financial, Inc., Chesterfield, MO; Temple-Inland Inc, Dibol, TX/California
Financial Corporation, Stockton, CA; Webster Financial Corporation, Waterbury,
CT/DS Bancor, Inc., Derby, CT; UST Corporation, Boston, MA/Walden Bancorp,
Inc., Acton, MA; HSBC Holdings PLC, London, England/First Federal Savings &
Loan Association-Rochester, Rochester, NY; North Fork Bancorp, Inc., Melville,
NY/North Side Savings Bank, Floral Park, NY; First Union Corporation,
Charlotte, NC/Center Financial Corporation, Waterbury, CT; First Union
Corporation, Charlotte, NC/Home Financial Corporation, Hollywood, FL;
NationsBank Corporation, Charlotte, NC/TAC Bancshares, Inc., Miami, FL; Union
Planters Corporation, Memphis, TN/Leader Financial Corporation, Memphis, TN;
Norwest Corporation, Minneapolis, MN/Primerit Bank FSB, Las Vegas, NV;
Standard Federal Bank, Troy, MI/Bell Bancorp, Inc., Chicago, IL; MAF Bancorp,
Inc., Clarendon Hills, IL/N.S. Bancorp, Inc., Chicago, IL; First Union
Corporation, Charlotte, NC/Society First FSB, Ft. Myers, FL; SouthTrust
Corporation, Birmingham, AL/Bankers First Corporation, Augusta, GA; Bank of
Boston Corporation, Boston, MA/Boston Bancorp, Inc., South Boston, MA;
Republic New York, New York, NY/Brooklyn Bancorp, Inc., Brooklyn, NY; Norwest
Corporation, Minneapolis, MN/AMFED Financial, Inc., Reno, NV; NationsBank
Corporation, Charlotte, NC/CSF Holdings, Miami, FL.
The analysis of the Thrift Transactions indicated, among other things, that,
based on the announced transaction value, (i) the average and median multiples
of transaction value to respective last twelve months earnings were 19.2 and
16.2 times, respectively, as compared to an implied valuation of 20.9 times
First
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Financial earnings in this transaction (15.2 times if the impact of the one-
time SAIF assessment is excluded); (ii) the average and median ratios of
transaction value to book value were 160% and 163%, respectively, as compared
to an implied valuation of 263% of First Financial book value; (iii) the
average and median ratios of transaction value to tangible book value were
171% and 155%, respectively, as compared to an implied valuation of 270% of
First Financial tangible book; and (iv) the average and median ratios of
transaction value to total assets were 15.0% and 13.6%, respectively, as
compared to an implied valuation of 18.4% of First Financial total assets.
Contribution Analysis: McDonald analyzed the contribution of each of First
Financial and Associated to the pro forma assets, gross loans, deposits,
equity, tangible equity, LTM earnings (excluding the one-time SAIF
assessment), 1997 estimated earnings, 1998 estimated earnings, and market
value. This analysis showed that First Financial contributed approximately
56.6% of assets, 51.9% of gross loans, 56.3% of deposits, 49.9% of equity,
51.0% of tangible equity, 55.2% of LTM earnings (excluding the one-time SAIF
assessment), 56.8% of 1997 estimated earnings, 56.3% 1998 estimated earnings,
and 54.6% of market value. The Exchange Ratio implies that First Financial
shareholders will own approximately 55.0% of pro forma shares outstanding upon
completion of the Merger.
Accretion/Dilution Analysis: On the basis of long-term financial projections
prepared by McDonald, with the assistance of both of the management teams, and
estimates of on-going cost savings accruing to the pro forma company, as well
as one-time costs related to the transaction, provided to McDonald by
management, McDonald compared pro forma earnings, cash dividends, book value
and tangible book value to the stand-alone projections.
The accretion/dilution analysis showed, among other things, that the Merger
would result in (i) dilution to 1997 earnings, after the impact of the
transaction related expenses, of approximately 26.6%, and accretion ranging
from .9% to 2.2% over the next four years; (ii) accretion to estimated cash
dividends ranging from 60.0% to 63.6%; (iii) dilution to book value ranging
from 2.2% to 6.9%; and (iv) dilution to tangible book value ranging from 2.2%
to 8.2%.
Discounted Cash Flow Analysis: McDonald performed discounted cash flow
analyses with regard to First Financial on a stand-alone basis and with regard
to the pro forma Associated, based on the above-mentioned long-term
projections, savings and costs. These analyses utilized a discount rate of 15%
and terminal multiples applied to calendar year 2001 projected earnings
ranging from 14.0 to 16.2, the median multiple to LTM earnings for the above-
mentioned Thrift Transactions. The analyses resulted in ranges of present
values of $26.07 to $29.88 per share on a stand-alone basis and of $28.94 to
$32.63 per First Financial share on a pro forma combined basis.
Other Analyses: McDonald also reviewed certain other information including
selected pro forma industry rankings, the institutional and inside ownership
of First Financial Common Stock and Associated Common Stock and the historical
performance, trading volume and other relevant market information of First
Financial Common Stock and Associated Common Stock.
No other company used as a comparison in the above analyses is identical to
First Financial, Associated or the combined entity and no other transaction is
identical to the Merger. Accordingly, an analysis of the results of the
foregoing is not purely mathematical; rather, it involves complex
considerations and judgments concerning differences in financial market and
operating characteristics of the companies and other factors that could affect
the public trading volume of the companies to which First Financial,
Associated and the combined entity are being compared.
For its financial advisory services provided to First Financial, McDonald
will be paid a fee of 0.5% of the transaction value upon closing of the
Merger. Based on the closing price of Associated common stock on July 31,
1997, the fee to McDonald would be approximately $5.8 million. In addition,
First Financial has agreed to reimburse McDonald for all reasonable out-of-
pocket expenses, not to exceed $20,000, incurred by it on First
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Financial's behalf, as well as indemnify McDonald against certain liabilities,
including any which may arise under the federal securities laws.
McDonald is a member of all principal securities exchanges in the United
States; and its conduct of its broker-dealer activities has from time to time
purchased securities from, and sold securities to, First Financial and/or
Associated. As a market maker, McDonald may also have purchased and sold the
securities of First Financial and/or Associated for McDonald's own account and
for the accounts of its customers.
Accounting Treatment
It is a condition to the consummation of the Merger that the Merger 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 First Financial will be carried forward to the combined
corporation at their recorded historical amounts, income of the combined
corporation will include income of Associated and First Financial for the
entire fiscal year in which the Merger occurs and the reported income of the
separate corporations for all prior periods will be combined and restated as
income of the combined corporation for all such periods.
Form of the Merger
Subject to the terms and conditions of the Merger Agreement and in
accordance with the Wisconsin Business Corporation Law (the "WBCL"), at the
Effective Time, it is presently contemplated that the Merger will be effected
by merging Badger Merger Corp. with First Financial. The parties have agreed
that Associated may at any time elect to modify the structure of the Merger so
long as (i) there are no material adverse federal income tax consequence to
First Financial shareholder as a result of such modification, (ii) the
consideration to be paid to the First Financial shareholders is not thereby
changed or reduced in any amount and (iii) such modification will not be
reasonably likely to delay materially or jeopardize receipt of any required
regulatory approvals. The resulting corporate structure will be Associated
continuing as the multi-bank holding company of its current Associated banks
and other subsidiaries, as well as FF Bank and First Financial's other
subsidiaries. The Associated Articles and Bylaws immediately prior to the
Merger will continue to be the Articles and Bylaws of Associated following the
Merger. At the Effective Time, the Articles of Incorporation and the Bylaws of
Badger Merger Corp. will become the Articles of Incorporation and Bylaws of
First Financial.
Merger Consideration
At the Effective Time, each outstanding share of First Financial Common
Stock, other than certain shares owned by Associated or First Financial, will
be converted into the right to receive .765 (the "Exchange Ratio") fully paid
and nonassessable (except as otherwise provided in the WBCL) shares of
Associated Common Stock (except that cash will be paid in lieu of fractional
shares). As of the Effective Time, all such shares of First Financial Common
Stock shall automatically be cancelled and retired and will cease to exist and
each holder of a certificate representing shares of First Financial Common
Stock will cease to have any rights in respect thereof.
Any shares of First Financial Common Stock owned by Associated or First
Financial (other than shares of First Financial Common Stock held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held
in a fiduciary or custodial capacity that are beneficially owned by third
parties or shares held in respect of debt previously contracted) will be
cancelled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
Conversion of Shares; Procedures for Exchange of Certificates; Fractional
Shares
The conversion of First Financial Common Stock into the right to receive
Associated Common Stock will occur automatically at the Effective Time. As
soon as practicable after the Effective Time, Harris Trust & Savings Bank, as
the exchange agent (the "Exchange Agent"), will send a transmittal letter to
each First Financial shareholder. The transmittal letter will contain
instructions with respect to obtaining shares of Associated Common Stock in
exchange for shares of First Financial Common Stock.
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FIRST FINANCIAL SHAREHOLDERS SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH
THE ENCLOSED PROXY CARD. IF THE MERGER IS CONSUMMATED, STOCK CERTIFICATES
SHOULD BE DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF
TRANSMITTAL WHICH WILL BE SENT TO FIRST FINANCIAL SHAREHOLDERS BY THE EXCHANGE
AGENT PROMPTLY AFTER THE EFFECTIVE TIME OF THE MERGER.
After the Effective Time, each certificate that previously represented
shares of First Financial Common Stock will represent only the right to
receive the Associated Common Stock into which such shares were converted in
the Merger and the right to receive cash in lieu of fractional shares of
Associated Common Stock as described below.
Holders of certificates representing First Financial Common Stock will not
receive dividends or other distributions declared or made with respect to
Associated Common Stock until such certificates are surrendered to the
Exchange Agent for exchange. Following the surrender of any such certificates,
any unpaid dividends and other distributions made with respect to Associated
Common Stock will be paid without interest.
In the event of a transfer of ownership of First Financial Common Stock
which is not registered in the transfer records of First Financial, a
certificate representing the proper number of shares of Associated Common
Stock may be issued to a transferee if the certificate representing such First
Financial Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that
any applicable stock transfer taxes have been paid.
All shares of Associated Common Stock issued upon conversion of shares of
First Financial Common Stock (including any cash paid in lieu of fractional
shares) will be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of First Financial Common Stock.
No fractional shares of Associated Common Stock will be issued to any First
Financial shareholder upon the surrender for exchange of certificates
representing First Financial Common Stock. Promptly after the Effective Time,
each holder of a fractional share interest will be paid an amount in cash
equal to the product obtained by multiplying (i) the fractional share interest
to which such holder (after taking into account all fractional share interests
then held by such holder) would otherwise be entitled to receive by (ii) the
closing sale price of a share of Associated Common Stock on the Nasdaq
National Market tier of the Nasdaq Stock Market (the "Nasdaq National Market")
on the trading day immediately preceding the date of the Effective Time (the
"Closing Date"). No interest will be paid on any cash amounts paid in lieu of
fractional shares.
Effective Time
The effective time will be the time of the filing of the Articles of Merger
with the Secretary of State of the State of Wisconsin (the "Effective Time").
The filing of the Articles of Merger will occur as soon as practicable, but no
later than the third business day after the last to occur of the following
events: (i) the receipt of the necessary shareholder approvals required by the
Merger Agreement; (ii) the receipt of the necessary regulatory approvals and
expiration of any applicable waiting period; and (iii) satisfaction of the
conditions to the consummation of the Merger set forth in the Merger
Agreement, unless another date is agreed to by Associated and First Financial.
Stock Exchange Listings
It is a condition to the consummation of the Merger that the Associated
Common Stock issued pursuant to the Merger be authorized for listing on the
Nasdaq National Market, subject to official notice of issuance.
Material Federal Income Tax Consequences
General. In the opinion of Shearman & Sterling, special counsel to
Associated, the following discussion, subject to the limitations set forth
herein, describes the material federal income tax consequences of the Merger.
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The discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), U.S. treasury regulations promulgated thereunder, and judicial
and administrative interpretations thereof, all as in effect on the date of
this Joint Proxy Statement/Prospectus, and is subject to any changes in these
or other laws occurring after such date. The discussion does not address the
effects of any state, local or foreign tax laws.
The tax consequences of the Merger to an individual shareholder may vary
depending upon such shareholder's particular situation, and certain
shareholders (particularly any shareholder who, at the Effective Time, is not
a U.S. Person, is a tax-exempt entity, securities dealer, broker-dealer,
insurance company or financial institution or is an individual who acquired
his or her First Financial Common Stock pursuant to an employee stock option
or otherwise as compensation) may be subject to special rules not discussed
below. For these purposes, a U.S. Person is (1) a citizen or resident of the
United States for U.S. federal income tax purposes, (2) a corporation or
partnership created or organized in or under the laws of the United States or
any political subdivision thereof, (3) an estate, the income of which is
subject to U.S. federal income tax regardless of the source or (4) a trust
with respect to which a court within the United States is able to exercise
primary supervision over its administration and one or more U.S. fiduciaries
have the authority to control all its substantial decisions.
EACH FIRST FINANCIAL SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE MERGER,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX
LAWS, AND OF CHANGES IN ANY APPLICABLE TAX LAWS.
The obligations of the parties to consummate the Merger are conditioned on
Associated's and First Financial's receipt of an opinion of Shearman &
Sterling, special counsel to Associated, that (1) the Merger will be treated
for federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code and (2) Associated, Badger Merger
Corp. and First Financial will each be a party to that reorganization within
the meaning of Section 368(b) of the Code. Shareholders should be aware that
an opinion of counsel is not binding on the IRS or the courts. Shareholders
should also be aware that the opinion of Shearman & Sterling will be based on
current law and on certain representations regarding factual matters made by
Associated and First Financial which, if incorrect in certain material
respects, might jeopardize the conclusions reached by counsel in its opinion.
Assuming that the Merger will qualify as a reorganization within Section
368(a) of the Code, the Merger will have the federal income tax consequences
discussed below.
Tax Implications to First Financial Shareholders. Except to the extent First
Financial shareholders receive cash in lieu of a fractional share interest,
First Financial shareholders who exchange First Financial Common Stock in the
Merger for Associated Common Stock will not recognize gain or loss for federal
income tax purposes upon the receipt of Associated Common Stock in exchange
for their First Financial Common Stock. The aggregate tax basis of Associated
Common Stock received as a result of the Merger will be the same as the
shareholder's aggregate tax basis in the First Financial Common Stock
surrendered in the exchange, reduced by the portion of the shareholder's tax
basis properly allocated to the fractional share interest, if any, for which
the shareholder receives cash. The holding period of the Associated Common
Stock received by First Financial shareholders as a result of the Merger will
include the period during which the shareholder held the First Financial
Common Stock exchanged in the Merger, provided that the First Financial Common
Stock so exchanged were held as capital assets at the Effective Time. A First
Financial shareholder that receives cash in lieu of a fractional share
interest in Associated Common Stock in the Merger will be treated as having
received the fractional share interest in Associated Common Stock in the
Merger and as having received the cash in redemption of the fractional share
interest. The cash payment will be treated as a distribution in payment of the
fractional interest deemed redeemed under Code Section 302, with the result
that the First Financial shareholder should generally recognize gain or loss
on the deemed redemption in an amount equal to the difference between the
amount of cash received and the shareholder's adjusted tax basis allocable to
such fractional share. Such gain or loss will be capital gain or loss if such
shareholder's First Financial Common Stock are held as a capital
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asset at the Effective Time. Recently enacted legislation provides different
capital gains rates for individuals depending on such person's holding period.
For individuals, capital gains will be taxed at rates that vary depending upon
whether the holding period of the stock exchanged was one year or less, more
than one year but not more than 18 months, or more than 18 months.
Tax Implications to Associated and First Financial. Associated and First
Financial will not recognize any gain or loss for federal income tax purposes
as a result of the Merger.
Backup Withholding. Under the U.S. backup withholding rules, a holder of
First Financial Common Stock may be subject to backup withholding at the rate
of 31%, unless the shareholder (1) is a corporation or comes within certain
other exempt categories and, when required, demonstrates this fact or (2)
provides a correct taxpayer identification number, certifies that such
shareholder is not subject to backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. Any amount withheld
under these rules will be credited against the shareholder's federal income
tax liability. Associated may require holders of First Financial Common Stock
to establish an exemption from backup withholding or to make arrangements
which are satisfactory to Associated to provide for the payment of backup
withholding. A shareholder that does not provide Associated with its current
taxpayer identification number may be subject to penalties imposed by the IRS.
Regulatory Approvals Required
Federal Reserve Board. The Merger is subject to prior approval by the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board") under
Section 4(c)(8) of the Bank Holding Company Act of 1956, as amended (the
"BHCA"). With respect to the Merger, Associated, as an acquiring bank holding
company, is required to file a notice with the Federal Reserve Board which
describes the Merger proposal and the proposed activities of the combined
entity, the effect of the proposal on competition among entities that engage
in such activities, the identity of the parties involved in the transaction,
including subsidiaries of the parties, a description of the public benefits
which may be expected from the proposal, a description of the terms of the
transactions, the sources of funds for the transaction and other financial and
managerial information. In determining whether to approve transactions such as
the Merger, the Federal Reserve Board is directed by statute to consider
whether the transactions can be expected to produce benefits to the public,
such as greater convenience, increased competition or gains in efficiency that
outweigh possible adverse effects, such as undue concentration of resources,
decreased competition, conflicts of interest or unsound banking practices. The
Federal Reserve Board is also required to evaluate the financial and
managerial resources of Associated and First Financial and the effect of the
Merger on those resources. The Federal Reserve Board also has the authority to
deny a notice if it should conclude that the acquiring organization does not
comply with the requirements of the Community Reinvestment Act of 1977, as
amended.
The regulations of the Federal Reserve Board provide for the publication of
notice and the opportunity for public comment relating to the notice for
approval discussed above. The decision of the Federal Reserve Board on the
Merger is subject to judicial review by any aggrieved party. A requirement of
a hearing or a judicial review of the decision of the Federal Reserve Board
could delay or prevent the completion of the Merger. The Merger may not be
consummated until after Federal Reserve Board approval is obtained.
Associated and First Financial believe that the Merger does not raise
antitrust or other significant regulatory concerns and that any divestitures
that may be required in order to consummate the Merger will not be material to
the financial condition or results of operations of Associated or First
Financial prior to the Effective Time, or Associated after the Effective Time.
There can be no assurance that the Federal Reserve Board will approve the
Merger, and if the Merger is approved, there can be no assurance as to the
date of such approval. There can likewise 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 Merger may not be consummated until after Federal
Reserve Board approval is obtained and may not be consummated later than three
months after the date of Federal Reserve Board approval unless the Federal
Reserve Board extends such three-month period.
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Associated filed a notice for approval of the Merger under the BHCA with the
Federal Reserve Bank of Chicago (the "Federal Reserve Bank") on July 11, 1997.
Under the regulations of the Federal Reserve Board, the Federal Reserve Board
is to act on the notice within a 60-day period beginning on the date the
notice is accepted for processing (a period that may be tolled or extended by
any public comments or other circumstances that may trigger further requests
for information from the Federal Reserve Bank). There can be no assurance that
the Federal Reserve Bank will process the notice under delegated authority.
Associated's and First Financial's right to exercise their respective
options under the Stock Option Agreements are also subject to the prior
approval of the Federal Reserve Board, to the extent that the exercise of
their respective options under the Stock Option Agreements would result in
Associated owning more than 5% of the outstanding shares of First Financial
Common Stock or First Financial owning 10% or more of the outstanding
Associated Common Stock. In considering whether to approve Associated's or
First Financial's respective right to exercise its option, including
Associated's right to purchase more than 5% of the outstanding shares of First
Financial Common Stock or First Financial's right to purchase 10% or more of
Associated Common Stock, the Federal Reserve Board would generally apply the
same statutory criteria it would apply to its consideration of approval of the
Merger in the case of the First Financial Option, and the comprehensive
criteria applicable to the acquisition of control of Associated under the
Change in Bank Control Act (the "Control Act") in the case of the Associated
Option.
Wisconsin. The Merger is also subject to the prior approval by the
Department of Financial Institutions of the State of Wisconsin (the "Wisconsin
DFI") under Section 221.0901 of the Wisconsin Statutes which requires that the
Wisconsin DFI 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 DFI on July 11, 1997.
There can be no assurance that the Wisconsin DFI will approve the Merger, and
if the Merger is approved, there can be no assurance as to the date of such
approval. The Merger may be consummated at any time within one year of the
date approval is granted by the Wisconsin DFI (subject to the foregoing
federal approvals).
Office of Thrift Supervision. As a bank holding company, pursuant to The
Economic Growth and Regulatory Paperwork Act of 1996 (the "1996 Act"),
Associated is exempt from the requirement under the Savings and Loan Holding
Company Act that the Office of Thrift Supervision (the "OTS") approve the
Merger. As a result of the exemption, it is anticipated that Associated will
not file a regulatory application or notice for prior approval of the Merger
with the OTS. The 1996 Act directs the Federal Reserve Board to consult with
the OTS in considering bank holding company acquisitions of thrifts. There can
be no assurance that the OTS will not comment on the notice filed with the
Federal Reserve, or if the OTS comments on such notice, that the comments will
not delay the processing of the notice by the Federal Reserve Board.
Office of the Comptroller of the Currency. FF Bank's wholly owned
subsidiary, First Financial Card Services Bank, N.A., is a credit card bank
chartered as a national bank. The Office of the Comptroller of the Currency
(the "OCC") has indicated that the Merger meets the exceptions of 12 C.F.R.
(S) 5.50 with respect to filing an application for approval pursuant to the
Control Act in connection with the Merger. As a result of the exemption, it is
anticipated that Associated will not file a regulatory application or notice
for prior approval of the Merger with the OCC. The Federal Reserve Board is to
consult with the OCC in considering the Merger. There can be no assurance that
the OCC will not comment on the notice filed with the Federal Reserve Board,
or if the OCC comments on such notice, that the comments will not delay the
processing of the notice by the Federal Reserve Board.
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Other Consents
Consummation of the Merger may require the consent of, or waiver from, other
parties to certain agreements to which either Associated and First Financial
is a party and may constitute a default resulting in termination, cancellation
or acceleration thereunder if such consents or waivers are not obtained.
Pursuant to the Merger Agreement, the parties agreed to use their reasonable
efforts to obtain all consents, licenses, permits, waivers, approvals,
authorizations or orders of all third parties and government entities that are
necessary for the consummation of the Merger.
General
Associated and First Financial 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 MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVALS. THERE CAN BE NO ASSURANCE THAT SUCH REGULATORY APPROVALS WILL BE
OBTAINED OR AS TO THE DATES OF ANY SUCH REQUISITE REGULATORY APPROVALS. THERE
ALSO CAN BE NO ASSURANCE THAT SUCH APPROVALS WILL NOT CONTAIN A CONDITION OR
REQUIREMENT WHICH CAUSES SUCH APPROVALS TO FAIL TO SATISFY THE CONDITIONS SET
FORTH IN THE MERGER AGREEMENT OR THAT WOULD CAUSE THE PARTIES TO TERMINATE THE
MERGER AGREEMENT.
Treatment of Stock Options Outstanding Under First Financial Stock Plans
At the Effective Time, each option granted by First Financial to purchase
shares of First Financial Common Stock which is outstanding and unexercised
will be assumed by Associated. Such options shall cease to represent a right
to acquire such shares and will be converted automatically into an option to
purchase shares of Associated Common Stock in an amount and at an exercise
price determined as provided below:
(i) the number of shares of Associated Common Stock to be subject to the
new option shall be equal to the product of the number of shares of First
Financial Common Stock subject to the original option and .765; provided
that any fractional shares of Associated Common Stock resulting from such
multiplication shall be rounded down to the nearest whole share; and
(ii) the exercise price per share of Associated Common Stock under the
new option shall be equal to the exercise price per share of First
Financial Common Stock under the original option divided by .765; provided
that such exercise price shall be rounded up to the nearest whole cent.
Certain Transactions; Conflicts of Interest
Certain members of Associated's and First Financial's Boards and management
have interests in the Merger in addition to their interests solely as First
Financial shareholders, as described below.
Board of Directors. The Merger Agreement provides that, at the Effective
Time, the Associated Board shall consist of a total of fourteen directors,
consisting of (i) seven individuals, including Harry B. Conlon, Jr., who are
currently directors of Associated and (ii) seven individuals, including John
C. Seramur, to be selected by the First Financial Board (subject to the
approval of the Associated Board, such approval not to be unreasonably
withheld) from the current First Financial Board. Following the Merger, the
Associated Board will be divided into three classes, two of which classes
shall be of five persons each (one of which shall have three current directors
of Associated and two current directors of First Financial, and the other of
which shall have two current directors of Associated and three current
directors of First Financial) and one class of four persons
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(two of whom shall be current directors of Associated and the other two of
whom shall be current directors of First Financial).
Associated Management. At the Effective Time, Associated's Chief Executive
Officer, Harry B. Conlon, will become Chairman and Chief Executive Officer.
John C. Seramur, First Financial's Chief Executive Officer, will be named Vice
Chairman. Robert C. Gallagher will continue as Vice Chairman. To date,
Associated and First Financial have not decided who, in addition to the above
named individuals, will be designated to serve as executive officers of
Associated.
Work Force Management Plan. Associated maintains the Work Force Management
Plan, which provides for severance payments in the event that an employee is
terminated by Associated for reason of reduction in work force, elimination of
the employee's position or the closing of a department or plant where the
employee was located. Pursuant to the Merger Agreement this plan is to be
amended to provide increased severance benefits during the two year period
immediately following the Effective Time. Under the amended Work Force
Management Plan, executive officers of Associated as well as certain officers
of First Financial and First Financial subsidiaries will be eligible to
receive up to 48 weeks of base salary and six months of health care benefits
continuation upon termination of employment in conjunction with the Merger.
See "Certain Provisions of the Merger Agreement--Employee Benefits and Plans--
Amendment to the Work Force Management Plan."
First Financial Change of Control Arrangements. In accordance with the terms
of First Financial's Directors' Retirement Plan (the "Retirement Plan"), as a
result of the Merger and the related transactions, the Retirement Plan will be
terminated and the directors of First Financial will receive a lump sum
payment based on the maximum monthly plan benefits, without reduction on
account of vesting or age; provided, however, that such benefits will be
limited to the extent they otherwise would constitute an excess parachute
payment for federal income tax purposes. The current maximum lump sum payment
benefit would be $378,000. Under circumstances where the limitation applies,
non-employee directors can choose either to receive a reduced lump sum
payment, or monthly payments having a present value equal to the reduced
amount. The limitation impacts each current non-employee director other than
Robert S. Gaiswinkler. In addition to the foregoing, one director, Arlyn G.
West, is expected to enter into a three year consulting agreement paying him
$45,000 annually for providing real estate appraisal related services to First
Financial's appraisal subsidiary.
Also as a result of the Merger, and pursuant to existing employment and
severance agreements of First Financial, as modified by the Merger Agreement,
severance payments will be made to certain executive officers of First
Financial if they are terminated other than for cause (as defined in the
Merger Agreement) or resign for good reason (as defined in the Merger
Agreement), provided that under any circumstances (unless they are terminated
for cause or resign without good reason), such payments will be paid no later
than two years after the Effective Time even if such persons are still
employed by Associated or any of its subsidiaries. These payments, which are
limited to the maximum amount that can be paid without adverse tax
consequences under Section 280G of the Code, will be based on two times
(except for Mr. Seramur, in which case it is three times) the average annual
compensation that was paid by First Financial and subsidiaries and includable
in their gross income for federal tax purposes for the calendar years 1992
through 1996. Assuming an Effective Time prior to year end 1997, the cash
payments to each of Messrs. John C. Seramur, Harry K. Hammerling, Donald E.
Peters, Robert M. Salinger, Thomas H. Neuschaefer and Kenneth F. Csinicsek
will be approximately $2.9 million, $372,000, $519,000, $411,000, $299,000 and
$209,000, respectively. Such persons also will be eligible for paid health
care coverage for 24 months following termination (in addition to the right to
pay for coverage for 12 months thereafter), and continuation of fringe
benefits, and all unvested options will vest at the Effective Time. Also,
under the terms of First Financial's Supplemental Executive Retirement Plan,
Mr. Seramur will receive an annual annuity for ten years certain or life of
approximately $157,000, and each of Messrs. Hammerling, Peters, Salinger and
Neuschaefer will receive an annual annuity for ten years of approximately
$14,000, $20,000, $18,000 and $33,000, respectively.
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Appraisal and Dissenters' Rights
In accordance with the WBCL, there will be no appraisal rights available to
holders of Associated Common Stock in connection with the Merger because
Associated shareholders do not need to approve the Merger.
In accordance with the WBCL, there will be no appraisal right available to
holders of First Financial Common Stock in connection with the Merger because
the First Financial Common Stock is quoted on the Nasdaq National Market.
Resale of Associated Common Stock
The Associated Common Stock issued pursuant to the Merger will not be
subject to any restrictions on transfer arising under the Securities Act of
1933 (the "Securities Act"), except for shares issued to any First Financial
shareholder who may be deemed to be an "affiliate" of Associated or First
Financial for purposes of Rule 144 or 145 under the Securities Act or for
purposes of qualifying the Merger for "pooling of interests" accounting
treatment. Each such affiliate has entered into an agreement providing that
such affiliate will not transfer any Associated Common Stock received in the
Merger except in compliance with the resale provisions of Rule 144 or 145
promulgated under the Securities Act or as otherwise permitted under the
Securities Act and will make no disposition of any Associated Common Stock (or
any interest therein) received in connection with the Merger unless, in the
opinion of counsel to Associated, the transaction will not have any adverse
consequences for Associated with respect to the treatment of the Merger for
tax purposes. In addition, each such affiliate agreed not to make any such
disposition within the 30 days prior to the Effective Time, and, until after
such time as financial results covering at least 30 days of combined
operations of Associated and First Financial after the Merger have been
published. This Joint Proxy Statement/Prospectus does not cover resales of
Associated Common Stock received by any person upon consummation of the
Merger, and no person is authorized to make any use of this Joint Proxy
Statement/Prospectus in connection with any such resale.
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CERTAIN PROVISIONS OF THE MERGER AGREEMENT
General
The Associated Board and the First Financial Board have approved the Merger
Agreement, which provides for the merger of Associated and First Financial, to
be effected by the merger of Badger Merger Corp. with First Financial, with
First Financial being the surviving corporation (the "Surviving Corporation")
and becoming a wholly owned subsidiary of Associated. This section of the
Joint Proxy Statement/Prospectus describes certain aspects of the proposed
Merger, including certain provisions of the Merger Agreement. The description
of the Merger Agreement contained in this Joint Proxy Statement/Prospectus
does not purport to be complete and is qualified in its entirety by reference
to the Merger Agreement, a copy of which is attached hereto as Annex I and
which is incorporated herein by reference. All shareholders of Associated and
First Financial are urged to read carefully the Merger Agreement.
Conditions to the Consummation of the Merger
Each party's obligation to effect the Merger is subject to the satisfaction
or waiver on or prior to the Closing Date of various conditions which include,
in addition to other customary closing conditions, the following:
(i) the Registration Statement, of which this Joint Proxy
Statement/Prospectus is a part, having become effective under the
Securities Act and not being the subject of any stop order or proceedings
seeking a stop order;
(ii) the shareholders of Associated having approved the authorization of
additional shares of Associated Common Stock and the issuance of additional
shares of Associated Common Stock and the shareholders of First Financial
having approved the Merger Agreement;
(iii) the applicable regulatory authorities, including the Federal
Reserve Board, having approved the Merger and all conditions to be
satisfied by the Effective Time of the Merger imposed by such approvals
having been satisfied and all waiting periods having expired;
(iv) no federal or state governmental or regulatory authority or other
agency or commission, or federal or state court of competent jurisdiction,
having 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
the Merger Agreement;
(v) the shares of Associated Common Stock issuable to First Financial's
shareholders pursuant to the Merger having been approved for listing on the
Nasdaq National Market, subject to official notice of issuance;
(vi) no federal or state governmental or regulatory authority or agency,
or federal or state court of competent jurisdiction, having enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, injunction or other order which in effect restricts,
prevents or prohibits consummation of the Merger;
(vii) no action, proceeding or investigation before any court or
administrative agency or by any government agency or any other person being
pending (i) challenging or seeking material damages in connection with 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 First Financial or its
subsidiaries, which in either case has or would have a Material Adverse
Effect (as defined below) on Associated and its subsidiaries, taken as a
whole, or a Material Adverse Effect on First Financial and its
subsidiaries, taken as a whole;
(viii) each of Associated and First Financial having received a letter
from each of KPMG Peat Marwick LLP and Ernst & Young LLP (the independent
accountants of Associated and First Financial, respectively), to the effect
that the Merger qualifies for "pooling of interests" accounting treatment;
and
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(ix) Associated and First Financial having each received letters from
Shearman & Sterling (special counsel to Associated) to the effect that the
Merger qualifies as a tax-free reorganization within the meaning of the
Code.
In addition, each party's obligation to effect the Merger is also subject to
the satisfaction or waiver of the following additional conditions:
(i) the representations and warranties of the other party to the Merger
Agreement set forth in the Merger Agreement being true and correct in all
material respects as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case as of such date);
(ii) the other party to the Merger Agreement having performed in all
material respects all obligations required to be performed by it under the
Merger Agreement on or prior to the Effective Time;
(iii) all consents, waivers, approvals, authorizations or orders required
to be obtained, and all filings required to be made, by either party for
the authorization, execution and delivery of the Merger Agreement and the
consummation by either party of the transactions contemplated by the Merger
Agreement shall have been obtained and made by such party except where the
failure to obtain or make the same would not, individually or in the
aggregate, have a Material Adverse Effect, on either Associated and its
subsidiaries, taken as a whole, or First Financial and its subsidiaries,
taken as a whole; and
(iv) each party shall have received, from each person who is identified
as an affiliate for purposes of pooling of interests of the other party, a
signed affiliate letter.
The term "Material Adverse Effect" as used in the Merger Agreement means 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), in the aggregate, or the ability of such party to
consummate the transactions contemplated by the Merger Agreement, except that
a Material Adverse Effect shall not be deemed to have occurred as a result of
any change or effect resulting from a change in law, rule, regulation,
generally accepted accounting principle or regulatory accounting principle, in
each case, affecting financial institutions or their holding companies
generally.
No Solicitation
The Merger Agreement provides that each of Associated and First Financial
will stop any existing discussions or negotiations relating to a Competing
Proposal (as defined below), other than the Merger. The Merger Agreement
provides that Associated and First Financial will not, directly or indirectly,
and will instruct their respective officers, directors or employees or other
representatives retained by them not to, and will not authorize any of them
to, directly or indirectly, initiate, solicit or encourage (including by way
of furnishing information), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Competing Proposal, or enter into or maintain
discussions or negotiate with any person in furtherance of or relating to such
inquiries or to obtain a Competing Proposal, or agree to or endorse any
Competing Proposal and shall promptly notify the other if any such inquiries
or proposals are made and keep the other informed of the status and terms of
any such proposals; provided, however, that prior to such time as the
shareholders of Associated and First Financial shall have adopted and approved
this Agreement, the Board of Directors of Associated or First Financial may
(i) in connection with a Superior Competing Transaction (as defined below),
furnish information to, or enter into discussions or negotiations with, any
person that makes an unsolicited bona fide proposal to acquire Associated or
First Financial, as applicable, pursuant to a merger, consolidation, share
exchange, business combination or other similar transaction, if, and only to
the extent that, (A) the Board of Directors of Associated or First Financial,
as applicable, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
required for the Board of Directors of Associated or First Financial, as
applicable, to comply with its fiduciary duties to shareholders imposed by the
WBCL, (B) prior to furnishing such information to, or entering
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into discussions or negotiations with, such person, Associated or First
Financial, as applicable, provide written notice to the other party to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person, (C) prior to furnishing such information to
such person, Associated or First Financial, as applicable, receives from such
person an executed confidentiality agreement with terms no less favorable than
the confidentiality agreements entered into between Associated and First
Financial, and (D) each party keeps the other party informed, on a current
basis, of the status and details of any such discussions or negotiations; or
(ii) comply with Rule 14e-2 promulgated under the Exchange Act.
A "Competing Proposal" means any of the following: any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or
purchase of a business that constitutes 15% or more of the net revenues, net
income or the assets of Associated or First Financial, as applicable, and its
subsidiaries, taken as a whole, or 15% or more of any class of equity
securities of Associated or First Financial, as applicable, or any of its
subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 15% or more of any class of equity
securities of Associated or First Financial, as applicable, or any of its
subsidiaries, any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Associated or First Financial, as applicable, or any of its subsidiaries,
other than the transactions contemplated by the Merger Agreement.
A "Superior Competing Transaction" means any of the following: any proposal
made by a third party to acquire, directly or indirectly, including pursuant
to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more than
50% of the combined voting power of the shares of Associated Common Stock or
First Financial Common Stock, as applicable, then outstanding or all or
substantially all the assets of Associated or First Financial, as applicable,
and otherwise on terms which the Board of Directors of Associated or First
Financial, as applicable, determines in its good faith judgment (based on the
opinion of a financial advisor of nationally recognized reputation) to be more
favorable to its shareholders than the Merger and for which financing, to the
extent required, is then committed or which if not committed is, in the good
faith judgment of its Board of Directors, reasonably capable of being obtained
by such third party.
Termination
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after adoption thereof by the shareholders of
Associated or First Financial:
(i) by mutual written consent of the boards of directors of Associated
and First Financial;
(ii) by Associated, on the one hand, or First Financial, on the other
hand, if (a) the Merger has not been consummated by March 31, 1998;
provided, however, that such right to terminate the Merger Agreement will
not be available to either party whose failure to perform any of its
obligations under the Merger Agreement has resulted in the failure of the
Merger to be consummated by that date or (b) any injunction preventing the
consummation of the Merger becomes final and nonappealable;
(iii) by either Associated, on the one hand, or First Financial, on the
other hand, if the other party has breached any material representations,
warranties, covenants or other agreements contained in the Merger
Agreement, or if any representation or warranty becomes untrue, in either
case so that the conditions to the Merger cannot be satisfied and such
breach is not cured within 30 days after written notice thereof from the
nonbreaching party;
(iv) by Associated, on the one hand, or First Financial, on the other
hand, if the Associated shareholders have not approved the authorization of
additional shares of Associated Common Stock and the issuance of additional
shares of Associated Common Stock or the First Financial shareholders have
not approved the Merger Agreement; or
(v) by either Associated, on the one hand, or First Financial, on the
other hand, if there shall exist a proposal for a Superior Competing
Transaction with respect to the other, and the Board of Directors of the
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other withdraws or modifies in a manner adverse to Associated or First
Financial, as applicable, its approval and recommendation of the Merger or
its approval of the Merger Agreement or any of the transactions
contemplated therein or if such party approves or recommends such Superior
Competing Transaction.
Conduct of Business Pending the Merger
Pursuant to the Merger Agreement, Associated and First Financial have both
agreed to conduct their respective businesses in the ordinary course of
business in a manner consistent with past practice and use their respective
reasonable best efforts to preserve intact their respective business
organizations, to keep available the services of their current officers,
employees and consultants and to preserve their respective current business
relationships. In addition, each of Associated and First Financial has agreed
that, among other things and subject to certain exceptions, neither it nor any
of its subsidiaries will, without the prior written consent of the other:
(i) adjust, split, combine or reclassify any capital stock, declare or
pay any dividend on, or make any other distribution in respect of, its
outstanding shares of capital stock, except for quarterly dividend
declarations and payments in accordance with past practice and in per share
amounts not materially in excess of historical per share dividend amounts;
provided, however, that after May 14, 1997, each of Associated and First
Financial will coordinate with the other the declaration of any dividends
in respect of Associated Common Stock and First Financial Common Stock and
the record dates and payment dates relating thereto, it being the intention
of the parties hereto that holders of Associated Common Stock or First
Financial Common Stock shall not receive two dividends, or fail to receive
one dividend, for any quarter with respect to their shares of Associated
Common Stock and/or First Financial Common Stock and any shares of
Associated Common Stock any such holder receives in exchange therefor in
the Merger;
(ii) 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; effect any reorganization or recapitalization;
purchase or otherwise acquire any assets or stock of any corporation, bank
or other business for consideration which in the aggregate exceeds $10
million; or liquidate, sell, dispose of or encumber any assets for
consideration which in the aggregate exceeds $25 million;
(iii) 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;
(iv) propose or adopt any amendments to its articles of incorporation or
bylaws;
(v) change any of its methods of accounting in effect at December 31,
1996, 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, 1996,
except as may be required by law or generally accepted accounting
principles;
(vi) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than (x) short-
term indebtedness incurred to refinance short-term indebtedness or (y)
indebtedness among its corporate affiliates), or assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations of
any other individual, corporation or other entity;
(vii) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract or agreement, or make any change in any of its material leases or
material contracts, other than renewals of such contracts and leases
without material adverse changes of terms;
(viii) increase in any manner the compensation or fringe benefits of any
of its employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or become a party to,
amend or commit itself to any pension, retirement, profit sharing or
welfare benefit plan or agreement or employment agreement with or for the
benefit of any employee other than, in each case, in
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the ordinary course of business consistent with past practice, or
accelerate the vesting of any stock options or other stock-based
compensation;
(ix) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practices;
(x) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code (except that
Associated or First Financial may exercise its rights under the Associated
Stock Option Agreement or First Financial Stock Option Agreement,
respectively);
(xi) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in the Merger
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in the Merger Agreement not being satisfied or in a violation of any
provision of the Merger Agreement, except, in each case, as may be required
by applicable law;
(xii) take any action or fail to take any action which individually or in
the aggregate can be reasonably expected to have a Material Adverse Effect
on, in the case of First Financial, First Financial and its subsidiaries,
taken as a whole or, in the case of Associated, Associated and its
subsidiaries, taken as a whole; or
(xiii) agree in writing or otherwise to do any of the foregoing.
Employee Benefits and Plans
The Merger Agreement provides that Associated will honor, without
modification, and perform its obligations under certain employee benefit plans
and programs. The Merger Agreement also provides that certain contracts, plans
and agreements will be treated as described below.
The Directors' Retirement Plan. The Retirement Plan will be terminated
immediately after the Effective Time and each person serving as a director of
First Financial will receive a lump sum payment equal to his vested benefits
under the plan, with no reduction due to the director's not having attained age
70. The payments will be reduced to the extent such payments would constitute
an excess parachute payment for federal income tax purposes. See "The Merger--
Certain Transactions; Conflicts of Interest--First Financial Change of Control
Arrangements."
Amendment to the Work Force Management Plan. The Merger Agreement provides
that following the Merger, Associated will give equal employment opportunity to
employees of Associated and First Financial. Employees of First Financial will
be deemed employees of Associated for the purposes of the Associated Work Force
Management Plan (the "Work Force Plan"). In addition, in accordance with the
Merger Agreement, the Work Force Plan will be amended to provide that any
employee in good standing of Associated, First Financial or any Associated or
First Financial subsidiary (other than an employee with an individual severance
arrangement) whose employment is terminated in connection with the Merger
either because such employee's position is eliminated or because such employee
is not offered comparable employment, within two years from the Effective Time
of the Merger, will be paid severance.
Under the amendment to the Work Force Plan, executive officers of Associated
as well as certain officers of First Financial and First Financial subsidiaries
will receive severance upon a qualified termination based on four weeks of base
salary, plus two weeks of additional base salary for each year of service, with
a minimum payment of 20 weeks and up to a maximum of 48 weeks of base salary.
Exempt employees below the rank of executive officer (other than part-time)
will receive severance upon a qualified termination based on two weeks of base
salary plus two weeks of additional base salary for each year of service, with
a minimum payment of four weeks and up to a maximum of 36 weeks of base salary.
Non-exempt employees whose wages are based on hourly service (other than part-
time) will receive upon a qualified termination two weeks of base salary plus
one week of additional base salary for each year of service, up to a maximum of
30 weeks of base salary. Part-time employees with at least 1,000 hours of
service in the previous calendar year will receive upon a qualified
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termination two weeks of base salary, plus one week of additional base salary
for each year of service, up to a maximum of 30 weeks of base salary. All
categories of employees will be eligible for health plan continuation upon a
qualified termination at the employee's present premium rate for six months
from the date of departure, and for an additional thirty months thereafter at
the employee's cost.
The benefits described above will replace the comparable benefits provided
under the Work Force Plan for the two year period ending on the second
anniversary of the Effective Time and apply solely to persons employed by
Associated or First Financial on the Effective Time. Following the second
anniversary of the Effective Time, the severance entitlements, if any, of the
employees of Associated and its subsidiaries will be determined by Associated.
See "The Merger--Certain Transactions; Conflicts of Interest--Work Force
Management Plan."
Certain Employment and Severance Agreements. Certain employees subject to
employment and severance agreements with First Financial will be given the
opportunity to elect to be paid certain specified benefits in lieu of any
benefits which would otherwise be due to such person following termination of
employment after the merger. See "The Merger--Certain Transactions; Conflicts
of Interest--First Financial Change of Control Arrangements." If elected by
such employees, these benefits will be paid upon the first to occur of (a) two
years following the Effective Time, (b) termination by reason of death or
disability, or for other than cause, or (c) resignation of the employee for
good reason. Such benefits will be forfeited if, prior to the second
anniversary of the Effective Time, an employee is terminated for cause or
resigns without good reason. The benefits replace only the severance benefits
provisions in the relevant employment agreements. All other terms of such
agreements remain in place.
Amendment and Waiver
The Merger Agreement may be amended by an instrument in writing signed on
behalf of each party at any time prior to the Effective Time; provided,
however, that, after approval of the Merger by the shareholders of First
Financial, no amendment may be made which would reduce the amount or change
the type of consideration into which each share of First Financial Common
Stock will be converted into shares of Associated Common Stock.
At any time prior to the Effective Time, either party may, in an instrument
in writing signed by the party or parties to be bound thereby, (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties
contained in the Merger Agreement or in any document delivered pursuant to the
Merger Agreement, and (c) waive compliance with any of the agreements or
conditions contained in the Merger Agreement. In the event of a failure to
obtain the tax opinion described under the caption "The Merger--Conditions to
the Consummation of the Merger" and a determination by the parties to waive
such condition to the consummation of the Merger, each of Associated and First
Financial will resolicit the votes of its shareholders in connection with the
Merger.
Expenses
All reasonable out-of-pocket expenses (including, without limitation, all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants) incurred in connection with the Merger Agreement, the Stock
Option Agreements and the transactions contemplated thereby will be paid by
the party incurring such expenses, except that Associated and First Financial
will share equally the expenses incurred in connection with filing and
printing this Joint Proxy Statement/Prospectus and the Registration Statement
of which it is a part and all other regulatory filing fees incurred in
connection with the Merger Agreement.
Representations and Warranties
The Merger Agreement contains customary mutual representations and
warranties relating to, among other things: (i) corporate organization and
qualification of each party and their subsidiaries; (ii) articles of
incorporation and bylaws of each party and its subsidiaries having been made
available; (iii) the capitalization of
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each party and its subsidiaries; (iv) corporate power and authority of each
party; (v) absence of conflict with (a) its articles of incorporation and
bylaws, (b) applicable law or (c) certain agreements; (vi) compliance with
applicable laws; (vii) the timely filing of documents filed by each of
Associated and First Financial with the Commission and the accuracy of
information contained therein; (viii) absence of material changes or events
with respect to each of Associated and First Financial; (ix) absence of
litigation; (x) matters relating to employee benefit plans; (xi) matters
relating to material contracts; (xii) environmental matters; (xiii) filing of
tax returns and payment of taxes; (xiv) derivative instruments; (xv) certain
regulatory approvals; (xvi) engagement and payment of fees of brokers; (xvii)
the absence of actions that would prevent using the "pooling of interests"
method to account for the Merger; (xviii) required shareholder votes; and
(xix) receipt of fairness opinions.
In addition, the Merger Agreement contains representations and warranties by
First Financial with respect to the non-applicability of state takeover laws
and certain provisions of its articles of incorporation with respect to the
Merger.
Indemnification and Insurance
The Merger Agreement provides that Associated and the Surviving Corporation
will indemnify, defend and hold harmless, to the fullest extent permitted by
law, the present and former officers, directors or employees of First
Financial against all losses, expenses, claims, damages, liabilities or
amounts that are paid in settlement of or otherwise in connection with, any
claim, action, suit, proceeding or investigation based in whole or in part on
the fact that such person is or was a director, officer or employee of First
Financial and arising out of actions or omissions occurring at or prior to the
Effective Time to the fullest extent permitted under the WBCL and Associated's
corporate governance documents. The Merger Agreement provides that, for a
period of not less than two years after the Effective Time, Associated will
use its reasonable best efforts to maintain directors' and officers' liability
insurance and fiduciary liability insurance that is substantially equivalent
to coverage of First Financial's current insurance; provided that Associated
will not be required to pay an annual premium for such insurance in excess of
150% of First Financial's last annual premium paid prior to the date of the
Merger Agreement.
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RECIPROCAL STOCK OPTION AGREEMENTS
This section of the Joint Proxy Statement/Prospectus describes certain
aspects of the Stock Option Agreements. The description of the Stock Option
Agreements contained in this Joint Proxy Statement/Prospectus does not purport
to be complete and is qualified in its entirety by reference to the Stock
Option Agreements, copies of which are attached hereto as Annexes II and III
and which are incorporated herein by reference. All shareholders of Associated
and First Financial are urged to read carefully the Stock Option Agreements.
Associated Stock Option Agreement. Upon the execution and delivery of the
Merger Agreement, First Financial and Associated entered into a Stock Option
Agreement, dated as of May 14, 1997 (the "Associated Stock Option Agreement"),
pursuant to which Associated granted First Financial an option to purchase up
to 19.9% of the issued and outstanding shares of Associated Common Stock
(after giving effect to the exercise of the option) (the "Associated Stock
Option").
The Associated Stock Option entitles First Financial to purchase up to 19.9%
of Associated Common Stock at any time following an Associated Purchase Event
(as defined below) for a purchase price of $32.50 per share. An "Associated
Purchase Event" means any of the following: (i) any person (other than First
Financial or any of its subsidiaries) commences a tender offer or exchange
offer to purchase shares of Associated Common Stock in which such person would
acquire beneficial ownership of 15% or more of the then outstanding Associated
Common Stock and the Associated Board fails to recommend against such tender
offer or exchange offer within 10 business days of the commencement of such
offer or at any time thereafter recommends acceptance thereof; (ii) Associated
authorizes, recommends, proposes or publicly announces an intention to
authorize, recommend, propose or enters into an agreement to merge,
consolidate or otherwise combine with any other person (other than First
Financial or any of its subsidiaries) or to sell, lease or otherwise dispose
of assets or stock representing 15% or more of the consolidated assets, net
revenues or net income or voting stock of Associated and its subsidiaries;
(iii) any person (other than First Financial or any of its subsidiaries)
acquires beneficial ownership of 15% or more of the then outstanding
Associated Common Stock; (iv) shareholders of Associated fail to approve the
increase in the number of authorized shares of Associated Common Stock or the
issuance of shares of Associated Common Stock as provided for in the Merger
Agreement, the Associated meeting of shareholders does not take place or is
cancelled prior to termination of the Merger Agreement or the Associated Board
withdraws or modifies its recommendation with respect to the Merger Agreement
in a manner adverse to First Financial in each case after certain events with
respect to any third party acquisition proposal have occurred; or (v) there is
a willful or intentional breach under the Merger Agreement by Associated which
would entitle First Financial to terminate the Merger Agreement and within 12
months of such breach, certain transactions with a third party as specified in
subsections (ii) or (iii) above occur.
First Financial has been granted certain registration rights with respect to
any shares of Associated Common Stock that First Financial may acquire upon
exercise of the Associated Stock Option.
The Associated Stock Option terminates upon the first to occur of (i) the
Effective Time, (ii) 12 months after the first occurrence of an Associated
Purchase Event and (iii) the termination of the Merger Agreement in accordance
with its terms prior to the occurrence of an Associated Purchase Event.
First Financial Stock Option Agreement. Immediately following the execution
and delivery of the Merger Agreement, Associated and First Financial entered
into a Stock Option Agreement, dated as of May 14, 1997 (the "First Financial
Stock Option Agreement"; together with the Associated Stock Option Agreement,
the "Stock Option Agreements"), pursuant to which First Financial granted
Associated an option to purchase up to 19.9% of the issued and outstanding
shares of First Financial Common Stock (after giving effect to the exercise of
the option) (the "First Financial Stock Option").
47
<PAGE>
The First Financial Stock Option entitles Associated to purchase up to 19.9%
of First Financial Common Stock at any time following a First Financial
Purchase Event (as defined below) for a purchase price of $23.25 per share
(the "First Financial Option Price"). A "First Financial Purchase Event" means
any of the following: (i) any person (other than Associated or any of its
subsidiaries) commences a tender offer or exchange offer to purchase shares of
First Financial Common Stock in which such person would acquire beneficial
ownership of 15% or more of the then outstanding First Financial Common Stock
and the First Financial Board fails to recommend against such tender offer or
exchange offer within 10 business days of the commencement of such offer or at
any time thereafter recommends acceptance thereof; (ii) First Financial
authorizes, recommends, proposes or publicly announces an intention to
authorize, recommend, propose or enter into an agreement to merge, consolidate
or otherwise combine with any other person (other than Associated or any of
its subsidiaries) or to sell, lease or otherwise dispose of assets or stock
representing 15% or more of the consolidated assets, net revenues or net
income or voting stock of First Financial and its subsidiaries; (iii) any
person (other than Associated or any of its subsidiaries) acquires beneficial
ownership of 15% or more of the then outstanding First Financial Common Stock;
(iv) shareholders of First Financial Common Stock fail to approve the Merger
Agreement, the First Financial meeting of shareholders does not take place or
is cancelled prior to termination of the Merger Agreement or the First
Financial Board withdraws or modifies its recommendation with respect to the
Merger Agreement in a manner adverse to Associated in each case after certain
events with respect to any third party acquisition proposal have occurred; or
(v) there is a willful or intentional breach under the Merger Agreement by
First Financial which would entitle Associated to terminate the Merger
Agreement and within 12 months of such breach, certain transactions with a
third party as specified in subsections (ii) and (iii) above occur.
If Associated's exercise of the First Financial Stock Option is prevented
due to certain provisions of First Financial's Articles of Incorporation,
Associated may elect to receive a cash payment with respect to the number of
shares of First Financial Common Stock that are subject to the First Financial
Stock Option that are not exercisable in an amount equal to the amount by
which the market price (or price per share of any tender or exchange offer)
for shares of First Financial Common Stock on the date that Associated gives
notice of its intent to exercise its rights to such cash payment exceeds the
exercise price ($23.25), multiplied by the number of shares of First Financial
Common Stock subject to the First Financial Stock Option.
Associated has been granted certain registration rights with respect to any
shares of First Financial Common Stock that Associated may acquire upon
exercise of the First Financial Stock Option.
The First Financial Stock Option expires at the first to occur of (i) the
Effective Time, (ii) 12 months after the first occurrence of a First Financial
Purchase Event and (iii) the termination of the Merger Agreement in accordance
with its terms prior to the occurrence of a First Financial Purchase Event.
Effect of Stock Option Agreements. The Stock Option Agreements are intended
to increase the likelihood that the Merger will be consummated on the terms
set forth in the Merger Agreement. Consequently, certain aspects of the Stock
Option Agreements may have the effect of discouraging persons who might now or
prior to the Effective Time be interested in acquiring all of or a significant
interest in either Associated or First Financial from considering or proposing
such an acquisition, even if such persons were prepared to offer higher
consideration per share for Associated Common Stock than that implicit in the
Exchange Ratio or a higher price per share for First Financial Common Stock
than the market price.
48
<PAGE>
THE COMPANIES
Associated. Associated is a diversified multi-bank holding company and a
registered bank holding company pursuant to the BHCA. Associated owns twelve
commercial banks in Wisconsin and Illinois with 98 banking locations in 67
communities.
Associated also owns 28 non-bank subsidiaries located in Arizona, Illinois,
Nevada and Wisconsin. Associated's commercial banks and non-bank subsidiaries
offer a complete range of business, retail, trust/asset management,
correspondent, international, leasing, insurance, mortgage banking, real
estate financing and investment services to a diverse customer base.
As of June 30, 1997, Associated was the third largest commercial bank
holding company headquartered in Wisconsin with total assets of $4.6 billion
and more than 2,000 employees.
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 (920) 433-3166.
First Financial. First Financial Corporation is the largest thrift holding
company headquartered in Wisconsin and one of the largest thrift holding
companies in the country, and provides a broad range of financial products,
including commercial and residential mortgages, appraisals, consumer, student
and home equity loans, insurance, and credit cards.
As of June 30, 1997, First Financial had assets of $5.9 billion, 1,755
employees, and 128 banking offices in Wisconsin and Illinois.
The principal executive offices of First Financial are located at 1305 Main
Street, Stevens Point, Wisconsin 54481 and its telephone number is (715) 345-
4352.
49
<PAGE>
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited Pro Forma Condensed Financial Information and
explanatory notes are presented to show the impact on the historical financial
position and results of operations of Associated from the proposed Merger with
First Financial.
As a result of the merger, First Financial shareholders will receive .765
shares of Associated Common Stock for each share of First Financial Common
Stock that they own. No fractional shares of Associated Common Stock will be
issued. Instead, First Financial shareholders will receive a cash payment for
any fractional shares to which they might otherwise have been entitled based
on the market value of Associated Common Stock.
The unaudited Pro Forma Condensed Financial Information reflects the Merger
to be accounted for as a "pooling of interests". See "The Merger--Accounting
Treatment."
The unaudited Pro Forma Condensed Balance Sheet assumes that the Merger was
consummated on June 30, 1997. The unaudited Pro Forma Condensed Statements of
Income assume that the Merger was consummated on January 1st of the earliest
indicated period.
The combined company expects to achieve substantial merger benefits.
However, the unaudited pro forma earnings do not reflect any potential savings
or revenue enhancements which are expected to result from the consolidation of
operations of Associated and First Financial and are not necessarily
indicative of the results expected of the future combined operations. No
assurances can be given with respect to the ultimate level of cost savings or
revenue enhancements to be realized.
The following information should be read in conjunction with and is
qualified in its entirety by the consolidated financial statements and
accompanying notes of Associated and First Financial included in the documents
described under "Where You Can Find More Information." Interim results of
Associated and First Financial for the six months ended June 30, 1997 are not
necessarily indicative of results of operations or the combined financial
position that would have resulted had the merger been consummated at the
beginning of the period indicated.
The unaudited Pro Forma Condensed Financial Information is intended for
information purposes and is not necessarily indicative of the future financial
position or future results of the combined company or of the financial
position or the results of operations of the combined company that would have
actually occurred had the Merger been in effect as of the date or for the
period presented.
50
<PAGE>
PRO FORMA COMBINED FINANCIAL INFORMATION
ASSOCIATED BANC-CORP
AND FIRST FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AT JUNE 30, 1997
(In thousands)
<TABLE>
<CAPTION>
FIRST PRO FORMA PRO FORMA
ASSOCIATED FINANCIAL ADJUSTMENTS COMBINED
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks...... $ 189,694 $ 91,459 $ $ 281,153
Interest-bearing deposits.... 2,459 31,328 33,787
Federal funds sold........... 16,879 2,616 19,495
Investment securities
available for sale--at fair
value....................... 423,227 1,433,656 1,856,883
Investment securities held to
maturity--at amortized
cost........................ 415,898 620,003 1,035,901
Loans........................ 3,402,937 3,589,748 6,992,685
Allowance for possible loan
losses...................... (49,943) (22,960) (72,903)
---------- ---------- ------- -----------
Loans, net.................. 3,352,994 3,566,788 6,919,782
---------- ---------- ------- -----------
Premises and equipment(3).... 79,084 50,470 (1,950) 127,604
Other assets(3).............. 115,151 135,181 5,162 255,494
---------- ---------- ------- -----------
TOTAL ASSETS.............. $4,595,386 $5,931,501 $ 3,212 $10,530,099
========== ========== ======= ===========
Non-interest bearing
deposits.................... $ 577,438 $ 162,009 $ $ 739,447
Interest-bearing deposits.... 3,004,732 4,355,665 7,360,397
---------- ---------- ------- -----------
Total deposits.............. 3,582,170 4,517,674 8,099,844
---------- ---------- ------- -----------
Short-term borrowings........ 488,760 896,972 1,385,732
Long-term borrowings......... 37,855 11,124 48,979
Other liabilities(3)......... 66,672 83,006 34,500 184,178
---------- ---------- ------- -----------
Total liabilities........... 4,175,457 5,508,776 34,500 9,718,733
---------- ---------- ------- -----------
Preferred stock.............. -- -- --
Common stock(2).............. 225 37,659 (37,382) 502
Surplus(2)................... 168,254 45,029 1,887 215,170
Retained earnings(3)......... 243,839 370,703 (31,288) 583,254
Net unrealized gain on
securities available for
sale........................ 8,139 4,829 12,968
Treasury stock(2)............ (528) (35,495) 35,495 (528)
---------- ---------- ------- -----------
Total stockholders'
equity..................... 419,929 422,725 (31,288) 811,366
---------- ---------- ------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY..... $4,595,386 $5,931,501 $ 3,212 $10,530,099
========== ========== ======= ===========
Issued shares(2) ............ 22,474 37,659 (9,959) 50,174
Outstanding shares(2)........ 22,459 36,209 (8,509) 50,159
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Information
51
<PAGE>
PRO FORMA COMBINED FINANCIAL INFORMATION
ASSOCIATED BANC-CORP
AND FIRST FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994
---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Interest income......... $384,828 $ 730,782 $ 696,686 $613,725
Interest expense........ 199,329 374,218 359,270 292,735
-------- --------- --------- --------
Net interest income.... 185,499 356,564 337,416 320,990
-------- --------- --------- --------
Provision for loan
losses................. 6,559 13,695 14,029 9,035
-------- --------- --------- --------
Net interest income
after provision for
loan losses........... 178,940 342,869 323,387 311,955
-------- --------- --------- --------
Non-interest income:
Trust service fees..... 13,931 25,185 22,243 20,282
Service charges on
deposit accounts...... 13,727 26,540 23,915 22,896
Retail investment...... 5,688 10,114 8,949 9,028
Investment securities
gains (losses), net... 1,382 (10,679) 1,512 (7,682)
Other.................. 24,062 60,317 43,022 39,631
-------- --------- --------- --------
Total non-interest
income.............. 58,790 111,477 99,641 84,155
-------- --------- --------- --------
Non-interest expense:
Salary and employee
benefits.............. 65,977 123,363 113,438 116,524
Net occupancy.......... 11,063 20,195 19,472 18,791
Equipment rentals,
depreciation and
maintenance........... 6,508 12,600 11,904 12,653
Data processing........ 8,399 15,905 15,068 15,352
FDIC premium........... 1,642 38,442 13,799 16,302
Other.................. 37,171 76,652 74,954 65,688
-------- --------- --------- --------
Total non-interest
expense............. 130,760 289,157 248,635 245,310
-------- --------- --------- --------
Income before income
taxes and extraordinary
items.................. 106,970 165,189 174,393 150,800
Income taxes............ 37,631 57,487 62,381 54,203
-------- --------- --------- --------
NET INCOME BEFORE
EXTRAORDINARY
ITEMS............... $ 69,339 $ 107,702 $ 112,012 $ 96,597
======== ========= ========= ========
Earnings per share
before extraordinary
items(2)............... $ 1.38 $ 2.13 $ 2.28 $ 1.99
Average shares
outstanding(2)......... 50,353 50,565 49,111 48,600
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Information
52
<PAGE>
PRO FORMA COMBINED FINANCIAL INFORMATION
ASSOCIATED BANC-CORP
AND FIRST FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
FIRST PRO FORMA PRO FORMA
ASSOCIATED FINANCIAL ADJUSTMENTS COMBINED
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income..................... $166,065 $218,763 $384,828
Interest expense.................... 76,352 122,977 199,329
-------- -------- ------ --------
Net interest income................ 89,713 95,786 185,499
-------- -------- ------ --------
Provision for loan losses........... 2,209 4,350 6,559
-------- -------- ------ --------
Net interest income after
provision for loan losses......... 87,504 91,436 178,940
-------- -------- ------ --------
Non-interest income:
Trust service fees................. 13,931 -- 13,931
Service charges on deposit
accounts.......................... 6,611 7,116 13,727
Retail investment.................. 1,810 3,878 5,688
Investment securities gains
(losses), net..................... 661 721 1,382
Other.............................. 11,633 12,429 24,062
-------- -------- ------ --------
Total non-interest income........ 34,646 24,144 58,790
-------- -------- ------ --------
Non-interest expense:
Salary and employee benefits....... 40,304 25,673 65,977
Net occupancy...................... 6,141 4,922 11,063
Equipment rentals, depreciation
and maintenance................... 4,301 2,207 6,508
Data processing.................... 4,648 3,751 8,399
FDIC premium....................... 212 1,430 1,642
Other.............................. 20,403 16,768 37,171
-------- -------- ------ --------
Total non-interest expense....... 76,009 54,751 130,760
-------- -------- ------ --------
Income before income taxes and
extraordinary items................ 46,141 60,829 106,970
Income taxes........................ 15,892 21,739 37,631
-------- -------- ------ --------
NET INCOME BEFORE EXTRAORDINARY
ITEMS........................... $ 30,249 $ 39,090 $ 69,339
======== ======== ====== ========
Earnings per share before
extraordinary items(2)............. $ 1.35 $ 1.07 $(1.04) $ (1.04)
Average shares outstanding(2)....... 22,448 36,477 (8,572) 50,353
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Information
53
<PAGE>
ASSOCIATED BANC-CORP
AND FIRST FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
PRO
PRO FORMA FORMA
ASSOCIATED FIRST FINANCIAL ADJUSTMENTS COMBINED
---------- --------------- ----------- --------
<S> <C> <C> <C> <C>
Interest income............... $311,732 $419,050 $730,782
Interest expense.............. 142,477 231,741 374,218
-------- -------- ------ --------
Net interest income.......... 169,255 187,309 356,564
-------- -------- ------ --------
Provision for loan losses..... 4,665 9,030 13,695
-------- -------- ------ --------
Net interest income after
provision for loan losses... 164,590 178,279 342,869
-------- -------- ------ --------
Non-interest income:
Trust service fees........... 25,185 -- 25,185
Service charges on deposit
accounts.................... 12,606 13,934 26,540
Retail investment............ 2,821 7,293 10,114
Investment securities gains
(losses), net............... 913 (11,592) (10,679)
Other........................ 23,558 36,759 60,317
-------- -------- ------ --------
Total non-interest income.. 65,083 46,394 111,477
-------- -------- ------ --------
Non-interest expense:
Salary and employee
benefits.................... 75,367 47,996 123,363
Net occupancy................ 10,818 9,377 20,195
Equipment rentals,
depreciation and
maintenance................. 7,745 4,855 12,600
Data processing.............. 8,328 7,577 15,905
FDIC premium................. 3 38,439 38,442
Other........................ 38,124 40,528 78,652
-------- -------- ------ --------
Total non-interest
expense................... 140,385 148,772 289,157
-------- -------- ------ --------
Income before income taxes and
extraordinary items.......... 89,288 75,901 165,189
Income taxes.................. 32,044 25,443 57,487
-------- -------- ------ --------
NET INCOME BEFORE
EXTRAORDINARY ITEMS....... $ 57,244 $ 50,458 $107,702
======== ======== ====== ========
Earnings per share before
extraordinary items(2)....... $ 2.60 $ 1.35 $ 2.13
Average shares
outstanding(2)............... 22,035 37,294 (8,764) 50,565
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Information
54
<PAGE>
ASSOCIATED BANC-CORP
AND FIRST FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
FIRST PRO FORMA PRO FORMA
ASSOCIATED FINANCIAL ADJUSTMENTS COMBINED
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income..................... $279,378 $417,308 $696,686
Interest expense.................... 125,099 234,171 359,270
-------- -------- ------ --------
Net interest income................ 154,279 183,137 337,416
-------- -------- ------ --------
Provision for loan losses........... 4,291 9,738 14,029
-------- -------- ------ --------
Net interest income after
provision for loan losses......... 149,988 173,399 323,387
-------- -------- ------ --------
Non-interest income:
Trust service fees................. 22,243 -- 22,243
Service charges on deposit
accounts.......................... 11,814 12,101 23,915
Retail investment.................. 2,100 6,849 8,949
Investment securities gains
(losses), net..................... 330 1,182 1,512
Other.............................. 18,863 24,159 43,022
-------- -------- ------ --------
Total non-interest income........ 55,350 44,291 99,641
-------- -------- ------ --------
Non-interest expense:
Salary and employee benefits....... 68,175 45,263 113,438
Net occupancy...................... 10,466 9,006 19,472
Equipment rentals, depreciation
and maintenance................... 6,601 5,303 11,904
Data processing.................... 7,909 7,159 15,068
FDIC premium....................... 3,630 10,169 13,799
Other.............................. 33,252 41,702 74,954
-------- -------- ------ --------
Total non-interest expense....... 130,033 118,602 248,635
-------- -------- ------ --------
Income before income taxes and
extraordinary items................ 75,305 99,088 174,393
Income taxes........................ 27,277 35,104 62,381
-------- -------- ------ --------
NET INCOME BEFORE EXTRAORDINARY
ITEMS........................... $ 48,028 $ 63,984 $112,012
======== ======== ====== ========
Earnings per share before
extraordinary items(2)............. $ 2.29 $ 1.74 2.28
Average shares outstanding(2)....... 20,967 36,789 (8,645) 49,111
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Information
55
<PAGE>
ASSOCIATED BANC-CORP
AND FIRST FINANCIAL CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(In thousands, except per share data)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ASSOCIATED FIRST FINANCIAL ADJUSTMENTS COMBINED
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Interest income............... $231,861 $381,864 $613,725
Interest expense.............. 88,513 204,222 292,735
-------- -------- ------ --------
Net interest income.......... 143,348 177,642 320,990
-------- -------- ------ --------
Provision for loan losses..... 2,211 6,824 9,035
-------- -------- ------ --------
Net interest income after
provision for loan losses... 141,137 170,818 311,955
-------- -------- ------ --------
Non-interest income:
Trust service fees........... 20,282 -- 20,282
Service charges on deposit
accounts.................... 12,314 10,582 22,896
Retail investment............ 1,759 7,269 9,028
Investment securities gains
(losses), net............... 214 (7,896) (7,682)
Other........................ 16,292 23,339 39,631
-------- -------- ------ --------
Total non-interest income.. 50,861 33,294 84,155
-------- -------- ------ --------
Non-interest expense:
Salary and employee
benefits.................... 65,028 51,496 116,524
Net occupancy................ 9,634 9,157 18,791
Equipment rentals,
depreciation and
maintenance................. 6,582 6,071 12,653
Data processing.............. 7,992 7,360 15,352
FDIC premium................. 6,011 10,291 16,302
Other........................ 29,696 35,992 65,688
-------- ======== ------ --------
Total non-interest
expense................... 124,943 120,367 245,310
-------- -------- ------ --------
Income before income taxes and
extraordinary items.......... 67,055 83,745 150,800
Income taxes.................. 23,487 30,716 54,203
-------- -------- ------ --------
NET INCOME BEFORE
EXTRAORDINARY ITEMS....... $ 43,568 $ 53,029 $ 96,597
======== ======== ====== ========
Earnings per share before
extraordinary items(2)....... $ 2.08 $ 1.47 $1.99
Average Outstanding
Shares(2).................... 20,939 36,158 (8,497) 48,600
</TABLE>
See Notes to Unaudited Pro Forma Condensed Financial Information
56
<PAGE>
ASSOCIATED BANC-CORP AND FIRST FINANCIAL CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
(1) Accounting treatment. The unaudited proforma condensed financial
information has been prepared using the pooling-of-interests method of
accounting, giving effect to the merger as if it had occurred as of the
beginning of the earliest period presented.
(2) Associated's historical average shares outstanding used in the computation
of earnings per share in the Statements of Income did not include the
dilutive effect of stock options outstanding as such effect was not
material. The computation of pro forma earnings per share excludes the
effects of First Financial's outstanding stock options.
The pro forma combined condensed financial statements reflect the issuance
of 0.765 common shares of Associated for each outstanding common share of
First Financial.
(3) Pro forma shareholders' equity includes the effect of an estimated one-
time charge of approximately $36.8 million, $31.3 million net of tax
effect. Since the estimated charge is nonrecurring, it has not been
reflected in the pro forma combined condensed income statements and
related per share calculations.
The estimated nonrecurring charge consists of the following (in thousands,
except per share information):
<TABLE>
<S> <C>
Employee/director severance and contract costs............... $13,000
Cost associated with duplicate facilities, computer systems,
software, and integration.................................... 12,000
Investment banking, legal and accounting fees................ 10,000
Other........................................................ 1,750
-------
36,750
-------
Tax benefit.................................................. (5,462)
-------
Total estimated nonrecurring charge..................... $31,288
=======
</TABLE>
(4) In addition to the transaction related expenses, it is expected that other
nonrecurring amounts will be recorded in the quarter the merger is
consummated as follows.
. Immediately following the merger, the credit policies, practices,
and procedures utilized by Associated to determine the appropriate
level of allowance for loan losses will be applied to the combined
company's loan portfolio. As a result, it is anticipated that an
additional loan loss provision of approximately $15 million will be
recorded.
. Also following the merger, Associated's current investment and
asset/liability policies and practices will be maintained, which
when applied to the combined institution, results in the disposition
of certain securities currently held by First Financial.
Specifically, certain non-agency mortgage-related securities rated
below investment grade by independent rating agencies and certain
adjustable rate mortgage mutual fund investments, having an
aggregate carrying value of $63 million and all of which are
classified as available for sale, will be sold resulting in a loss
of approximately $8 million. Additionally, certain collateralized
mortgage obligations with a carrying value of $131 million currently
classified as held to maturity will be transferred to "available for
sale" and subsequently sold resulting in a loss of approximately $40
million. The losses on these sales will be capital losses for income
tax purposes. As a result, no immediate tax benefit is anticipated
to result from these sales.
. An additional one time nonrecurring charge of $2 million related to
consulting projects will also be incurred near the closing of the
merger.
The after tax effect of these additional expenses approximates $59 million.
57
<PAGE>
DIRECTORS AND OFFICERS OF ASSOCIATED FOLLOWING THE MERGER
Directors
Associated Board of Directors. The Merger Agreement provides that, at the
Effective Time, the Associated Board shall consist of a total of fourteen
directors, consisting of (i) seven individuals, including Harry B. Conlon,
Jr., who are currently Directors of Associated (Messers. Feitler and Janz have
agreed to resign as of the Effective Time) and (ii) seven individuals,
including John C. Seramur, to be selected by the First Financial Board
(subject to the approval of the Associated Board, such approval not to be
unreasonably withheld) from the current First Financial Board. Following the
Merger, the Associated Board will be divided into three classes, two of which
classes shall be of five persons each (one of which shall have three current
directors of Associated and two current directors of First Financial, and the
other of which shall have two current directors of Associated and three
current directors of First Financial) and one class of four persons (two of
whom shall be current directors of Associated and the other two of whom shall
be current directors of First Financial).
Executive Officers
Associated Management. At the Effective Time, Associated's current Chief
Executive Officer, Harry B. Conlon, Jr., will become Chairman and Chief
Executive Officer. John C. Seramur, First Financial's Chief Executive Officer,
will be named Vice Chairman. Robert C. Gallagher will continue as Vice
Chairman. Joseph B. Selner, Associated's current Chief Financial Officer, will
be the Chief Financial Officer of the combined company and Brian R. Bodager,
Associated's current Secretary and General Counsel, will be the Chief
Administrative Officer of the combined company. It is expected that other
officers will be appointed on or after the Effective Time.
Stock Ownership of Directors, Executive Officers and Five Percent Shareholders
For information concerning ownership of Associated Common Stock by
Directors, Executive Officers and five percent shareholders of Associated, see
the 1997 Notice of Annual Meeting and Proxy Statement of Associated and the
Associated Annual Report on Form 10-K for the year ended December 31, 1996.
For information concerning ownership of First Financial Common Stock by
Directors, Executive Officers and five percent shareholders of First
Financial, see the 1997 Notice of Annual Meeting and Proxy Statement of First
Financial and the First Financial Annual Report on Form 10-K for the year
ended December 31, 1996.
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 FIRST FINANCIAL SHAREHOLDERS SINCE, AT THE EFFECTIVE TIME, EACH
ISSUED AND OUTSTANDING SHARE OF FIRST FINANCIAL COMMON STOCK WILL BE CONVERTED
INTO THE RIGHT TO RECEIVE SHARES OF ASSOCIATED COMMON STOCK AT THE EXCHANGE
RATIO.
General. Associated has one class of common stock, the Associated Common
Stock. Of the 48,000,000 shares of Associated Common Stock currently
authorized, 22,470,492 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.
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Dividend Rights. Dividends on Associated Common Stock will be payable to the
holders thereof, in the amount, 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.
Associated's Board of Directors currently determines the level of dividends
to be declared on a quarterly basis taking into consideration various factors
including capital levels, earnings expectations, industry standards,
liquidity, economic conditions and such other factors and circumstances as the
Board believes are relevant at that time.
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 SHAREHOLDERS' RIGHTS
The following is a summary of material differences between the rights of
holders of Associated Common Stock and First Financial Common Stock. As
Associated and First Financial are both incorporated under the laws of the
State of Wisconsin, differences in the rights of shareholders of Associated
and First Financial arise from differences between the provisions of the
Associated Articles of Incorporation and Bylaws and the First Financial
Articles of Incorporation and Bylaws. Shareholders of First Financial, whose
rights are governed by First Financial's Articles of Incorporation, Bylaws 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 Bylaws and by the WBCL. The
following is a summary of the material differences between the rights of
shareholders of Associated and the rights of shareholders of First Financial.
This summary does not purport to be complete and is qualified in its entirety
by reference to the relevant provisions of the WBCL, the Associated Articles
of Incorporation, the Associated Bylaws, the First Financial Articles of
Incorporation and the First Financial Bylaws.
Authorized Capital Stock
Associated. Under Associated's Articles of Incorporation (prior to the
amendment to be voted upon at the Associated Special Meeting with respect to
increasing the number of authorized shares to 100,000,000), 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, par value $1.00 per share. All
shares of Associated Common Stock are identical in rights and have one vote.
For a description of Associated Common Stock, see "Description of Associated
Common Stock Issuable in the Merger." 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 Associated
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.
First Financial. Under First Financial's Articles of Incorporation, the
authorized capital stock consists of 75,000,000 shares of common stock, par
value $1.00 per share, and 3,000,000 shares of serial preferred stock,
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par value $1.00 per share. Each share of First Financial Common Stock has the
same relative rights and is identical in all respects to each other share of
First Financial Common Stock. Holders of First Financial Common Stock are
entitled to one vote per share on each matter properly submitted to
shareholders for their vote, including the election of directors. Holders of
First Financial Common Stock do not have the right to cumulate their votes for
the election of directors, and they have no preemptive or conversion rights
with respect to any shares that may be issued. The holders of First Financial
Common Stock are entitled to receive dividends when and as declared from time
to time by the First Financial Board from funds legally available therefor and
upon liquidation are entitled to receive, after payment or provision for
payment of all debts and liabilities of First Financial, if any, all remaining
assets of First Financial available for distribution to such holders in cash
or in kind. As of the date hereof, no shares of any series of First Financial
preferred stock are issued and outstanding.
Amendment of Articles of Incorporation; Amendment of Bylaws
Associated. Pursuant to Section 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 "--Certain
Business Combinations."
First Financial. The First Financial Articles of Incorporation may be
amended with the approval of two-thirds of the Board of Directors and the
holders of two-thirds of the shares of First Financial Common Stock. First
Financial's Bylaws may be amended upon the approval of two-thirds of the
directors then in office or holders of two-thirds of the First Financial
Common Stock. Pursuant to First Financial's Bylaws, the First Financial Board
may change or repeal any bylaw adopted by the First Financial shareholders
within three years of the date of its adoption.
Classified Board of Directors
Associated. The Associated Board is divided into three classes as nearly
equal in number as possible, with the directors in each class serving for
staggered three-year terms. However, the Bylaws 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. The Associated Board currently consists of nine
directors. The Associated Articles provide that the number of directors shall
be no less than three.
First Financial. First Financial's Articles of Incorporation provide that
the First Financial Board shall consist of a variable number of directors
between seven and twenty-four. The number is currently fixed at eleven. The
First Financial Board is divided into three classes consisting, as nearly as
may be possible, of one-third of the total number of directors, with the
directors in each class serving for staggered three-year terms. At each annual
meeting of First Financial's shareholders, the successors to the class of
directors whose terms expire at such annual meeting shall be elected for a
term of three years.
Removal of Directors for Cause
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.
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First Financial. The First Financial Articles of Incorporation provide that
a director may only be removed for "cause" and then only after the affirmative
vote of two-thirds of the total shares eligible to vote at a duly constituted
meeting of the shareholders called expressly for that purpose. The Articles of
Incorporation also provide that at least 20 days' written notice must be
provided to any director or directors whose removal is to be considered at a
shareholders's meeting called for such purpose.
Newly Created Directorships and Vacancies on the Board of Directors
Associated. The Associated Articles provide that newly created directorships
and any vacancies on the Associated Board may only be filled by the Associated
Board. Associated's Bylaws provide that the remaining members of the Board
shall appoint a director in accordance with the WBCL. The Associated Articles
further provide that the term of any director appointed to the Board of
Directors shall expire at the next annual meeting of shareholders following
the appointment.
First Financial. First Financial's Articles of Incorporation provide that
any vacancy on the Board of Directors (whether newly created by an increase in
the number of directors in accordance with applicable law and the First
Financial Articles of Incorporation or created by the resignation, death or
removal of a director) shall be filled only by the remaining directors.
Certain Business Combinations
Associated. Article VII of the Associated 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.
First Financial. First Financial's Articles of Incorporation contain a
provision prohibiting any person from directly or indirectly offering to
acquire or acquiring the beneficial ownership of 10% or more of the issued and
outstanding voting stock of First Financial as long as First Financial is
registered with the Federal Savings and Loan Insurance Corporation (a
predecessor to the Office of Thrift Supervision) as a thrift holding company.
The term "person" means an individual, a group acting in concert, a
corporation, a partnership, an association, a joint stock company, a trust or
any unincorporated organization or similar company. This provision will not
apply to acquisitions approved by the OTS and by the holders of two-thirds of
First Financial's outstanding voting stock. Under the 1996 Act, the
acquisition of a thrift holding company by a bank holding company does not
require OTS approval. In the event voting stock is acquired in violation of
this provision, the excess shares shall not be entitled to vote on any matter
or to take shareholder action or be counted in determining the total number of
outstanding shares for purposes of any matter involving shareholder action;
and the First Financial Board may cause such excess shares to be transferred
to an independent trustee for sale in the open market or otherwise.
In addition, First Financial's Articles of Incorporation require the
approval by at least two-thirds of the voting power of the outstanding capital
stock of First Financial entitled to vote generally in the election of
directors to approve mergers and certain other business combinations of First
Financial with any Interested
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Shareholder, unless the transaction is approved by at least a majority of the
members of the Board of Directors who are unaffiliated with the Interested
Shareholder or certain minimum price and procedural requirements are met. An
"Interested Shareholder" is defined to mean any person (other than First
Financial or any subsidiary) who is: (i) the beneficial owner, directly or
indirectly, of 10% or more of the outstanding voting stock of First Financial;
(ii) an affiliate of First Financial who at any time within two years
immediately prior to the date in question was the beneficial owner, directly
or indirectly, of 10% or more of the then outstanding voting stock of First
Financial; or (iii) an assignee of or has otherwise succeeded to any shares of
First Financial voting stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any Interested
Shareholder, if such assignment or succession occurred in a transaction not
involving a public offering within the meaning of the Securities Act.
Advance Notice of Proposals to Be Brought at the Annual Meeting
Associated. Pursuant to Article II, Section 5 of Associated's Bylaws, 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.
First Financial. Pursuant to Section 2.3 of First Financial's Bylaws, any
shareholder who intends to bring business before an annual meeting of
shareholders (other than nominations for directors) must provide First
Financial with notice of such intention, a brief description of the business
desired to be brought before the annual meeting and the reason therefor and
certain other information regarding the shareholder bringing the proposal, not
less than 30 days prior to the meeting; provided, however, that in the event
that less than 45 days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, to be timely, notice by the
shareholder must be received not later than the close of business on the 15th
day following the day on which such notice or such public disclosure was made.
Advance Notice of Nominations of Directors
Associated. Pursuant to Article II, Section 6 of Associated's Bylaws, 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.
First Financial. Pursuant to Section 3.5 of First Financial's Bylaws, any
shareholder who intends to nominate directors for election at a meeting called
for that purpose must provide First Financial with notice of such intention,
certain information regarding the proposed nominee and certain information
regarding the nominating shareholder, not less than 30 days prior to the
meeting; provided, however, that in the event that less than 45 days' notice
or prior public disclosure of the date of the meeting is given or made to
shareholders, to be timely, notice by the shareholder must be received not
later than the close of business on the 15th day following the day on which
such notice or such public disclosure was made.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities offered
hereby and the Merger will be passed upon for Associated by Brian R. Bodager,
Secretary and General Counsel of Associated.
EXPERTS
The consolidated financial statements of Associated as of December 31, 1996
and December 31, 1995 and for each of the years in the three-year period ended
December 31, 1996, have been incorporated by reference
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herein and in the Registration Statement in reliance upon the report by KPMG
Peat Marwick LLP, incorporated by reference herein, and upon the authority of
such firm as experts in accounting and auditing.
The consolidated financial statements of First Financial incorporated by
reference in First Financial's Annual Report on Form 10-K for the year ended
December 31, 1996, and incorporated by reference in this Joint Proxy
Statement/Prospectus, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference
therein and incorporated by reference herein. Such consolidated financial
statements are incorporated by reference herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
FUTURE SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1998 Annual Meeting of
Shareholders of Associated must be received by the Secretary of Associated not
later than November 21, 1997 for inclusion in the proxy materials for such
meeting.
If the Merger is not consummated, First Financial will hold a 1998 Annual
Meeting of Shareholders. If such meeting is held, shareholder proposals
intended to be presented at such meeting must be received by First Financial
not later than November 10, 1997 for inclusion in First Financial's proxy
materials for such meeting.
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WHERE YOU CAN FIND MORE INFORMATION
Associated and First Financial file annual, quarterly and special reports,
proxy statements and other information with the Commission. You may read and
copy any reports, statements or other information we file at the Commission's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms. Our Commission filings are also available to
the public from commercial document retrieval services and at the worldwide
web site maintained by the Commission at "http://www.sec.gov".
Associated has filed a Registration Statement on Form S-4 (the "Registration
Statement") to register with the Commission the Associated Common Stock to be
issued to First Financial shareholders in the Merger. This Joint Proxy
Statement/Prospectus is a part of the Registration Statement and constitutes a
prospectus of Associated in addition to being a proxy statement of Associated
and First Financial for the Associated Special Meeting and the First Financial
Special Meeting. As allowed by Commission rules, this Joint Proxy
Statement/Prospectus does not contain all the information you can find in the
Registration Statement or the exhibits to the Registration Statement, which
are incorporated herein by reference.
The Commission allows us to "incorporate by reference" information into this
Joint Proxy Statement/Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the Commission. The information that we incorporate by reference is deemed to
be part of this Joint Proxy Statement/Prospectus, except for any information
superseded by information in this Joint Proxy Statement/Prospectus. This Joint
Proxy Statement/Prospectus incorporates by reference the documents set forth
below that we have previously filed with the Commission. These documents
contain important information about our companies and their finances.
<TABLE>
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ASSOCIATED COMMISSION FILINGS PERIOD
----------------------------- ------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1996
Quarterly Report on Form 10-Q For the quarter ended March 31, 1997
Quarterly Report on Form 10-Q For the quarter ended June 30, 1997
1997 Notice of Annual Meeting and
Proxy Statement, dated March 24,
1997 Dated March 24, 1997
Current Report on Form 8-K Dated May 16, 1997
Description of the Associated
Common
Stock set forth in Associated's
Registration
Statement pursuant to Section 12 of
the Exchange Act
<CAPTION>
FIRST FINANCIAL COMMISSION FILINGS PERIOD
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<S> <C>
Annual Report on Form 10-K Year ended December 31, 1996
Quarterly Report on Form 10-Q For the quarter ended March 31, 1997
Quarterly Report on Form 10-Q For the quarter ended June 30, 1997
1997 Notice of Annual Meeting and
Proxy Statement, dated March 10,
1997 Dated March 10, 1997
Current Reports on Form 8-K Dated January 14, 1997, April 22, 1997,
May 29, 1997
</TABLE>
We also are incorporating by reference all additional documents that we will
file with the Commission between the date of this Joint Proxy
Statement/Prospectus and the dates of the Special Meetings of our
shareholders.
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Associated has supplied all information contained or incorporated by
reference in this Joint Proxy Statement/Prospectus relating to Associated, and
First Financial has supplied all such information relating to First Financial.
If you are a shareholder, we may have sent you some of the documents
incorporated herein by reference, but you can obtain any of them through us or
the Commission. Documents which we incorporate by reference are available from
us without charge, excluding all exhibits unless we have specifically
incorporated by reference an exhibit in this Joint Proxy Statement/Prospectus.
Shareholders may obtain documents incorporated by reference in this Joint
Proxy Statement/Prospectus by requesting them in writing or by telephone from
the appropriate party at the following addresses:
<TABLE>
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Associated Banc-Corp First Financial Corporation
112 North Adams Street 1305 Main Street
P.O. Box 13307 Stevens Point, WI 54481
Green Bay, WI 54307 (715) 345-4352
(920) 433-3166 Attention: Investor Relations
</TABLE>
If you would like to request documents from us, please do so by October 20,
1997 to receive them before the Special Meetings.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS TO VOTE ON THE MERGER. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT
FROM WHAT IS CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS. THIS JOINT
PROXY STATEMENT/PROSPECTUS IS DATED SEPTEMBER 4, 1997. YOU SHOULD NOT ASSUME
THAT THE INFORMATION CONTAINED IN THE JOINT PROXY STATEMENT/PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THE
JOINT PROXY STATEMENT/PROSPECTUS TO SHAREHOLDERS NOR THE ISSUANCE OF
ASSOCIATED COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION TO THE
CONTRARY.
THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE ANY SUCH OFFER OR SOLICITATION.
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LIST OF DEFINED TERMS
<TABLE>
<S> <C>
1996 Act.................................................................... 36
All Transactions............................................................ 25
ASBC........................................................................ 12
Associated Articles......................................................... 58
Associated Board............................................................ 14
Associated Common Stock..................................................... 17
Associated Peer Group....................................................... 28
Associated Purchase Event................................................... 47
Associated Record Date...................................................... 14
Associated Special Meeting.................................................. 14
Associated Stock Option Agreement........................................... 47
Associated Stock Option..................................................... 47
BHCA........................................................................ 35
Closing Date................................................................ 33
Code........................................................................ 34
Commission.................................................................. 16
Competing Proposal.......................................................... 42
Control Act................................................................. 36
Effective Time.............................................................. 33
Exchange Agent.............................................................. 32
Exchange Ratio.............................................................. 32
Federal Reserve Board....................................................... 35
Federal Reserve Bank........................................................ 36
FF Bank..................................................................... 17
FFHC........................................................................ 12
First Financial Board....................................................... 14
First Financial Common Stock................................................ 17
First Financial Option Agreement............................................ 47
First Financial Option Price................................................ 48
First Financial Peer Group.................................................. 28
First Financial Purchase Event.............................................. 48
First Financial Record Date................................................. 14
First Financial Special Meeting............................................. 14
First Financial Stock Option................................................ 47
Highly-Valued Bank Group.................................................... 23
Highly-Valued Savings Institutions.......................................... 24
Highly-Valued Transactions.................................................. 25
IRS......................................................................... 34
Material Adverse Effect..................................................... 41
Merger...................................................................... 17
Merger Agreement............................................................ 17
MOE Transactions............................................................ 30
Nasdaq National Market...................................................... 33
OCC......................................................................... 36
OTS......................................................................... 36
</TABLE>
<TABLE>
<S> <C>
Peer Group.................................................................. 24
Regional Bank Group......................................................... 23
Regional Transactions....................................................... 25
Registration Statement...................................................... 64
Retirement Plan............................................................. 38
ROAA........................................................................ 28
ROAE........................................................................ 28
Sandler O'Neill............................................................. 21
Sandler O'Neill Agreement................................................... 21
Securities Act.............................................................. 39
Superior Competing Transaction.............................................. 42
Surviving Corporation....................................................... 40
Stock Option Agreements..................................................... 47
Thrift Transactions......................................................... 30
WBCL........................................................................ 32
Wisconsin DFI............................................................... 36
Work Force Plan............................................................. 44
</TABLE>
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ANNEXES TO THE JOINT PROXY STATEMENT/PROSPECTUS
Annex I Agreement and Plan of Merger, as amended
Annex II Associated Stock Option Agreement
Annex III First Financial Stock Option Agreement
Annex IVOpinion of Sandler O'Neill & Partners, L.P.
Annex V Opinion of McDonald & Company Securities, Inc.
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ANNEX I
AGREEMENT AND PLAN OF MERGER
AMONG
ASSOCIATED BANC-CORP,
BADGER MERGER CORP.
AND
FIRST FINANCIAL CORPORATION
DATED AS OF
MAY 14, 1997
<PAGE>
TABLE OF CONTENTS
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ARTICLE I
The Merger
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Section 1.01. The Merger................................................. 2
Section 1.02. Effective Time............................................. 2
Section 1.03. Effect of the Merger....................................... 2
Section 1.04. Articles of Incorporation and Bylaws....................... 2
Section 1.05. Directors and Officers of Merger Sub....................... 2
Section 1.06. Representation on Associated Board......................... 2
Section 1.07. Conversion of Securities................................... 3
Section 1.08. Exchange of Certificates................................... 3
Section 1.09. Treatment of Stock Options................................. 5
Section 1.10. Stock Transfer Books....................................... 5
Section 1.11. Anti-Dilution Adjustment................................... 5
ARTICLE II
Representations and Warranties of FFC
Section 2.01. Organization and Qualification of
FFC; Subsidiaries........................................ 6
Section 2.02. Articles of Incorporation and Bylaws........................ 7
Section 2.03. Capitalization.............................................. 7
Section 2.04. Authority; State Takeover Laws; Articles of
Incorporation........................................... 7
Section 2.05. No Conflict; Required Filings and Consents................. 8
Section 2.06. Compliance................................................. 8
Section 2.07. Securities and Banking Reports; Financial
Statements.............................................. 9
Section 2.08. Absence of Certain Changes or Events....................... 9
Section 2.09. Absence of Litigation and Agreements....................... 9
Section 2.10. Employee Benefit Plans..................................... 10
Section 2.11. Material Contracts......................................... 11
Section 2.12. Environmental Matters...................................... 12
Section 2.13. Taxes...................................................... 12
Section 2.14. Derivative Instruments..................................... 13
Section 2.15. Regulatory Approvals....................................... 13
Section 2.16. Brokers.................................................... 13
Section 2.17. Pooling of Interests and Tax Matters....................... 13
Section 2.18. Vote Required.............................................. 13
Section 2.19. Fairness Opinion........................................... 13
ARTICLE III
Representations and Warranties of Associated
Section 3.01. Organization and Qualification of Associated;
Subsidiaries............................................ 14
Section 3.02. Articles of Incorporation and Bylaws....................... 14
Section 3.03. Capitalization............................................. 15
Section 3.04. Authority.................................................. 15
Section 3.05. No Conflict; Required Filings and Consents................. 15
Section 3.06. Compliance................................................. 16
Section 3.07. Securities and Banking Reports; Financial
Statements.............................................. 16
</TABLE>
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Section 3.08. Absence of Certain Changes or Events....................... 17
Section 3.09. Absence of Litigation and Agreements....................... 17
Section 3.10. Employee Benefit Plans..................................... 17
Section 3.11. Material Contracts......................................... 19
Section 3.12. Environmental Matters...................................... 19
Section 3.13. Taxes...................................................... 19
Section 3.14. Derivative Instruments..................................... 20
Section 3.15. Regulatory Approvals....................................... 20
Section 3.16. Brokers.................................................... 20
Section 3.17. Pooling of Interest and Tax Matters........................ 21
Section 3.18. Vote Required.............................................. 21
Section 3.19. Fairness Opinion........................................... 21
ARTICLE IV
Covenants of FFC and Associated
Section 4.01. Affirmative Covenants...................................... 21
Section 4.02. Negative Covenants......................................... 21
ARTICLE V
Additional Agreements
Section 5.01. Registration Statement..................................... 22
Section 5.02. Meetings of Shareholders................................... 24
Section 5.03. Access to Information; Confidentiality..................... 25
Section 5.04. Appropriate Action; Consents; Filings...................... 25
Section 5.05. No Solicitation of Transactions............................ 25
Section 5.06. Indemnification............................................ 27
Section 5.07. Obligations of Merger Sub.................................. 28
Section 5.08. Pooling Affiliates......................................... 28
Section 5.09. Executive Agreements and Employee Severance................ 28
Section 5.10. Notification of Certain Matters............................ 29
Section 5.11. Public Announcements....................................... 29
Section 5.12. Expenses................................................... 30
Section 5.13. Delivery of Shareholder List............................... 30
Section 5.14. Letters of Accountants..................................... 30
Section 5.15. FFC Reports................................................ 30
Section 5.16. Associated Reports......................................... 31
Section 5.17. Pooling.................................................... 31
ARTICLE VI
Conditions of Merger
Section 6.01. Conditions to Obligation of Each Party to Effect the Merg-
er...................................................................... 31
Section 6.02. Additional Conditions to Obligations of Associated......... 32
Section 6.03. Additional Conditions to Obligations of FFC................ 32
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ARTICLE VII
Termination, Amendment and Waiver
<S> <C>
Section 7.01. Termination................................................. 33
Section 7.02. Effect of Termination....................................... 34
Section 7.03. Amendment................................................... 34
Section 7.04. Waiver...................................................... 34
ARTICLE VIII
General Provisions
Section 8.01. Closing..................................................... 34
Section 8.02. Non-Survival of Representations, Warranties
and Agreements........................................... 34
Section 8.03. Notices..................................................... 34
Section 8.04. Certain Definitions......................................... 35
Section 8.05. Headings.................................................... 35
Section 8.06. Severability................................................ 35
Section 8.07. Entire Agreement............................................ 36
Section 8.08. Assignment.................................................. 36
Section 8.09. Parties in Interest......................................... 36
Section 8.10. Governing Law............................................... 36
Section 8.11. Counterparts................................................ 36
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 14, 1997 (this "Agreement"),
among ASSOCIATED BANC-CORP, a Wisconsin corporation ("Associated"), BADGER
MERGER CORP., a newly organized Wisconsin corporation and wholly owned
subsidiary of Associated formed to effect the Merger ("Merger Sub"), and FIRST
FINANCIAL CORPORATION, a Wisconsin corporation ("FFC").
W I T N E S S E T H:
WHEREAS, Associated is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHCA"); and
WHEREAS, FFC is a registered savings and loan holding company under the Home
Owners' Loan Act, as amended ("HOLA"); and
WHEREAS, the Boards of Directors of Associated and FFC have determined that
a so-called merger of equals through a combination of the respective
businesses and operations of such entities and their respective direct and
indirect subsidiaries would be in the best long term interests of the
shareholders of each of Associated and FFC; and
WHEREAS, in order to effect the aforementioned combination, the respective
Boards of Directors of Associated, Merger Sub and FFC have (i) determined that
the merger of Merger Sub with and into FFC (the "Merger") in accordance with
the Wisconsin Business Corporation Law ("Wisconsin Law"), pursuant and subject
to the terms and conditions of this Agreement, are fair to and in the best
interests of their respective corporations and their shareholders, and (ii)
adopted the plan of Merger and the other transactions contemplated hereby; and
WHEREAS, the Board of Directors of Associated has, subject to its fiduciary
duties under applicable law, resolved to recommend approval of the plan of
Merger by the shareholders of Associated; and
WHEREAS, the Board of Directors of FFC has, subject to its fiduciary duties
under applicable law, resolved to recommend approval of the Merger by the
shareholders of FFC; and
WHEREAS, Associated, Merger Sub and FFC 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") with this Agreement representing the plan of reorganization for
purposes of the Code; and
WHEREAS, as a condition and inducement to Associated's willingness to enter
into this Agreement, FFC and Associated will enter into a stock option
agreement (the "FFC Stock Option Agreement") in the form attached hereto as
Exhibit A; and
WHEREAS, as a condition and inducement to FFC's willingness to enter into
this Agreement, Associated and FFC will enter into a stock option agreement
(the "Associated Stock Option Agreement"; together with the FFC Stock Option
Agreement, the "Option Agreements") in the form attached hereto as Exhibit B.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Associated, Merger Sub and FFC hereby agree as follows:
<PAGE>
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) Merger Sub shall be merged with
and into FFC. As a result of the Merger, the separate corporate existence of
Merger Sub shall cease and FFC shall continue as the surviving corporation of
the Merger (the "Surviving Corporation"). Associated may at any time elect to
modify the structure of the Merger contemplated by this Agreement so long as
(i) there are no material adverse federal income tax consequences to the FFC
shareholders as a result of such modification, (ii) the consideration to be
paid to the FFC shareholders under this Agreement is not thereby changed or
reduced in amount, and (iii) such modification will not be reasonably likely
to delay materially or jeopardize receipt of any required regulatory
approvals. In the event that Associated elects to change the structure of the
Merger, the parties agree to modify this Agreement and the various exhibits
hereto to reflect such revised structure.
Section 1.02. Effective Time. Within three business days following the last
to occur of (i) receipt of the shareholder approvals contemplated at Section
6.01(b), (ii) receipt of the required regulatory approvals contemplated at
Section 6.01(c) and expiration of any applicable waiting periods required
thereby and (iii) satisfaction of any other condition to closing set forth in
Article VI, or on such other date as the parties hereto may agree, 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 (the date and time of the filing of the
Articles of Merger is hereinafter referred to as the "Effective Time").
Section 1.03. Effect of the Merger. (a) Legal Effect. 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 Merger Sub and FFC
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of Merger Sub and FFC shall become the debts, liabilities and duties of the
Surviving Corporation.
(b) Post-Merger Operations. Upon the Merger, the parties intend that the
headquarters office of Associated will remain designated as Green Bay,
Wisconsin. It is further anticipated that Associated and FFC Bank (as defined
in Section 2.01(d))(or any successor to the operations of FFC Bank) will, for
the foreseeable future, maintain significant operations in each of Green Bay
and Stevens Point, Wisconsin.
Section 1.04. Articles of Incorporation and Bylaws. At the Effective Time,
the Articles of Incorporation and the Bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
and Bylaws of the Surviving Corporation following the Merger until otherwise
amended or repealed.
Section 1.05. Directors and Officers of Merger Sub. The directors of Merger
Sub 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
FFC 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. Representation on Associated Board. Associated shall take all
necessary actions so that as of the Effective Time, the Board of Directors of
Associated shall consist of a total of fourteen Directors, consisting of (i)
seven individuals, including Harry B. Conlon, the Chairman of the Board of
Associated, who are currently Directors of Associated and, (ii) seven
individuals, including John C. Seramur, to be selected by the Board of
Directors of FFC (subject to the approval of the Board of Directors of
Associated, such approval not to be unreasonably withheld) from the current
Board of Directors of FFC. The Board of Associated shall be divided into three
classes; two of which classes shall be of five persons (one of which shall
have three current
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directors of Associated and two current directors of FFC, and the other of
which shall have two current directors of Associated and three current
directors of FFC) and one class of four persons (two of which shall be current
directors of Associated and the other two of which shall be current directors
of FFC).
Section 1.07. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Associated, Merger Sub, FFC,
or the holders of any of the following securities:
(a) Each share of FFC common stock, par value $1.00 per share ("FFC
Common Stock") (all such shares of FFC 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 1.07(b)) shall be converted, in accordance
with Section 1.08, into the right to receive .765 (the "Exchange Ratio")
shares of Associated common stock, par value $0.01 per share ("Associated
Common Stock"). As of the Effective Time, all such Shares 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 Shares are
convertible. Certificates previously representing Shares 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 1.08, 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 1.08 hereof.
(b) Each Share held in the treasury of FFC or by any of FFC Subsidiaries
(as defined in Section 2.01) and each Share owned by Associated or any
direct or indirect wholly owned subsidiary of Associated immediately prior
to the Effective Time (other than Shares held, directly or indirectly, by
Associated, any Associated Subsidiary, FFC or any FFC Subsidiary in trust
accounts, managed accounts and the like or otherwise held in a fiduciary or
custodial capacity that are beneficially owned by third parties and Shares
held by Associated, any Associated Subsidiary, FFC or any FFC Subsidiary in
respect of debt previously contracted) shall be cancelled and extinguished
without any conversion thereof and no payment shall be made with respect
thereto.
(c) Each share of the common stock, par value $.01 per share, of Merger
Sub issued and outstanding immediately prior to the Effective Time shall by
virtue of this Agreement and without any action on the part of the holder
thereof, be converted into and exchangeable for one share of the common
stock of the Surviving Corporation, which shall thereafter constitute all
of the issued and outstanding shares of the common stock of the Surviving
Corporation.
Section 1.08. 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 (the "Exchange Agent"),
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 1.07 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 1.07
and cash in lieu of fractional shares (if any), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates
to the Exchange Agent and shall be in such form and have such other provisions
as Associated and FFC 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
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<PAGE>
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 any fractional Shares, 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 FFC, 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 as
contemplated by this Section 1.08, 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 1.08(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
1.08(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 1.08(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 1.08(e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Shares. In
accordance with Wisconsin Law, there shall be no appraisal rights available to
holders of FFC Common Stock or Associated Common Stock in connection with the
Merger.
(e) No Fractional Shares. Notwithstanding anything to the contrary contained
herein, 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 (i) 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 to receive pursuant to Section 1.07 hereof by (ii)
the closing sale price of a share of the Associated Common Stock on the Nasdaq
National Market on the trading day immediately preceding the date of the
Effective Time as reported by the Wall Street Journal.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the shareholders of FFC for twelve months after the
Effective Time shall be delivered to Associated, upon demand, and any
shareholders of FFC 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, Merger Sub or FFC 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.
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(h) Withholding Rights. Associated shall be entitled to deduct and withhold
from the consideration otherwise 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 were made by Associated.
Section 1.09. Treatment of Stock Options. (a) At the Effective Time, each
option granted by FFC to purchase Shares which is outstanding and unexercised
immediately prior thereto shall be assumed by Associated. Such options shall
cease to represent a right to acquire Shares and shall be converted
automatically into an option to purchase shares of Associated Common Stock in
an amount and at an exercise price determined as provided below:
(i) the number of shares of Associated Common Stock to be subject to the
new option shall be equal to the product of the number of shares of FFC
Common Stock subject to the original option and the Exchange Ratio;
provided that any fractional shares of Associated Common Stock resulting
from such multiplication shall be rounded down to the nearest whole share;
and
(ii) the exercise price per share of Associated Common Stock under the
new option shall be equal to the exercise price per share of FFC Common
Stock under the original option divided by the Exchange Ratio, provided
that such exercise price shall be rounded up to the nearest whole cent.
(b) the adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be and
is intended to be effected in a manner which is consistent with Section 424(a)
of the code. The duration and other terms of the new option shall be the same
as the original option except that all references to FFC shall be deemed to be
references to Associated.
(c) At the Effective Time, by virtue of the Merger and without the need of
any further corporate action, Associated shall assume the Restated FFC
Corporation Stock Option Plan III and the First Financial Corporation Stock
Option Plan I, as amended (the "FFC Stock Plans"), with the result that all
obligations of FFC under the FFC Stock Plans, including with respect to FFC
stock options outstanding at the Effective Time under each FFC Stock Plan,
shall be obligations of Associated following the Effective Time.
(d) No later than the Effective Time, Associated shall prepare and file with
the SEC a registration statement on Form S-8 (or another appropriate form)
registering a number of shares of Associated Common Stock equal to the number
of shares subject to the adjusted options. Such registration statement shall
be kept effective (and the current status of the prospectus or prospectuses
required thereby shall be maintained) at least for so long as any adjusted
options may remain outstanding.
(e) As soon as practicable after the Effective Time, Associated shall
deliver to the holders of options to purchase FFC Common Stock appropriate
notices setting forth such holders' rights pursuant to FFC Stock Plans and the
agreements pursuant to which such options were issued, and the agreements
evidencing the grant of such options shall be assumed by Associated and shall
continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 1.09 after giving effect to the Merger).
Section 1.10. Stock Transfer Books. At the Effective Time, the stock
transfer books of FFC shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of FFC. From and
after the Effective Time, the holders of certificates evidencing ownership of
Shares 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 1.11. 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 or other capital
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stock of Associated in shares of Associated Common Stock or other capital
stock of Associated or any security convertible into Associated Common Stock
or other capital stock of Associated or shall combine, subdivide, reclassify
or recapitalize 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 from such combination or subdivision, an
appropriate adjustment shall be made to the Exchange Ratio, for purposes of
determining the number of shares of Associated Common Stock into which FFC'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.
ARTICLE II
Representations and Warranties of FFC
Except as set forth in the disclosure schedule delivered by FFC to
Associated prior to the execution of this Agreement which shall identify
exceptions by specific Section references; provided that disclosure in one
schedule will be deemed to satisfy disclosure in another schedule (the "FFC
Disclosure Schedule"), FFC hereby represents and warrants to Associated and
Merger Sub that:
Section 2.01. Organization and Qualification of FFC; Subsidiaries. (a) FFC
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Wisconsin. FFC is a unitary savings and loan holding
company registered with the Office of Thrift Supervision under HOLA.
(b) Section 2.01 of the FFC Disclosure Schedule sets forth a true and
complete list of each of FFC's subsidiaries (the "FFC Subsidiaries") and the
percentage owned by FFC of such equity securities. Except as set forth in
Section 2.01 of the FFC Disclosure Schedule, each FFC Subsidiary is wholly
owned, directly or indirectly, by FFC. Except as set forth in Section 2.01 of
the FFC Disclosure Schedule, all outstanding shares of capital stock of FFC
Subsidiaries are validly issued, fully paid and nonassessable (except as
provided in Section 180.0622(2)(b) of Wisconsin Law) and are free and clear of
any lien, claim, charge, options, encumbrances agreement, mortgage, pledge,
security interest or restriction (each, a "Lien") with respect thereto. Each
FFC Subsidiary is a corporation, partnership, savings bank, savings and loan,
bank or trust company duly incorporated or organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization.
(c) FFC and each FFC Subsidiary has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("FFC Permits") necessary to own, lease and operate its properties and to
carry on its business as is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power,
authority and FFC Permits would not, either individually or in the aggregate,
have a Material Adverse Effect (as defined below) on FFC and the FFC
Subsidiaries, taken as a whole. FFC has not received any notice of proceedings
relating to the revocation or modification of any FFC Permits except for any
such revocation or modification which would not, either individually or in the
aggregate, have a Material Adverse Effect on FFC and the FFC Subsidiaries,
taken as a whole. FFC and each FFC Subsidiary is duly qualified or licensed as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated
by it or the nature of its 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 FFC and the FFC Subsidiaries, taken as a whole.
(d) Deposits in First Financial Bank, a Federally chartered savings bank
("FFC Bank"), are insured by the Savings Association Insurance Fund to
applicable limits. The form of charter and any applicable insurance fund
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for each of the other FFC Subsidiaries which is a financial institution is set
forth in Section 2.01 of the FFC Disclosure Schedule.
(e) Section 2.01 of the FFC Disclosure Schedule sets forth a true, complete
and correct list of all corporations, partnerships, limited liability
companies or other organizations, whether an incorporated or unincorporated
organization (a "Corporate Entity") of which FFC or any FFC Subsidiary holds
or beneficially owns 5% or more of the outstanding shares of any class of
voting securities, holds a general partnership interest or other controlling
interest, holds or beneficially owns more than 24.9% of the outstanding
capital stock (whether voting or nonvoting) and subordinated debt or is
otherwise deemed to be a subsidiary within the meaning of the BHCA.
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), in the aggregate, or the ability of such party to
consummate the transactions contemplated by this Agreement, except that a
Material Adverse Effect shall not be deemed to have occurred as a result of
any change or effect resulting from a change in law, rule, regulation,
generally accepted accounting principle or regulatory accounting principle, in
each case, affecting financial institutions or their holding companies
generally.
Section 2.02. Articles of Incorporation and Bylaws. FFC has heretofore
furnished or made available to Associated a complete and correct copy of the
Articles of Incorporation and the Bylaws, as amended or restated, of FFC and
the FFC Subsidiaries and such Articles of Incorporation and Bylaws of FFC and
the FFC Subsidiaries are in full force and effect and neither FFC nor any FFC
Subsidiary is in violation of any of the provisions of its respective Articles
of Incorporation or Bylaws.
Section 2.03. Capitalization. (a) Capitalization of FFC. The authorized
capital stock of FFC consists of (i) 75,000,000 Shares, of which, as of March
31, 1997, 36,411,443 Shares were issued and outstanding, all of which are
validly issued, fully paid and non-assessable (except as provided in Section
180.0622(2)(b) of Wisconsin Law), and all of which have been issued in
compliance with applicable securities laws, and (ii) 3,000,000 shares of
serial preferred stock, par value $1.00 per share ("FFC Preferred Stock"), of
which no shares are issued and outstanding. Since March 31, 1997, no Shares
have been issued, except for Shares issued upon exercise of options
outstanding as of March 31, 1997 under the FFC Stock Plans (as defined in
Section 1.09). As of March 31, 1997, FFC had outstanding 1,266,887 options
issued under the FFC Stock Plans, 992,651 of which were exercisable. No
options have been granted since March 31, 1997 to the date of this Agreement
under the FFC Stock Plans. As of the date of this Agreement, 1,449,620 Shares
are held as treasury stock by FFC. Other than pursuant to the FFC Stock Option
Agreement and the FFC Stock Plans, there are no options, warrants or other
rights, rights of first refusal, agreements, arrangements, or commitments of
any character relating to the issued or unissued capital stock of FFC or
obligating FFC to issue or sell any shares of capital stock of, or other
equity interests in FFC. There are no obligations, contingent or otherwise, of
FFC to repurchase, redeem or otherwise acquire any Shares or to provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity (including any FFC Subsidiary).
(b) Capital Stock of the FFC Subsidiaries. Except as set forth in Section
2.03 (b) of the FFC Disclosure Schedule there are no options, warrants or
other rights, rights of first refusal, agreements, arrangements or commitments
of any character relating to the issued or unissued capital stock of the FFC
Subsidiaries or obligating any FFC Subsidiary to issue or sell any shares of
capital stock of, or other equity interests in any FFC Subsidiary. There are
no obligations, contingent or otherwise, of any FFC Subsidiary to repurchase,
redeem or otherwise acquire any shares of the capital stock of any FFC
Subsidiary 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; State Takeover Laws; Articles of Incorporation. (a)
FFC 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 FFC and
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the consummation by FFC of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of FFC
and no other corporate proceedings on the part of FFC are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger, the approval of the plan of Merger by
the holders of two-thirds of the then outstanding Shares in accordance with
Wisconsin Law and FFC's Articles of Incorporation and Bylaws, and the filing
and recordation of appropriate merger documents required by Wisconsin Law).
This Agreement has been duly and validly executed and delivered by FFC and,
assuming the due authorization, execution and delivery by Associated and
Merger Sub, constitutes the legal, valid and binding obligation of FFC
enforceable in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally and by general principles of equity.
(b) The Board of Directors of FFC has taken all actions necessary under
Wisconsin Law and FFC's Articles of Incorporation, including approving the
transactions contemplated herein, to insure that the restrictions on business
combinations set forth in Wisconsin Law and the supermajority voting
requirements set forth in FFC's Articles of Incorporation do not or will not
apply to this Agreement, the transactions contemplated herein, the FFC Stock
Option Agreement or the transactions contemplated therein or any transaction
between Associated or its affiliates, on the one hand, and FFC or its
affiliates, on the other hand, following exercise of the FFC Stock Option.
Section 2.05. No Conflict; Required Filings and Consents. (a) Except as set
forth in Section 2.05 of the FFC Disclosure Schedule, the execution and
delivery of this Agreement by FFC does not, and the performance of this
Agreement by FFC shall not, (i) conflict with or violate the Articles of
Incorporation or Bylaws of FFC or any FFC Subsidiary, (ii) conflict with or
violate any domestic (federal, state or local) or foreign law, statute,
ordinance, rule, regulation, order, judgment decision, writ, injunction or
decree (collectively, "Laws") applicable to FFC or any FFC Subsidiary, or by
which its 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 on any of the properties or assets of FFC or any FFC
Subsidiary pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which FFC or any FFC Subsidiary is a party or by which FFC or any FFC
Subsidiary or its respective properties are bound or affected, except (in the
case of clauses (ii) and (iii) of this Section 2.05(a)) for any such
conflicts, violations, breaches, defaults or other occurrences that would not,
either individually or in the aggregate, have a Material Adverse Effect on FFC
and the FFC Subsidiaries, taken as a whole.
(b) The execution and delivery of this Agreement by FFC does not, and the
performance of this Agreement by FFC shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, ("Approvals")
except (i) for the applicable requirements, if any, of (A) the Securities Act
of 1933, as amended (the "Securities Act"), (B) the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (C) the BHCA, (D) HOLA, (E) the Office
of the Comptroller of the Currency (the "OCC"), (F) the Federal Deposit
Insurance Act, as amended, and the rules and regulations promulgated
thereunder (the "FDIA"), (G) state securities or blue sky laws ("Blue Sky
Laws"), (H) the banking laws and regulations of the State of Wisconsin (the
"WBL"), (I) the filing and recordation of appropriate merger or other
documents as required by Wisconsin Law, (J) the banking laws and regulations
of the State of Illinois (the "IBL"), (K) the Nasdaq Stock Market, (L)
applicable laws and regulations relating to insurance business agencies
("Insurance Laws") and (M) any applicable domestic or foreign industry self-
regulatory organization ("SRO"), and (ii) such additional Approvals the
failure of which to obtain would not prevent or delay consummation of the
Merger, or otherwise prevent FFC from performing its obligations under this
Agreement, and would not, either individually or in the aggregate, have a
Material Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
Section 2.06. Compliance. Neither FFC nor any FFC Subsidiary is in conflict
with, or in default or violation of, (i) any Law applicable to FFC or the FFC
Subsidiaries or by which any of their respective properties
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are bound or affected, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which FFC or any FFC Subsidiary is a party or by which FFC or any FFC
Subsidiary or any of their respective properties are bound or affected, except
for any such conflicts, defaults or violations which would not, either
individually or in the aggregate, have a Material Adverse Effect on FFC and
the FFC Subsidiaries, taken as a whole.
Section 2.07. Securities and Banking Reports; Financial Statements. (a) FFC
and the FFC Subsidiaries have filed all material forms, reports registrations,
statements and documents, together with any amendments required to be made
with respect thereto that were required to be filed since January 1, 1995 with
(i) the Securities and Exchange Commission (the "SEC") and (ii)(A) any SRO,
(B) any other federal, state or foreign governmental or regulatory agency or
authority (collectively with the SEC and the SROs, "Regulatory Agencies") and
(C) all other reports and statements (the filings made with the entities
listed in subclause (ii) being referred to as "Other Reports") required to be
filed by FFC and any FFC Subsidiary since January 1, 1995, and paid all fees
and assessments due and payable in connection therewith, except, in the case
of the Other Reports, where failure to file such form, report, registration,
statement or document or pay such fees and assessments would not, either
individually or in the aggregate, have a Material Adverse Effect on FFC and
the FFC Subsidiaries, taken as a whole (all such reports and statements, are
collectively referred to as the "FFC Reports"). The FFC Reports, including all
FFC 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 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 any filings with the SEC since January
1, 1995 (the "FFC SEC Reports"), including any FFC SEC Reports filed since the
date of this Agreement and prior to or on the Effective Time, have been, or
will be, 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, or will fairly
present, in all material respects, the consolidated financial position of FFC
and the FFC 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 FFC and the FFC Subsidiaries as of December 31, 1996, including all notes
thereto (the "FFC Balance Sheet"), neither FFC nor any FFC Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), except for (i) liabilities or obligations incurred
in the ordinary course of business since December 31, 1996 and (ii)
liabilities or obligations that would not, either individually or in the
aggregate, have a Material Adverse Effect on FFC and the FFC Subsidiaries,
taken as a whole.
Section 2.08. Absence of Certain Changes or Events. (a) Except as disclosed
in the FFC SEC Reports filed prior to the date of this Agreement, since
December 31, 1996, (i) FFC and the FFC Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and (ii) there has been no event which has had, or is reasonably
likely to result in, either individually or in the aggregate, a Material
Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
Section 2.09. Absence of Litigation and Agreements. (a) Except as disclosed
in the FFC SEC Reports filed prior to the date of this Agreement or set forth
in Section 2.09 of the FFC Disclosure Schedule, (i) neither FFC nor any FFC
Subsidiary is subject to any continuing order of, or written agreement or
memorandum of understanding with, or continuing investigation by, any federal
or state savings and loan or bank regulatory authority or other governmental
entity or regulatory authority, or any judgment, order, writ, injunction,
decree or award of any governmental entity or regulatory authority or
arbitrator, including, without limitation, cease-and-desist or other orders
which, either individually or in the aggregate, would have or reasonably be
expected to
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have a Material Adverse Effect on FFC and the FFC Subsidiaries, taken as a
whole; (ii) there is no claim of any kind, action, suit, litigation,
proceeding, arbitration, investigation, or controversy affecting FFC or the
FFC Subsidiaries pending or, to the knowledge of FFC, threatened, except (A)
as of the date of this Agreement, for matters which individually seek damages
not in excess of $500,000 and (B) as of the Closing (as defined in Section
8.01), for matters which otherwise cannot reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on FFC and
the FFC Subsidiaries, taken as a whole; and (iii) there are not uncured
violations, or violations with respect to which refunds or restitutions may be
required, cited in any compliance report to FFC or the FFC Subsidiaries as a
result of the examination by any bank regulatory authority, which would have
or reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
(b) Except as set forth on the FFC Disclosure Schedule at Section 2.09,
neither FFC nor any of the FFC Subsidiaries is a party to any written
agreement or memorandum of understanding with, or party to any commitment
letter, board resolution submitted to a regulatory authority or similar
undertaking to, or is subject to any order or directive by, or is a recipient
of any extraordinary supervisory letter from any governmental entity or agency
which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies or its
management nor has FFC or any FFC Subsidiary (i) been advised by any
governmental entity or agency that it 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 or (ii) have
knowledge of any pending or threatened regulatory investigation. Neither FFC
nor any FFC Subsidiary is required by Section 32 of the Federal Deposit
Insurance Act to give prior notice to a Federal banking agency of the proposed
addition of an individual to its board of directors or the employment of an
individual as a senior executive officer.
Section 2.10. Employee Benefit Plans. (a) Except as set forth in Section
2.10 of the FFC Disclosure Schedule, since December 31, 1996, there has not
been any adoption or amendment in any material respect by FFC or any FFC
Subsidiary of any employment, consulting, termination or severance agreement
or any material bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding providing
benefits to any current or former employee, officer or director of FFC or any
FFC Subsidiary (collectively, such agreements, plans, arrangements and
understandings being the "FFC Benefit Plans"), or any material change in any
actuarial or other assumption used to calculate funding obligations with
respect to any FFC pension plans, or any change in the manner in which
contributions to any FFC pension plans are made or the basis on which such
contributions are determined.
(b) Section 2.10 of the FFC Disclosure Schedule sets forth a list of all FFC
Benefit Plans. FFC has delivered or made available to Associated true and
complete copies of all FFC Benefit Plans together with all current related
documents, including the most recent summary plan descriptions, IRS
determination letters and actuarial reports, if applicable.
(c) (i) Except as disclosed in Section 2.10 of the FFC Disclosure Schedule,
with respect to FFC Benefit Plans, no event has occurred and, to the knowledge
of FFC, there exists no condition or set of circumstances, in connection with
which FFC or any of the FFC Subsidiaries could be subject to any liability
that individually, or in the aggregate, would have a Material Adverse Effect
on FFC and the FFC Subsidiaries, taken as a whole, under ERISA, the Code or
any other applicable law.
(ii) Each FFC Benefit Plan has been administered in accordance with its
terms, except for any failures so to administer any FFC Benefit Plan that
individually or in the aggregate, would not have a Material Adverse Effect on
FFC and the FFC Subsidiaries, taken as a whole. FFC, the FFC Subsidiaries and
all FFC Benefit Plans are in compliance with the applicable provisions of
ERISA, the Code and all other applicable laws and the terms of all applicable
collective bargaining agreements, except for any failures to be in such
compliance that, individually or in the aggregate, would not have a Material
Adverse Effect on FFC and the FFC Subsidiaries, taken as a
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whole. Each FFC Benefit Plan that is intended to be qualified under Section
401(a) or 401(k) of the Code has received a favorable determination letter
from the IRS that it is so qualified and each trust established in connection
with any FFC Benefit Plan that is intended to be exempt from Federal income
taxation under Section 501(a) of the Code has received a determination letter
from the IRS that such trust is so exempt. To the knowledge of FFC, no fact or
event has occurred since that date of any determination letter from the IRS
which is reasonably likely to affect adversely the qualified status of any
such FFC Benefit Plan or the exempt status of any such trust.
(iii) Neither FFC nor any of the FFC Subsidiaries has incurred any liability
under Title IV of ERISA (other than liability for premiums to the Pension
Benefit Guaranty Corporation arising in the ordinary course). No FFC Benefit
Plan has incurred an "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code) whether or not waived. To the
knowledge of FFC, there are not any facts or circumstances that would
materially change the funded status of any FFC Benefit Plan that is a "defined
benefit" plan (as defined in Section 3(35) of ERISA) since the date of the
most recent actuarial report for such plan. No FFC Benefit Plan is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA.
(iv) Neither FFC nor any of the FFC Subsidiaries is a party to any
collective bargaining or other labor union contract applicable to persons
employed by FFC or any of the FFC Subsidiaries and no collective bargaining
agreement is being negotiated by FFC or any of the FFC Subsidiaries. There is
no labor dispute, strike or work stoppage against FFC or any of the FFC
Subsidiaries pending or, to the knowledge of FFC, threatened which may
interfere with the respective business activities of FFC or any FFC
Subsidiary, except where such dispute, strike or work stoppage individually or
in the aggregate, would not have a Material Adverse Effect on FFC and the FFC
Subsidiaries, taken as a whole. As of the date of this Agreement, to the
knowledge of FFC, none of FFC, any of the FFC Subsidiaries or any of their
respective representatives or employees has committed any unfair labor
practice in connection with the operation of the respective businesses of FFC
or any of the FFC Subsidiaries, and there is no charge or complaint against
FFC or any of the FFC Subsidiaries by the National Labor Relations Board or
any comparable governmental agency pending or threatened in writing.
(v) Except as referenced in this Agreement or contemplated by this Agreement
and except as set forth in Section 2.10 of the FFC Disclosure Schedule, no
employee of FFC or any FFC Subsidiary will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of any benefits
under any FFC Benefit Plan as a result of the transactions contemplated by
this Agreement or the Option Agreements.
(vi) No payment or benefit will or may be made by FFC or any FFC Subsidiary
with respect to any employee or any current of former director that will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b) of the Code.
Section 2.11. Material Contracts. Except as set forth in Section 2.11 of the
FFC Disclosure Schedule, as of the date of this Agreement, neither FFC nor any
FFC Subsidiary is a party to or bound by (a) any contract or commitment for
capital expenditures in excess of $500,000 for any one project, (b) 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 and calling for aggregate future payments of $1,000,000 or more
during the term of such contract or commitment, (c) any contract which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) that has not been filed or incorporated by reference in the
FFC SEC Reports, (d) any contract which contains non-compete or exclusivity
provisions or restrictions with respect to any business or geographic area or
(e) any contract which would prohibit or materially delay the consummation of
the Merger or any other transaction contemplated by this Agreement. Each
contract, arrangement, commitment or understanding of the type described in
this Section 2.11, whether or not set forth in Section 2.11 of the FFC
Disclosure Schedule, is referred to herein as a "FFC Contract". Neither FFC
nor any FFC Subsidiary knows of, or has received notice of, any violation of
any FFC Contract by any of the other parties thereto, except for violations
which, individually or in the aggregate, would not result in a Material
Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
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Section 2.12. Environmental Matters. To the knowledge of FFC neither FFC,
any FFC Subsidiary, nor any properties owned or operated by FFC or any FFC
Subsidiary has been or is in violation of or liable under any Environmental
Law, except for such violations or liabilities that, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on FFC
and the FFC Subsidiaries, taken as a whole. There are no actions, suits or
proceedings, or demands, claims, notices or investigations (including without
limitation notices, demand letters or requests of information from any
environmental agency) instituted or pending, or to the knowledge of FFC,
threatened, relating to the liability of FFC or any FFC Subsidiary with
respect to any properties owned or operated by FFC or any FFC Subsidiary under
any Environmental Law, except for liabilities or violations that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
"Environmental Law" means any applicable federal, state, local or foreign
law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent order, judgment, decree, injunction or
agreement with any regulatory authority relating to (i) the protection,
preservation or restoration of the environment (including, without limitation,
air, water vapor, surface water, groundwater, drinking water supply, surface
soil, subsurface soil, plant and animal life or any other natural resource),
and/or (ii) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of any substance presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether
by type or by quantity, including any material containing any such substance
as a component.
Section 2.13. Taxes. (a) Except for such matters as would not have,
individually or in the aggregate, a Material Adverse Effect on FFC and the FFC
Subsidiaries, taken as a whole, (i) FFC and the FFC Subsidiaries have timely
filed or will timely file all returns and reports required to be filed by them
with any taxing authority with respect to Taxes (as defined below) for any
period ending on or before the Effective Time, taking into account any
extension of time to file granted to or obtained on behalf of FFC and the FFC
Subsidiaries, (ii) all Taxes that are due prior to the Effective Time have
been paid or will be paid (other than Taxes which (1) are not yet delinquent
or (2) are being contested in good faith and have not been finally
determined), (iii) as of the date hereof, no deficiency for any Tax has been
asserted or assessed by a taxing authority against FFC or any of the FFC
Subsidiaries which deficiency has not been paid other than any deficiency
being contested in good faith and (iv) FFC and the FFC Subsidiaries have
provided adequate reserves (in accordance with generally accepted accounting
principles) in their financial statements for any Taxes that have not been
paid, whether or not shown as being due on any returns. As used in this
Agreement, "Taxes" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any governmental entity or taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchise, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or other charges
in the nature of excise, withholding, ad valorem, stamp, transfer, value-added
or gains taxes; license, registration and documentation fees; and customers'
duties, tariffs and similar charges.
(b) To the knowledge of FFC, there are no material disputes pending, or
claims asserted in writing for, Taxes or assessments upon FFC or any of the
FFC Subsidiaries, nor has FFC or any FFC Subsidiaries been requested in
writing to give any currently effective waivers extending the statutory period
of limitation applicable to any federal or state income tax return for any
period which disputes, claims, assessments or waivers would have, individually
or in the aggregate, a Material Adverse Effect on FFC and the FFC
Subsidiaries, taken as a whole.
(c) There are no Tax liens upon any property or assets of FFC or any of the
FFC Subsidiaries except liens for current Taxes not yet due and except for
liens which have not had and are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on FFC and the FFC
Subsidiaries, taken as a whole.
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(d) Neither FFC nor any of the FFC Subsidiaries has been required to include
in income any adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by FFC or any of the FFC
Subsidiaries, and the IRS has not initiated or proposed any such adjustment or
change in accounting method, in either case which adjustment or change would
have, individually or in the aggregate, a Material Adverse Effect on FFC and
the FFC Subsidiaries, taken as a whole.
(e) Except as set forth in the financial statements described in Section
2.07, neither FFC nor any the FFC Subsidiaries has entered into a transaction
which is being accounted for under the installment method of Section 453 of
the Code, which would have, individually or in the aggregate, a Material
Adverse Effect on FFC, and the FFC Subsidiaries, taken as a whole.
Section 2.14. Derivative Instruments. All swap, forward, future, option,
cap, floor or collar financial contracts, and any other interest rate
protection contracts ("Derivative Instruments") to which FFC or any FFC
Subsidiary is a party or to which any of their properties or assets may be
subject were entered into in the ordinary course of business and, to the
knowledge of FFC, in accordance with prudent banking practice and applicable
rules, regulations, and policies of the regulatory agencies and with
counterparties believed to be financially responsible at the time and, to the
knowledge of FFC, are legal, valid, and binding obligations enforceable in
accordance with their terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization, or similar laws affecting the rights
of creditors generally, and the availability of equitable remedies), and, to
the knowledge of FFC, are in full force and effect. FFC and each FFC
Subsidiary has duly performed in all material respects all of its obligations
under any such Derivative Instruments, and to the knowledge of FFC, there are
no breaches, violations, or defaults or allegations or assertions of such by
any party thereunder except for any such breaches, violations, or defaults or
allegations or assertions which would not, individually or in the aggregate,
have a Material Adverse Effect on FFC and the FFC Subsidiaries, taken as a
whole.
Section 2.15. Regulatory Approvals. FFC is not aware of any aspect of, or
issues relating to, its or the FFC Subsidiaries' operations and business that
would prevent the condition of Closing set forth in Section 6.01(c) from being
satisfied.
Section 2.16. Brokers. Except as contemplated by or referenced in the May
[14], 1997 letter agreement between McDonald & Company Securities, Inc.
("McDonald") and FFC, a true and complete copy of which FFC has delivered to
Associated, 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 FFC or any FFC Subsidiary.
Section 2.17. Pooling of Interests and Tax Matters. Neither FFC nor, to the
knowledge of FFC, 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 combination to be effected by the Merger as a
pooling of interests in accordance with generally accepted accounting
principles or would prevent the Merger from qualifying as a reorganization
under Section 368(a) of the Code. FFC has no reason to believe that the Merger
will not qualify as a pooling of interest or as a reorganization under Section
368(a) of the Code.
Section 2.18. Vote Required. The affirmative vote of the holders of two-
thirds of the outstanding Shares entitled to vote on the Merger is the only
FFC shareholder vote required with respect to the Merger.
Section 2.19. Fairness Opinion. FFC has received an opinion from McDonald to
the effect that, in its opinion, the consideration to be paid to shareholders
of FFC under this Agreement is fair to such shareholders from a financial
point of view ("FFC Fairness Opinion"), and McDonald has consented to the
inclusion of the FFC Fairness Opinion in the Form S-4 (as defined below).
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ARTICLE III
Representations and Warranties of Associated
Except as set forth in the disclosure schedule delivered by Associated to
FFC prior to the execution of this Agreement which shall identify exceptions
by specific Section references; provided that disclosure in one schedule will
be deemed to satisfy disclosure in another schedule (the "Associated
Disclosure Schedule"), Associated hereby represents and warrants to FFC that:
Section 3.01. Organization and Qualification of Associated;
Subsidiaries. (a) Associated, is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin.
Associated is registered as a bank holding company with the Federal Reserve
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")
under the BHCA.
(b) Section 3.01 of the Associated Disclosure Schedule sets forth a true and
complete list of each of Associated's subsidiaries (the "Associated
Subsidiaries"), all outstanding equity securities of each Associated
Subsidiaries and the percentages owned by Associated of such equity
securities. Except as set forth in Section 3.01 of the Associated Disclosure
Schedule, each Associated Subsidiary is wholly owned, directly or indirectly,
by Associated. Except as set forth in Section 3.01 of the Associated
Disclosure Schedule, all outstanding shares of capital stock of the Associated
Subsidiaries are validly issued, fully paid and nonassessable (except as
provided in Section 180.0622(2)(b) of Wisconsin Law) and are free and clear of
any Lien, with respect thereto. Each Associated Subsidiary is a corporation,
partnership, savings bank, savings and loan, bank or trust company duly
incorporated or organized validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization.
(c) Associated and each Associated Subsidiary has the requisite corporate
power and authority and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates,
approvals and orders (the "Associated Permits") 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 Associated Permits would not,
either individually or in the aggregate, have a Material Adverse Effect on
Associated and the Associated Subsidiaries, taken as a whole. Associated has
not received any notice of proceedings relating to the revocation or
modification of any such Associated Permits except for any such revocation or
modification which would not, either individually or in the aggregate, have a
Material Adverse Effect on Associated and the Associated Subsidiaries, taken
as a whole. Associated and each Associated Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its 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 and the Associated
Subsidiaries, taken as a whole.
(d) Section 3.01 of the Associated Disclosure Schedule sets forth with
respect to each Associated Subsidiary that is a financial institution, its
form of charter and the insurance fund which insures such subsidiary's
deposits.
(e) Section 3.01 of the Associated Disclosure Schedule sets forth a true,
complete and correct list of all Corporate Entities of which Associated or any
Associated Subsidiary holds or beneficially owns 5% or more of the outstanding
shares of any class of voting securities, holds a general partnership interest
or other controlling interest, holds or beneficially owns more than 24.9% of
the outstanding capital stock (whether voting or nonvoting) and subordinated
debt or is otherwise deemed to be a subsidiary within the meaning of the BHCA.
Section 3.02. Articles of Incorporation and Bylaws. Associated, Merger Sub
and Associated Bank Green Bay, N.A. and Associated Bank Milwaukee (together,
the "Associated Material Subsidiaries") have heretofore furnished or made
available to FFC a complete and correct copy of their respective Articles of
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Incorporation and the Bylaws, as amended or restated. The Associated Material
Subsidiaries are Associated's only banking subsidiaries with total assets (as
reflected on the financial statements of Associated's banking subsidiaries)
greater than $500 million. Such Articles of Incorporation and Bylaws are in
full force and effect and none of Associated, Merger Sub or the Associated
Material Subsidiaries are in violation of any of the provisions of their
respective Articles of Incorporation or Bylaws.
Section 3.03. Capitalization. (a) Capitalization of Associated. The
authorized capital stock of Associated consists of (i) 48,000,000 shares of
Associated Common Stock of which as of March 31, 1997, 22,439,000 shares were
issued and outstanding, all of such shares are, and the shares of Associated
Common Stock to be issued pursuant to the Merger, when so issued will be,
validly issued, fully paid and non-assessable (except as provided in Section
180.0622(2)(b) of Wisconsin Business Corporation Law), and all of which have
been or will be issued in compliance with applicable securities laws, and (ii)
750,000 shares of preferred stock, par value $1.00 per share ("Associated
Preferred Stock"), of which no shares are issued and outstanding. Since March
31, 1997, no shares of Associated Common Stock have been issued, except for
shares issued upon exercise of options outstanding as of March 31, 1997, under
the Restated Long Term Incentive Stock Plan and the 1982 Incentive Stock
Option Plan (the "Associated Stock Plans"). As of March 31, 1997 Associated
had reserved 2,127,855 shares of Associated Common Stock under the Associated
Stock Plans pursuant to which options covering 1,262,577 shares of Associated
Common Stock were outstanding. No options have been granted since March 31,
1997 to the date of this Agreement under the Associated Stock Plans. As of the
date of this Agreement 34,556 shares of the Associated Common Stock are held
as treasury stock by Associated. Other than pursuant to the Associated Stock
Option Agreement and the Associated Stock Plans there are no options, warrants
or other rights, rights of first refusal, agreements, arrangements, or
commitments of any character relating to the issued or unissued capital stock
of Associated or obligating Associated to issue or sell any shares of capital
stock of, or other equity interests in Associated. There are no obligations,
contingent or otherwise, of Associated to repurchase, redeem or otherwise
acquire any shares of Associated 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 (including any Associated Subsidiary).
(b) Capital Stock of the Associated Subsidiaries. Except as set forth in
Section 3.03(b) of the Associated Disclosure Schedule, there are no options,
warrants or other rights, rights of first refusal, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of the Associated Subsidiaries or obligating any Associated Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in any
Associated Subsidiary. There are no obligations, contingent or otherwise, of
any Associated Subsidiary to repurchase, redeem or otherwise acquire any
shares of the capital stock of any Associated Subsidiary or to provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity.
Section 3.04. Authority. Associated and Merger Sub 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 Merger Sub and the consummation by Associated and Merger Sub of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Associated and Merger Sub and no
other corporate proceedings on the part of Associated or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the requisite
approval to increase the authorized number of, and the issuances of, shares of
Associated Common Stock in connection with the Merger). This Agreement has
been duly and validly executed and delivered by Associated and Merger Sub and,
assuming the due authorization, execution and delivery by FFC, constitutes the
legal, valid and binding obligation of Associated and Merger Sub enforceable
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally and by general principles of equity.
Section 3.05. No Conflict; Required Filings and Consents. (a) Except as set
forth in Section 3.05 of the Associated Disclosure Schedule, the execution and
delivery of this Agreement by Associated and Merger
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Sub does not, and the performance of this Agreement by Associated and Merger
Sub shall not, (i) conflict with or violate the Articles of Incorporation or
Bylaws of Associated or any Associated Subsidiary, (ii) conflict with or
violate any Laws applicable to Associated or any Associated Subsidiary, or by
which its 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 on any of the properties or assets of Associated or any
Associated Subsidiary pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Associated or any Associated Subsidiary is a party or by
which Associated or any Associated Subsidiary or its respective properties are
bound or affected, except (in the case of clauses (ii) and (iii) of this
Section 3.05(a)) for any such conflicts, violations, breaches, defaults or
other occurrences that would not, either individually or in the aggregate,
have a Material Adverse Effect on Associated and the Associated Subsidiaries,
taken as a whole.
(b) The execution and delivery of this Agreement by Associated and Merger
Sub does not, and the performance of this Agreement by Associated and Merger
Sub shall not, require any Approval, except (i) for applicable requirements,
if any, of (A) the Securities Act, (B) the Exchange Act, (C) the BHCA, (D)
HOLA, (E) the OCC, (F) the FDIA, (G) Blue Sky Laws, (H) the WBL, (I) the
filing and recordation of appropriate merger or other documents as required by
Wisconsin Law, (J) the IBL, (K) the Nasdaq Stock Market, (L) Insurance Laws
and (M) any applicable SRO and (ii) such additional Approvals the failure of
which to obtain would not prevent or delay consummation of the Merger, or
otherwise prevent Associated and Merger Sub from performing their obligations
under this Agreement, and would not, either individually or in the aggregate,
have a Material Adverse Effect on Associated and the Associated Subsidiaries,
taken as a whole.
Section 3.06. Compliance. Neither Associated nor any Associated Subsidiary
is in conflict with, or in default or violation of, (i) any Law applicable to
Associated or the Associated Subsidiaries or by which any of their respective
properties are bound or affected, or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Associated or any Associated Subsidiary is a party or by
which Associated or any Associated Subsidiary or any of their respective
properties are bound or affected, except for any such conflicts, defaults or
violations which would not, either individually or in the aggregate, have a
Material Adverse Effect on Associated and the Associated Subsidiaries, taken
as a whole.
Section 3.07. Securities and Banking Reports; Financial Statements. (a)
Associated and the Associated Subsidiaries have filed all material forms,
reports, registrations, statements and documents, together with any amendments
required to be made with respect thereto that were required to be filed since
January 1, 1995 with the Regulatory Agencies and all Other Reports required to
be filed by Associated and any Associated Subsidiary since January 1, 1995,
and paid all fees and assessments due and payable in connection therewith,
except, in the case of the Other Reports, where failure to file such form,
report, registration, statement or document or pay such fees and assessments
would not, either individually or in the aggregate, have a Material Adverse
Effect on Associated and the Associated Subsidiaries, taken as a whole (all
such reports and statements are collectively referred to as the "Associated
Reports"). The Associated Reports, including all Associated 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 (including, in each case,
any related notes thereto) contained in any filings with the SEC since January
1, 1995 (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, or will be, prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as the may be indicated in the notes thereto) and each fairly
presents, or will fairly present, in all material respects, the consolidated
financial position of Associated and the Associated
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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 the Associated Subsidiaries as of December 31, 1996,
including all notes thereto (the "Associated Balance Sheet"), neither
Associated nor any Associated Subsidiary has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise), except for
(i) liabilities or obligations incurred in the ordinary course of business
since December 31, 1996 and (ii) liabilities or obligations that would not,
either individually or in the aggregate, have a Material Adverse Effect on
Associated and the Associated Subsidiaries, taken as a whole.
Section 3.08. Absence of Certain Changes or Events. (a) Except as disclosed
in the Associated SEC Reports filed prior to the date of this Agreement, since
December 31, 1996, (i) Associated and the Associated Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and (ii) there has been no event which has had,
or is reasonably likely to result in, either individually or in the aggregate,
a Material Adverse Effect on Associated and the Associated Subsidiaries, taken
as a whole.
Section 3.09. Absence of Litigation and Agreements. (a) Except as disclosed
in the Associated SEC Reports filed prior to the date of this Agreement or set
forth in Section 3.09 of the Associated Disclosure Schedule, (i) neither
Associated nor any Associated Subsidiary is subject to any continuing order
of, or written agreement or memorandum of understanding with, or continuing
investigation by, any federal or state savings and loan or bank regulatory
authority or other governmental entity or regulatory authority, or any
judgment, order, writ, injunction, decree or award of any governmental entity
or regulatory authority or arbitrator, including, without limitation, cease-
and-desist or other orders which, either individually or in the aggregate,
would have or reasonably be expected to have a Material Adverse Effect on the
Associated and the Associated Subsidiaries, taken as a whole; (ii) there is no
claim of any kind, action, suit, litigation, proceeding, arbitration,
investigation, or controversy affecting Associated or the Associated
Subsidiaries pending or, to the knowledge of Associated, threatened, except
(A) as of the date of this Agreement, for matters which individually seek
damages not in excess of $500,000 and (B) as of the Closing, for matters which
cannot reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole; and (iii) there are not uncured violations, or
violations with respect to which refunds or restitutions may be required,
cited in any compliance report to Associated or the Associated Subsidiaries as
a result of the examination by any bank regulatory authority, which would have
or reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Associated and the Associated Subsidiaries, taken
as a whole.
(b) Except as set forth on the Associated Disclosure Schedule at Section
3.09, neither Associated nor any of the Associated Subsidiaries is a party to
any written agreement or memorandum of understanding with, or party to any
commitment letter, board resolution submitted to a regulatory authority or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from any governmental entity
or agency which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies or its
management nor has Associated or any Associated Subsidiary (i) been advised by
any governmental entity or agency that it 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 or (ii) have
knowledge of any pending or threatened regulatory investigation. Neither
Associated nor any Associated Subsidiary is required by Section 32 of the
Federal Deposit Insurance Act to give prior notice to a Federal banking agency
of the proposed addition of an individual to its board of directors or the
employment of an individual as a senior executive officer.
Section 3.10. Employee Benefit Plans. (a) Since December 31, 1996, there has
not been any adoption or amendment in any material respect by Associated or
any Associated Subsidiary of any employment, consulting,
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termination or severance agreement or any material bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding providing benefits to any current or former employee, officer
or director of Associated or any Associated Subsidiary (collectively, such
agreements, plans, arrangements and understandings being the "Associated
Benefit Plans"), or any material change in any actuarial or other assumption
used to calculate funding obligations with respect to any Associated pension
plans, or any change in the manner in which contributions to any Associated
pension plans are made or the basis on which such contributions are
determined.
(b) Section 3.10 of the Associated Disclosure Schedule sets forth a list of
all Associated Benefit Plans. Associated has delivered or made available to
FFC true and complete copies of all Associated Benefit Plans together with all
current related documents, including the most recent summary plan
descriptions, IRS determination letters and actuarial reports, if applicable.
(c) (i) Except as disclosed in Section 3.10 of the Associated Disclosure
Schedule, with respect to Associated Benefit Plans, no event has occurred and,
to the knowledge of Associated, there exists no condition or set of
circumstances, in connection with which Associated or any of the Associated
Subsidiaries could be subject to any liability that individually or in the
aggregate would have a Material Adverse Effect on the Associated and the
Associated Subsidiaries, taken as a whole, under ERISA, the Code or any other
applicable law.
(ii) Each Associated Benefit Plan has been administered in accordance with
its terms, except for any failures so to administer any Associated Benefit
Plan that individually or in the aggregate would not have a Material Adverse
Effect on Associated and the Associated Subsidiaries, taken as a whole.
Associated, the Associated Subsidiaries and all Associated Benefit Plans are
in compliance with the applicable provisions of ERISA, the Code and all other
applicable laws and the terms of all applicable collective bargaining
agreements, except for any failures to be in such compliance that individually
or in the aggregate would not have a Material Adverse Effect on Associated and
the Associated Subsidiaries, taken as a whole. Each Associated Benefit Plan
that is intended to be qualified under Section 401(a) or 401(k) of the Code
has received a favorable determination letter from the IRS that it is so
qualified and each trust established in connection with any Associated Benefit
Plan that is intended to be exempt from Federal income taxation under Section
501(a) of the Code has received a determination letter from the IRS that such
trust is so exempt. To the knowledge of Associated, no fact or event has
occurred since that date of any determination letter from the IRS which is
reasonably likely to affect adversely the qualified status of any such
Associated Benefit Plan or the exempt status of any such trust.
(iii) Neither Associated nor any of the Associated Subsidiaries has incurred
any liability under Title IV of ERISA (other than liability for premiums to
the Pension Benefit Guaranty Corporation arising in the ordinary course). No
Associated Benefit Plan has incurred an "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the Code)
whether or not waived. To the knowledge of Associated, there are not any facts
or circumstances that would materially change the funded status of any
Associated Benefit Plan that is a "defined benefit" plan (as defined in
Section 3(35) of ERISA) since the date of the most recent actuarial report for
such plan. No Associated Benefit Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(iv) Neither Associated nor any of the Associated Subsidiaries is a party to
any collective bargaining or other labor union contract applicable to persons
employed by Associated or any of the Associated Subsidiaries and no collective
bargaining agreement is being negotiated by Associated or any of the
Associated Subsidiaries. There is no labor dispute, strike or work stoppage
against Associated or any of the Associated Subsidiaries pending or, to the
knowledge of Associated, threatened which may interfere with the respective
business activities of Associated or any Associated Subsidiary, except where
such dispute, strike or work stoppage individually or in the aggregate would
not have a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole. As of the date of this Agreement, to the
knowledge of Associated, none of Associated, any of the Associated
Subsidiaries or any of their respective representatives or employees has
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committed any unfair labor practice in connection with the operation of the
respective businesses of Associated or any of the Associated Subsidiaries, and
there is no charge or complaint against Associated or any of the Associated
Subsidiaries by the National Labor Relations Board or any comparable
governmental agency pending or threatened in writing.
(v) Except as referenced in this Agreement or contemplated by this Agreement
and except as set forth in Section 3.10 of the Associated Disclosure Schedule,
no employee of Associated or any Associated Subsidiary will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of
any benefits under any Associated Benefit Plan as a result of the transactions
contemplated by this Agreement or the Option Agreements.
(vi) No payment or benefit will or may be made by Associated or any
Associated Subsidiary with respect to any employee or any current of former
director that will be characterized as an "excess parachute payment" within
the meaning of Section 280G(b) of the Code.
Section 3.11. Material Contracts. Except as set forth in Section 3.11 of the
Associated Disclosure Schedule, as of the date of this Agreement, neither
Associated nor any Associated Subsidiary is a party to or bound by (a) any
contract or commitment for capital expenditures in excess of $500,000 for any
one project, (b) 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 and calling for aggregate future payments of
$1,000,000 or more during the term of such contract or commitment, (c) any
contract which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC) that has not been filed or
incorporated by reference in the Associated SEC Reports, (d) any contract
which contains non-compete or exclusivity provisions or restrictions with
respect to any business or geographic area or (e) which would prohibit or
materially delay the consummation of the Merger or any other transaction
contemplated by this Agreement. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.11, whether or not set
forth in Section 3.11 of Associated Disclosure Schedule, is referred to herein
as a "Associated Contract". Neither Associated nor any of Associated
Subsidiary knows of, or has received notice of, any violation of any
Associated Contract by any of the other parties thereto, except for violations
which, individually or in the aggregate, would not result in a Material
Adverse Effect on Associated and Associated Subsidiaries, taken as a whole.
Section 3.12. Environmental Matters. To the knowledge of Associated neither
Associated, any Associated Subsidiary, nor any properties owned or operated by
Associated or any Associated Subsidiary has been or is in violation of or
liable under any Environmental Law, except for such violations or liabilities
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on Associated and the Associated Subsidiaries, taken
as a whole. There are no actions, suits or proceedings, or demands, claims,
notices or investigations (including without limitation notices, demand
letters or requests of information from any environmental agency) instituted
or pending, or to the knowledge of Associated, threatened, relating to the
liability of Associated or any Associated Subsidiary with respect to any
properties owned or operated by Associated or any Associated Subsidiary under
any Environmental Law, except for liabilities or violations that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Associated and the Associated Subsidiaries, taken as a
whole.
Section 3.13. Taxes. (a) Except for such matters as would not have,
individually or in the aggregate, a Material Adverse Effect on Associated and
the Associated Subsidiaries, taken as a whole, (i) Associated and the
Associated Subsidiaries have timely filed or will timely file all returns and
reports required to be filed by them with any taxing authority with respect to
Taxes for any period ending on or before the Effective Time, taking into
account any extension of time to file granted to or obtained on behalf of
Associated and the Associated Subsidiaries, (ii) all Taxes that are due prior
to the Effective Time have been paid or will be paid (other than Taxes which
(1) are not yet delinquent or (2) are being contested in good faith and have
not been finally determined), (iii) as of the date hereof, no deficiency for
any Tax has been asserted or assessed by a taxing
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authority against Associated or any of the Associated Subsidiaries which
deficiency has not been paid other than any deficiency being contested in good
faith and (iv) Associated and the Associated Subsidiaries have provided
adequate reserves (in accordance with generally accepted accounting
principles) in their financial statements for any Taxes that have not been
paid, whether or not shown as being due on any returns.
(b) To the knowledge of Associated, there are no material disputes pending,
or claims asserted in writing for, Taxes or assessments upon Associated, or
any of the Associated Subsidiaries, nor has Associated or any of the
Associated Subsidiaries been requested in writing to give any currently
effective waivers extending the statutory period of limitation applicable to
any federal or state income tax return for any period which disputes, claims,
assessments or waivers would have, individually or in the aggregate, a
Material Adverse Effect on Associated and the Associated Subsidiaries, taken
as a whole.
(c) There are no Tax liens upon any property or assets of Associated or any
of the Associated Subsidiaries except liens for current Taxes not yet due and
except for liens which have not had and are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Associated and
the Associated Subsidiaries, taken as a whole.
(d) Neither Associated nor any of the Associated Subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of the
Code by reason of a voluntary change in accounting method initiated by
Associated or any of the Associated Subsidiaries, and the IRS has not
initiated or proposed any such adjustment or change in accounting method, in
either case which adjustment or change would have, individually or in the
aggregate, a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole.
(e) Except as set forth in the financial statements described in Section
3.07, neither Associated nor any of the Associated Subsidiaries has entered
into a transaction which is being accounted for under the installment method
of Section 453 of the Code, which would have, individually or in the
aggregate, a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole.
Section 3.14. Derivative Instruments. All Derivative Instruments to which
Associated or any Associated Subsidiary is a party or to which any of their
properties or assets may be subject were entered into in the ordinary course
of business and, to the knowledge of Associated, in accordance with prudent
banking practice and applicable rules, regulations, and policies of the
regulatory agencies and with counterparties believed to be financially
responsible at the time and, to knowledge of Associated, are legal, valid, and
binding obligations enforceable in accordance with their terms (except as may
be limited by bankruptcy, insolvency, moratorium, reorganization, or similar
laws affecting the rights of creditors generally, and the availability of
equitable remedies), and, to the knowledge of Associated, are in full force
and effect. Associated and each Associated Subsidiary has duly performed in
all material respects all of its obligations under any such Derivative
Instruments, and to the knowledge of Associated, there are no breaches,
violations, or defaults or allegations or assertions of such by any party
thereunder except for any such breaches, violations, or defaults or
allegations or assertions which would not, individually or in the aggregate,
have a Material Adverse Effect on Associated and the Associated Subsidiaries,
taken as a whole.
Section 3.15. Regulatory Approvals. Associated is not aware of any aspect
of, or issues relating to, its or the Associated Subsidiaries' operations and
business that would prevent the condition of Closing set forth in Section
6.01(c) from being satisfied.
Section 3.16. Brokers. Except as contemplated by or referenced in the March
26, 1997 letter agreement between Sandler O'Neill & Partners, L.P. ("Sandler
O'Neill") and Associated, a true and complete copy of which Associated has
delivered to FFC, 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 or any Associated Subsidiary.
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Section 3.17. Pooling of Interest and Tax Matters. Neither Associated nor,
to the knowledge of Associated, 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 combination to be effected by the
Merger as a pooling of interests in accordance with generally accepted
accounting principles or would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code. Associated has no reason to
believe that the Merger will not qualify as a pooling of interests or as a
reorganization under Section 368(a) of the Code.
Section 3.18. Vote Required. The requisite affirmative vote of holders of a
majority of the outstanding shares of the Associated Common Stock with respect
to authorization of additional shares of Associated Common Stock in accordance
with the Associated's Articles of Incorporation and the issuance of shares of
Associated Common Stock in connection with the Merger pursuant to the rules of
the NASDAQ is the only vote of the holders of any class or series of
Associated's capital stock necessary with respect to the Merger.
Section 3.19. Fairness Opinion. Associated has received an opinion from
Sandler O'Neill to the effect that in its opinion, the consideration to be
paid to shareholders of FFC under this Agreement is fair to such shareholders
from a financial point of view ("Associated Fairness Opinion"), and Sandler
O'Neill has consented to the inclusion of the Associated Fairness Opinion in
the Form S-4.
ARTICLE IV
Covenants of FFC and Associated
Section 4.01. Affirmative Covenants. Each of FFC and Associated hereby
covenants and agrees with the other that prior to the Effective Time, unless
the prior written consent of the other shall have been obtained and except as
otherwise contemplated herein, FFC will, and will cause each FFC Subsidiary
to, and Associated will, and will cause each Associated Subsidiary to, conduct
their respective businesses in the ordinary course of business in a manner
consistent with past practice, use their respective reasonable best efforts to
preserve intact their respective business organizations, keep available the
services of their respective current officers, employees and consultants and
to preserve their respective current business relationships.
Section 4.02. Negative Covenants. Except set forth in Section 4.02 of the
Associated Disclosure Schedule or the FFC Disclosure Schedule, as applicable,
and except as specifically contemplated by this Agreement, from the date of
this Agreement until the Effective Time, each of FFC and Associated shall not
do, and, in the case of FFC, permit the FFC Subsidiaries to do, and, in the
case of Associated, permit the Associated Subsidiaries to do, without the
prior written consent of Associated or FFC, as applicable, any of the
following:
(a) adjust, split, combine or reclassify any capital stock, declare or
pay any dividend on, or make any other distribution in respect of, its
outstanding shares of capital stock, except for quarterly dividend
declarations and payments in accordance with past practice and in per share
amounts not materially in excess of historical per share dividend amounts;
provided, however, that after the date of this Agreement, each of
Associated and FFC shall coordinate with the other the declaration of any
dividends in respect of Associated Common Stock and FFC Common Stock and
the record dates and payment dates relating thereto, it being the intention
of the parties hereto that holders of Associated Common Stock or FFC Common
Stock shall not receive two dividends, or fail to receive one dividend, for
any quarter with respect to their shares of Associated Common Stock and/or
FFC Common Stock and any shares of Associated Common Stock any such holder
receives in exchange therefor in the Merger;
(b) (i) redeem, purchase or otherwise acquire any shares of its capital
stock or any securities or obligations convertible into or exchangeable for
any shares of its capital stock, or any options, warrants, conversion or
other rights to acquire any shares of its capital stock or any such
securities or obligations, (ii) effect any reorganization or
recapitalization, (iii) purchase or otherwise acquire any assets or stock
of any corporation, bank or other business for consideration which in the
aggregate exceeds $10 million, or (iv) liquidate, sell, dispose of or
encumber any assets for consideration which in the aggregate exceeds $25
million;
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(c) 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;
(d) propose or adopt any amendments to its articles of incorporation or
bylaws;
(e) change any of its methods of accounting in effect at December 31,
1996, 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, 1996,
except as may be required by law or generally accepted accounting
principles;
(f) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money (other than (x) short-
term indebtedness incurred to refinance short-term indebtedness or (y)
indebtedness among its corporate affiliates), or assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations of
any other individual, corporation or other entity;
(g) except for transactions in the ordinary course of business consistent
with past practice, enter into or terminate any material contract or
agreement, or make any change in any of its material leases or material
contracts, other than renewals of such contracts and leases without
material adverse changes of terms;
(h) increase in any manner the compensation or fringe benefits of any of
its employees or pay any pension or retirement allowance not required by
any existing plan or agreement to any such employees or become a party to,
amend or commit itself to any pension, retirement, profit sharing or
welfare benefit plan or agreement or employment agreement with or for the
benefit of any employee other than, in each case, in the ordinary course of
business consistent with past practice, or accelerate the vesting of any
stock options or other stock-based compensation;
(i) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practices;
(j) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code: provided,
however that nothing contained herein shall limit the ability of Associated
or FFC to exercise its rights under the FFC Stock Option Agreement or the
Associated Stock Option Agreement, respectively;
(k) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VI not being satisfied or in a violation of any provision
of this Agreement, except, in each case, as may be required by applicable
law;
(l) take any action or fail to take any action which individually or in
the aggregate can be reasonably expected to have a Material Adverse Effect
on, in the case of FFC, FFC and the FFC Subsidiaries, taken as a whole or,
in the case of Associated, Associated and the Associated Subsidiaries,
taken as a whole; or
(m) agree in writing or otherwise to do any of the foregoing.
ARTICLE V
Additional Agreements
Section 5.01. Registration Statement. (a) As promptly as practicable after
the execution of this Agreement, (i) FFC and Associated shall prepare and file
with the SEC preliminary proxy materials which shall constitute the joint
proxy statement of Associated and FFC (such joint proxy statement as amended
or supplemented is referred to herein as the "Joint Proxy Statement") and (ii)
Associated shall prepare and file a registration statement on Form S-4
(together with any amendments thereto, the "Registration Statement"), in which
the Joint Proxy Statement shall be included as a prospectus, with the SEC with
respect to the registration
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of the Associated Common Stock to be issued in the Merger. Associated and FFC
shall each use its reasonable best efforts to cause the Registration Statement
to become effective as soon as reasonably practicable. FFC will furnish to
Associated all information concerning FFC and the FFC Subsidiaries required to
be set forth in the Registration Statement and Associated will provide FFC and
its counsel the opportunity to review such information as set forth in the
Registration Statement and Joint Proxy Statement. Associated and FFC 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.
Each of Associated and FFC will promptly advise the other if at any time prior
to the Effective Time any information provided by it for inclusion in the
Registration Statement or the Joint Proxy 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 Registration Statement shall have become effective, each
of FFC and Associated will mail the Joint Proxy Statement to its respective
shareholders. 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 FFC
and the FFC Subsidiaries shall furnish all information concerning FFC and the
FFC Subsidiaries, and the holders of Shares and other assistance as Associated
may reasonably request in connection with such action.
(b) (i) The Joint Proxy Statement shall include the recommendation of the
Board of Directors of FFC to the shareholders of FFC in favor of approval and
adoption of this Agreement and approval of the Merger; provided, however,
that, in connection with recommending approval of a Superior Competing
Transaction (as defined in Section 5.05), the Board of Directors of FFC may,
at any time prior to such time as the shareholders of FFC shall have adopted
and approved this Agreement and approval of the Merger in accordance with
Wisconsin Law, withdraw, modify or change any such recommendation to the
extent that the Board of Directors of FFC determines in good faith, after
consultation with and based upon the advice of independent legal counsel, that
the failure to so withdraw, modify or change its recommendation would cause
the Board of Directors of FFC to breach its fiduciary duties to FFC's
shareholders under applicable law and, notwithstanding anything to the
contrary contained in this Agreement, any such withdrawal, modification or
change of recommendation shall not constitute a breach of this Agreement by
FFC.
(ii) The Joint Proxy Statement shall include the recommendation of the Board
of Directors of Associated to the shareholders of Associated in favor of
approval of the authorization of additional shares of Associated Common Stock
and the issuance of the shares of Associated Common Stock in the Merger;
provided, however, that, in connection with recommending approval of a
Superior Competing Transaction, the Board of Directors of Associated may, at
any time prior to such time as the shareholders of FFC shall have adopted and
approved this Agreement in accordance with Wisconsin Law withdraw, modify, or
change any such recommendation to the extent that the Board of Directors of
Associated determines in good faith, after consultation with and based upon
the advice of independent legal counsel, that the failure to so withdraw,
modify or change its recommendation would cause the Board of Directors of
Associated to breach its fiduciary duties to Associated's shareholders under
applicable law and, notwithstanding anything to the contrary contained in this
Agreement, any such withdrawal, modification or change of recommendation shall
not constitute a breach of this Agreement by Associated.
(c) No amendment or supplement to the Joint Proxy Statement or the
Registration Statement will be made by Associated or FFC without the approval
of the other party (which will not be unreasonably withheld). Associated and
FFC each will advise the other, promptly after it receives notice thereof, of
the time when the Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Associated Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Joint Proxy Statement, or the
Registration Statement or comments thereon and responses thereto or requests
by the SEC for additional information.
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(d) Associated shall promptly prepare and submit to the Nasdaq a listing
application covering the shares of Associated Common Stock issuable in the
Merger, and shall use its reasonable best efforts to obtain, prior to the
Effective Time, approval for the listing of such Associated Common Stock,
subject to official notice of issuance and FFC shall cooperate with Associated
with respect to such listing.
(e) The information supplied by Associated for inclusion in the Registration
Statement or the Joint Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Joint Proxy
Statement (or any amendment or supplement thereto), is first mailed to the
shareholders of Associated and FFC and (iii) the time of any Shareholders'
Meetings, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time
any event or circumstance relating to Associated or any Associated Subsidiary,
or their respective officers or directors, should be discovered by Associated
that should be set forth in an amendment or a supplement to the Registration
Statement the Joint Proxy Statement, Associated shall promptly inform FFC. All
documents that FFC is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply as to form and substance in
all material aspects with the applicable requirements of the Securities Act
and the rules and regulations promulgated thereunder and the Exchange Act and
the rules and regulations thereunder.
(f) The information supplied by FFC for inclusion in the Registration
Statement or the Joint Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Joint Proxy
Statement (or any amendment or supplement thereto), is first mailed to the
shareholders of Associated and FFC and (iii) the time of any Shareholders'
Meetings, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time
any event or circumstance relating to FFC or any FFC Subsidiary, or their
respective officers or directors, should be discovered by FFC that should be
set forth in an amendment or a supplement to the Registration Statement or the
Joint Proxy Statement, FFC shall promptly inform Associated. All documents
that Associated is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and
the rules and regulations promulgated thereunder and the Exchange Act and the
rules and regulations promulgated thereunder.
Section 5.02. Meetings of Shareholders. (a) FFC and its officers and
directors shall (i) cause a meeting of FFC's shareholders to consider the
Merger (the "FFC Meeting") to be duly called and held as soon as practicable
to consider and vote upon the plan of Merger and any related matters in
accordance with the applicable provisions of applicable law, (ii) submit this
Agreement and the plan of Merger to FFC's shareholders together with, subject
to the fiduciary duties of the FFC's Board of Directors under applicable law
as advised by counsel, a recommendation for approval by the Board of Directors
of FFC, (iii) solicit the approval thereof by FFC's shareholders by mailing or
delivering to each shareholder a Joint Proxy Statement, and (iv) subject to
the fiduciary duties of the FFC's Board of Directors under applicable law as
advised by counsel, use their reasonable efforts to obtain the approval of the
plan of Merger by the requisite percentage of FFC's shareholders.
(b) Associated and its officers and directors shall (i) cause a meeting of
Associated's shareholders to consider the authorization of additional shares
of Associated Common Stock and the issuance of shares of Associated Common
Stock in connection with the Merger (the "Associated Meeting"; and together
with the FFC Meeting, the "Shareholders' Meetings") to be duly called and held
as soon as practicable to consider and vote upon the issuance of additional
shares of Associated Common Stock in connection with the Merger and any
related matters in accordance with the applicable provisions of applicable
law, (ii) submit such proposal to Associated's shareholders together with,
subject to the fiduciary duties of Associated's Board of Directors under
applicable law as advised by counsel, a recommendation for approval by the
Board of Directors of Associated, (iii) solicit the approval thereof by
Associated's shareholders by mailing or delivering to each shareholder a Joint
Proxy Statement, and (iv) subject to the fiduciary duties of Associated's
Board of Directors under applicable law as advised by counsel, use their
reasonable efforts to obtain the approval of the Merger by the requisite
percentage of Associated's shareholders.
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(c) Each of FFC and Associated will consult with the other and use its
reasonable best efforts to hold their respective meetings on the same day.
Section 5.03. Access to Information; Confidentiality. (a) Except as required
pursuant to any confidentiality agreement or similar agreement or arrangement
to which Associated or FFC or any of their respective subsidiaries is a party
or pursuant to applicable Law, from the date of this Agreement to the
Effective Time, Associated and FFC shall (and shall cause their respective
subsidiaries to): (i) provide to the other (and its officers, directors,
employees, accountants, consultants, legal counsel, agents, investment
bankers, advisors and other representatives (collectively, "Representatives"))
access at reasonable times upon prior notice to the officers, employees,
agents, properties, offices and other facilities of the other and its
subsidiaries and to the books and records thereof and (ii) furnish promptly to
the other party and its Representatives such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects with respect to it and its subsidiaries as the requesting party may
reasonably request.
(b) The parties shall comply with and shall cause their respective
Representatives to comply with, all their respective obligations under the
Confidentiality Agreements entered into by the parties (the "Confidentiality
Agreements"), it being understood that the parties hereto shall have the
rights as beneficiaries under such agreements.
(c) No investigation pursuant to this Section 5.03 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 5.04. Appropriate Action; Consents; Filings. FFC and Associated and
Merger Sub shall use all reasonable efforts to (i) 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; (ii) 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 (iii) make
all necessary filings, and thereafter make any other required submissions,
with respect to this Agreement and the Merger required under (A) the
Securities Act and the Exchange Act and the rules and regulations thereunder,
and any other applicable federal or state securities laws; (B) any applicable
federal or state banking laws (including, without limitation, filing a notice
with the Federal Reserve Board with respect to approval of the Merger under
the BHCA and the applicable regulations promulgated thereunder); and (C) any
other applicable law (including, without limitation, any applicable state
insurance laws); provided that Associated and FFC 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. FFC 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 Joint Proxy Statement 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 5.05. No Solicitation of Transactions. (a) FFC shall immediately
cease and cause to be terminated any existing discussions or negotiations
relating to a Competing Proposal (as defined below), other than with respect
to the Merger, with any parties conducted heretofore. FFC will not, directly
or indirectly, and will instruct its Representatives not to, directly or
indirectly, 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 Proposal, or enter into or maintain
discussions or negotiate with any person in furtherance of or relating to such
inquiries or to obtain a Competing Proposal, or agree to or endorse any
Competing Proposal, or authorize or permit any Representative
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of FFC or any of its subsidiaries to take any such action, and FFC shall use
its reasonable best efforts to cause the Representatives of FFC and the FFC
Subsidiaries not to take any such action, and FFC shall promptly notify
Associated if any such inquiries or proposals are made regarding a Competing
Proposal, and FFC shall keep Associated informed, on a current basis, of the
status and terms of any such proposals; provided, however, that prior to such
time as the shareholders of FFC shall have adopted and approved this Agreement
in accordance with Wisconsin Law, nothing contained in this Section 5.05 shall
prohibit the Board of Directors of FFC from (i), in connection with a Superior
Competing Transaction (as defined below), furnishing information to, or
entering into discussions or negotiations with, any person that makes an
unsolicited bona fide proposal to acquire FFC pursuant to a merger,
consolidation, share exchange, business combination or other similar
transaction, if, and only to the extent that, (A) the Board of Directors of
FFC, after consultation with and based upon the advice of independent legal
counsel, determines in good faith that such action is required for the Board
of Directors of FFC to comply with its fiduciary duties to shareholders
imposed by Wisconsin Law, (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person, FFC provides
written notice to Associated to the effect that it is furnishing information
to, or entering into discussions or negotiations with, such person, (C) prior
to furnishing such information to such person, FFC receives from such person
an executed confidentiality agreement with terms no less favorable to FFC than
those contained in the Confidentiality Agreements, and (D) FFC keeps
Associated informed, on a current basis, of the status and details of any such
discussions or negotiations; or (ii) complying with Rule 14e-2 promulgated
under the Exchange Act.
(b) Associated shall immediately cease and cause to be terminated any
existing discussions or negotiations relating to a Competing Proposal, other
than with respect to the Merger, with any parties conducted heretofore.
Associated will not, directly or indirectly, and will instruct its
Representatives not to, directly or indirectly, 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 Proposal,
or enter into or maintain discussions or negotiate with any person in
furtherance of or relating to such inquiries or to obtain a Competing
Proposal, or agree to or endorse any Competing Proposal, or authorize or
permit any Representative of Associated or any of its subsidiaries to take any
such action, and Associated shall use its reasonable best efforts to cause the
Representatives of Associated and Associated Subsidiaries not to take any such
action, and Associated shall promptly notify FFC if any such inquiries or
proposals are made regarding a Competing Proposal, and Associated shall keep
FFC informed, on a current basis, of the status and terms of any such
proposals; provided, however, that prior to such time as the shareholders of
Associated shall have adopted and approved this Agreement in accordance with
Wisconsin Law, nothing contained in this Section 5.05 shall prohibit the Board
of Directors of Associated from (i) in connection with a Superior Competing
Transaction, furnishing information to, or entering into discussions or
negotiations with, any person that makes an unsolicited bona fide proposal to
acquire Associated pursuant to a merger, consolidation, share exchange,
business combination or other similar transaction, if, and only to the extent
that, (A) the Board of Directors of Associated, after consultation with and
based upon the written advise of independent legal counsel, determines in good
faith that such action is required for the Board of Directors of Associated to
comply with its fiduciary duties to shareholders imposed by Wisconsin Law, (B)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person, Associated provides written notice to FFC to
the effect that it is furnishing information to, or entering into discussions
or negotiations with, such person, (C) prior to furnishing such information to
such person, Associated receives from such person an executed confidentiality
agreement with terms no less favorable to Associated than those contained in
the Confidentiality Agreements, and (D) Associated keeps FFC informed, on a
current basis, of the status and details of any such discussions or
negotiations; or (ii) complying with Rule 14e-2 promulgated under the Exchange
Act.
(c) For purposes of this Agreement, "Competing Proposal" shall mean any of
the following involving FFC or any FFC Subsidiary, on the one hand, or
Associated or any Associated Subsidiary, on the other hand: any inquiry,
proposal or offer from any person relating to any direct or indirect
acquisition or purchase of a business that constitutes 15% or more of the net
revenues, net income or the assets of Associated or FFC, as applicable, and
its subsidiaries, taken as a whole, or 15% or more of any class of equity
securities of Associated or FFC, as applicable,or any of its subsidiaries, any
tender offer or exchange offer that if consummated would result in any
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person beneficially owning 15% or more of any class of equity securities of
Associated or FFC, as applicable, or any of its subsidiaries, any merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Associated or FFC, as applicable,
or any of its subsidiaries, other than the transactions contemplated by this
Agreement.
(d) For purposes of this Agreement "Superior Competing Transaction" shall
mean any of the following involving FFC or any FFC Subsidiary, on the one
hand, or Associated or any Associated Subsidiary, on the other hand: any
proposal made by a third party to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more than
50% of the combined voting power of the shares of Associated Common Stock or
FFC Common Stock, as applicable, then outstanding or all or substantially all
the assets of Associated or FFC, as applicable, and otherwise on terms which
the Board of Directors of Associated or FFC, as applicable, determines in its
good faith judgement (based on the opinion of a financial advisor of
nationally recognized reputation) to be more favorable to its shareholders
than the Merger and for which financing, to the extent required, is then
committed or which if not committed is, in the good faith judgment of its
Board of Directors, reasonably capable of being obtained by such third party.
Section 5.06. Indemnification. (a) From and after the Effective Time,
Associated and the Surviving Corporation shall, jointly and severally,
indemnify, defend and hold harmless the present and former officers, directors
and employees of FFC (collectively, the "Indemnified Parties") against all
losses, expenses, claims, damages, liabilities or amounts that are paid in
settlement of (with the approval of Associated and the Surviving Corporation,
which will not be unreasonably withheld), or otherwise in connection with, any
claim, action, suit, proceeding or investigation (a "Claim"), based in whole
or in part on the fact that such person is or was such a director, officer or
employee and arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated
by this Agreement), in each case to the fullest extent permitted under
Wisconsin Law and Associated's corporate governance documents (and shall pay
expenses in advance of the final disposition of any such action or proceeding
to each Indemnified Party to the fullest extent permitted under Wisconsin Law,
upon receipt from the Indemnified Party to whom expenses are advanced of the
undertaking to repay such advances).
(b) Any Indemnified Party wishing to claim indemnification under this
Section 5.06, upon learning of any such Claim, shall notify Associated and the
Surviving Corporation (although the failure so to notify Associated and the
Surviving Corporation shall not relieve either thereof from any liability that
Associated or the Surviving Corporation may have under this Section 5.06,
except to the extent such failure materially prejudices such party).
Associated and the Surviving Corporation shall have the right to assume the
defense thereof and if such right is exercised Associated and the Surviving
Corporation shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Associated and the Surviving Corporation elect not to assume such defense or
there is a conflict of interest between Associated and the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and, in such case, Associated and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that (i) Associated and the Surviving Corporation shall not, in
connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate
firm of attorneys at any time for all Indemnified Parties except to the extent
that local counsel, in addition to such parties' regular counsel, is necessary
or desirable in order to effectively defend against such action or proceeding,
(ii) Associated, the Surviving Corporation and the Indemnified Parties will
cooperate in the defense of any such matter, or (iii) Associated and the
Surviving Corporation shall not be liable for any settlement effected without
its prior written consent, which consent will not be unreasonably withheld or
delayed, and provided, further, that the Surviving Corporation shall not have
any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and not subject to further appeal, that the
indemnification of such Indemnified Party in the manner
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contemplated hereby is prohibited by applicable law. No Indemnified Party
shall consent to entry of any judgment or enter into any settlement that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release, in form and substance
reasonably satisfactory to such Indemnified Party, from all liability in
respect of such claim or litigation for which such Indemnified Party would be
entitled to indemnification hereunder.
(c) Associated shall use its reasonable best efforts to cause to be
maintained in effect for not less than two years after the Effective Time
(except to the extent not generally available in the market) directors' and
officers' liability insurance and fiduciary liability insurance that is
substantially equivalent in coverage to FFC's current insurance; provided,
however, that Associated shall not be required to pay an annual premium for
such insurance in excess of 150% of the last annual premium paid prior to the
date of this Agreement, and in such case shall purchase as much comparable
coverage as possible for such amount.
(d) This Section 5.06 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties referred to herein, their heirs and
personal representatives and shall be binding on Associated and Merger Sub and
the Surviving Corporation and their respective successors and assigns.
Section 5.07. Obligations of Merger Sub. Associated shall take all action
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and subject to conditions set forth
in this Agreement.
Section 5.08. Pooling Affiliates. (a) As soon as practicable after the date
of this Agreement, FFC shall deliver to Associated a list of names and
addresses of those persons, in FFC's reasonable judgment, at the record date
for its shareholders' approval the Merger, who were affiliates within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act or otherwise applicable SEC accounting releases with respect to
pooling-of-interests accounting treatment (each such person, a "Pooling
Affiliate") of FFC. FFC shall provide Associated such information and
documents as Associated shall reasonably request for purposes of reviewing
such list. FFC shall use its reasonable best efforts to deliver or cause to be
delivered to Associated, as soon as practicable after the date of this
Agreement, an affiliate letter in the form attached hereto as Exhibit 5.08(a),
executed by each of the Pooling Affiliates of FFC identified in the foregoing
list. Associated shall be entitled to issue appropriate stop transfer
instructions to the transfer agent for the Associated Common Stock, consistent
with the terms of such Letters.
(b) As soon as practicable after the date of this Agreement, Associated
shall deliver to FFC a list of names and addresses of the Pooling Affiliates
of Associated. Associated shall provide FFC such information and documents as
FFC shall reasonably request for purposes of reviewing such list. Associated
shall use its reasonable best efforts to deliver or cause to be delivered to
FFC, as soon as practicable after the date of this Agreement, an affiliate
letter in the form attached hereto as Exhibit 5.08(b), executed by each of the
Pooling Affiliates of Associated identified in the foregoing list.
Section 5.09. Executive Agreements and Employee Severance. (a) Associated
agrees to cause the Surviving Corporation and each relevant FFC Subsidiary to
honor, without modification (except as provided in Section 5.09(b) below), and
perform its obligations under, the contracts, plans and arrangements listed in
Section 5.09 of FFC Disclosure Schedule.
(b) Notwithstanding any provisions of the contracts, plans and arrangements
listed in Section 5.09 of the FFC Disclosure Schedule, the following
contracts, plans and arrangements shall be treated as follows:
(i) FFC's Directors' Retirement Plan, effective November 18, 1992 (the
"Directors' Plan"), shall be terminated immediately after the Effective
Time of the Merger, and, accordingly, (a) each person serving as a director
of FFC on the date hereof ("Current Directors") shall receive in a lump sum
cash payment his fully vested benefits thereunder, with no reduction as a
result of any Current Director having not attained age 70, and (b) each
former director of FFC who is currently receiving benefits under the
Directors' Plan shall receive benefits as provided under Section 4.6 of the
Directors' Plan.
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(ii) Each of the persons subject to the employment and severance
agreements listed in Section 5.09 of the FFC Disclosure Schedule who
delivers a written consent to Parent prior to the Effective Time, which
consent permits the payment of benefits in accordance herewith, shall be
paid the benefits specified at Section 5.09(b)(ii) of the FFC Disclosure
Schedule (the "Benefits") in lieu of any severance benefits which otherwise
would be due to such person following termination upon the Merger.
Associated shall provide the Benefits to such persons upon the first to
occur of (x) two years following the Effective Time; (y) termination of
such employee by reason of death or disability, or for other than "Cause"
or (z) resignation of such employee for "Good Reason"; provided, however,
that post-retirement continuation of healthcare benefits will be provided
only upon the occurrence of (y) or (z) above, on or prior to the second
anniversary of the Effective Time. In the event of the termination of any
such person for Cause or a resignation without Good Reason occurring prior
to the second anniversary of the Effective Time, such person shall have no
right to the Benefits or to any other severance benefits under the relevant
agreements listed in Section 5.09 of the Disclosure Schedule or any other
plan, program or arrangement. The term "Cause" means personal dishonesty,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, or regulation involving dishonesty or breach of trust, which is a
crime punishable by imprisonment for a term exceeding one year, or
otherwise involving unsafe or unsound banking practices, willful violation
or being the subject of a final cease-and-desist order. The term "Good
Reason" means a reduction in the compensation, or material reduction in the
benefits, position, authority, duties or responsibilities of the employee
from those which existed prior to the date hereof; a reduction in the
employee's job stature as reflected in his title; or a change by more than
50 miles of the location of the employee's job; provided, however, that
nothing herein shall be construed to mean that the mere fact that an
employee's position is with a subsidiary of a public company rather than in
a public company itself constitutes Good Reason. Neither execution and
delivery of the aforementioned consent or payment of the Benefits shall
constitute a waiver or satisfaction, or otherwise effect the terms of the
employment and severance agreements listed in Section 5.09 of the FFC
Disclosure Schedule, except with respect to the right to receive severance
benefits following termination upon the Merger.
This Section 5.09(b) is intended to be for the benefit of, and shall be
enforceable by, the individuals subject to the provisions of Section
5.09(b)(i) and (b)(ii) above, their heirs, and personal representatives, and
shall be binding on Associated and Merger Sub and the Surviving Corporation
and their respective successors and assigns.
(c) Following the Merger, it is the intent of Associated and the Surviving
Corporation that such entities will, and will cause any of their respective
direct and indirect subsidiaries to, in connection with reviewing candidates
for employment positions, give equal opportunity for such positions to
employees of Associated and any Associated Subsidiaries and of FFC and any FFC
Subsidiaries. In addition, for purposes of the Associated Work Force
Management Plan (the "Work Force Plan"), employees of FFC will be deemed
associates of Associated, and will be accorded equal priority in the hiring
process. Furthermore, effective as of the Effective Time, Associated shall
adopt an amendment to its Work Force Plan (as well as conforming amendments to
Associated's Severance Pay Plan) which covers the employees of Associated and
the Associated subsidiaries, which plan, as amended, shall include the terms
set forth in Section 5.09(c) of the Associated Disclosure Schedule.
Section 5.10. Notification of Certain Matters. FFC shall give prompt notice
to Associated, and Associated shall give prompt notice to FFC, of (i) 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 (ii) any failure of FFC 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
5.10 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 5.11. Public Announcements. Associated and FFC 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
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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 Nasdaq Stock Market.
Section 5.12. Expenses. (a) All Expenses (as described below) incurred by
Associated and FFC shall be borne by the party which has incurred the same,
except that the parties shall share equally in the cost of printing and filing
the Registration Statement and the Joint Proxy Statement with the SEC and all
other regulatory filing fees incurred in connection with this Agreement.
(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, FFC
Stock Option Agreement and the Associated Stock Option Agreement, the
solicitation of shareholder approvals and all other matters related to the
closing of the transactions contemplated hereby.
Section 5.13. Delivery of Shareholder List. FFC 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 FFC, their holdings of stock as of the latest
practicable date, and such other shareholder information as Associated may
reasonably request.
Section 5.14. Letters of Accountants. (a) FFC shall use its reasonable
efforts to cause to be delivered to Associated a "comfort" letter of Ernst &
Young LLP, FFC's independent public accountants, dated and delivered the date
on which the Registration Statement shall become effective, and addressed to
Associated, in the form, scope and content contemplated by Statement on
Auditing Standards No. 72 issued by the American Institute of Certified Public
Accountants, Inc. ("SAS 72"), relating to the financial statements and other
financial data with respect to FFC and its consolidated subsidiaries included
or incorporated by reference in the Joint Proxy Statement and such other
matters as may be reasonably required by Associated, and based upon procedures
carried out to a specified date not earlier than five days prior to the date
thereof.
(b) Associated shall use its reasonable efforts to cause to be delivered to
FFC a "comfort" letter of KPMG Peat Marwick LLP, Associated's independent
public accountants, dated the date on which the Registration Statement shall
become effective, and addressed to FFC, in the form, scope and content
contemplated by SAS 72, relating to the financial statements and other
financial data with respect to Associated and its consolidated subsidiaries
included in or incorporated by reference in the Joint Proxy Statement and such
other matters as may be reasonably required by FFC, and based upon procedures
carried out to a specified date not earlier than five days prior to the date
thereof.
Section 5.15. FFC Reports. (a) FFC shall timely file all required FFC
Reports, each of which (i) shall be prepared in all material respects in
accordance with, in the case of filings with the SEC, the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the SEC
thereunder, and in the case of all other FFC Reports, the requirements of any
Regulatory Agency applicable to such FFC Reports and (ii) shall not at the
time they are filed contain any untrue statement of a 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 (including, in each case,
any notes thereto) contained in FFC SEC Reports filed after the date of this
Agreement and prior to the Effective Time shall be prepared in accordance with
the published rules and regulations of the SEC and generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated and each shall present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of FFC
and its consolidated subsidiaries as at the respective dates thereof and for
the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which are not
expected, individually or in the aggregate, to have a FFC Material Adverse
Effect).
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Section 5.16. Associated Reports. (a) Associated shall timely file all
required Associated Reports, each of which (i) shall be prepared in all
material respects in accordance with, in the case of filings with the SEC, the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC thereunder, and in the case of all other Associated
Reports, the requirements of any Regulatory Agency applicable to such
Associated Reports and (ii) shall not at the time they are filed contain any
untrue statement of a 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 (including, in each case,
any notes thereto) contained in the Associated SEC Reports filed after the
date of this Agreement and prior to the Effective Time shall be prepared in
accordance with the published rules and regulations of the SEC and generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and each shall present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of
Associated and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein (subject, in the case
of unaudited statements, to normal and recurring year-end adjustments which
are not expected, individually or in the aggregate, to have a Associated
Material Adverse Effect).
Section 5.17. Pooling. Associated and FFC shall take all reasonable actions
to insure pooling of interest treatment for the Merger including, without
limitation, FFC shall rescind its share buy-back program approved by its Board
of Directors on April 22, 1997.
ARTICLE VI
Conditions of Merger
Section 6.01. 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 FFC, 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 FFC Common Stock and to consummate the Merger.
(b) Shareholder Approvals. (i) This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the shareholders of FFC.
(ii) Authorization for additional shares of Associated Common Stock and
issuance of shares of Associated Common Stock in connection with the Merger
shall have each been approved by the requisite vote of the shareholders of
Associated.
(c) Regulatory Approvals. All requisite approvals of this Agreement and
the transactions contemplated hereby shall have been received from the
Federal Reserve Board and any other applicable regulatory authority, and
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) Nasdaq Listing. The shares of Associated Common Stock that are to be
issued to the shareholders of FFC upon consummation of the Merger shall
have been authorized for listing on the Nasdaq Stock Market's National
Market, subject to notice of issuance.
(e) 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.
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(f) No Challenge. There shall not be pending any action, proceeding or
investigation before any court or administrative agency or by any
government agency or any other person (i) challenging or seeking material
damages in connection with the Merger or (ii) seeking to restrain, prohibit
or limit the exercise of full rights of ownership or operation by
Associated or the Associated Subsidiaries of all or any portion of the
business or assets of FFC or any FFC Subsidiary, which in either case has
or would have a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole, or a Material Adverse Effect on FFC and FFC
Subsidiaries, taken as a whole.
(g) Pooling Opinions. Each of Associated and FFC shall have received an
opinion from each of KPMG Peat Marwick LLP and Ernst & Young LLP to the
effect that the Merger qualifies for pooling of interests accounting
treatment if consummated in accordance with this Agreement.
(h) Associated Tax Opinion. Associated and FFC shall have received an
opinion of Shearman & Sterling, special counsel for Associated, based on
appropriate representations of Associated, FFC and, if required by
applicable regulations, any other party, and upon assumptions and
qualifications that are appropriate and reasonably satisfactory to FFC, 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, Merger Sub and FFC will each be a party to that
reorganization within the meaning of Section 368(b) of the Code, dated the
date of the Effective Time, shall have been delivered and shall not have
been withdrawn or modified.
Section 6.02. Additional Conditions to Obligations of Associated. The
obligations of Associated and Merger Sub to effect the Merger are also subject
to the following conditions:
(a) Representation and Warranties. Each of the representations and
warranties of FFC set forth in this Agreement shall be true and correct in
all material respects as of the Closing Date (as defined in Section 8.01)
(except to the extent such representations and warranties speak only as of
an earlier date, in which case such representations and warranties shall be
true and correct in all material respects as of such date) as though made
as of the Closing Date. Associated shall have received a certificate of the
Chief Executive Officer of FFC dated the Closing Date to that effect.
(b) Agreements and Covenants. FFC shall have performed or complied in all
material respects with all obligations required to be performed by it under
this Agreement on or prior to the Effective Time. Associated shall have
received a certificate of the Chief Executive Officer of FFC dated the
Closing Date to that effect.
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made by
FFC 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 FFC, except when the failure to obtain or make the
same, individually or in the aggregate, would not have a Material Adverse
Effect on FFC and FFC Subsidiaries, taken as a whole, or the Associated and
the Associated Subsidiaries, taken as a whole.
(d) Affiliate Letters. Associated shall have received from each person
who is identified as a Pooling Affiliate of FFC a signed affiliate letter
in the form attached hereto as Exhibit 5.08(a).
Section 6.03. Additional Conditions to Obligations of FFC. The obligation of
FFC to effect the Merger is also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Associated set forth in this Agreement shall be true and
correct in all material respects as of the Closing Date (except to the
extent such representation and warranties speak as of an earlier date, in
which case such representation and warranties shall be true and correct in
all material respects as of such earlier date) as though made at the
Closing Date. FFC shall have received a certificate of the President of
Associated dated the Effective Time to that effect.
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(b) Agreements and Covenants. Associated and Merger Sub shall have
performed or complied in all material respects with all obligations
required to be performed by it under this Agreement on or prior to the
Effective Time. FFC shall have received a certificate of the President of
Associated dated the Closing Date to that effect.
(c) Consents Obtained. All consents, waivers, approvals, authorizations
or orders required to be obtained, and all filings required to be made by
Associated and Merger Sub 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, except when the
failure to obtain or make the same, individually or in the aggregate, would
not have a Material Adverse Effect on FFC and FFC Subsidiaries, taken as a
whole, or the Associated and the Associated Subsidiaries, taken as a whole.
(d) Affiliate Letters. FFC shall have received from each person who is
identified as a Pooling Affiliate of Associated a signed affiliate letter
in the form attached hereto as Exhibit 5.08(b).
ARTICLE VII
Termination, Amendment and Waiver
Section 7.01. Termination. 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 FFC and
Associated:
(a) by mutual written consent duly authorized by the Boards of Directors
of each of Associated and FFC;
(b) by either Associated or FFC if either (i) the Effective Time shall
not have occurred on or before March 31, 1998; provided that the right to
terminate this Agreement under this Section 7.01(b) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date or (ii) any injunction preventing the
consummation of the Merger shall have become final and nonappealable;
(c) by Associated, if there has been a breach of any material
representation, warranty, covenant or agreement on the part of FFC set
forth in this Agreement, or if any representation or warranty of FFC shall
have become untrue, in either case such that the conditions set forth in
Section 6.02(a) or Section 6.02(b) would not be satisfied and such breach
is not cured within 30 days after written notice thereof to FFC by
Associated;
(d) by FFC, if there has been a breach of any material representation,
warranty, covenant or agreement on the part of Associated set forth in this
Agreement, or if any representation or warranty of Associated shall have
become untrue, in either case such that the conditions set forth in Section
6.03(a) or Section 6.03(b) would not be satisfied and such breach is not
cured within 30 days after written notice thereof to Associated by FFC;
(e) by either Associated or FFC, if at a duly called and held
shareholders' meeting therefor, this Agreement and the transactions
contemplated hereby shall fail to receive the requisite vote for approval
and adoption by FFC's shareholders;
(f) by either Associated or FFC, if at a duly called and held
shareholders' meeting therefor, the authorization of additional shares of
Associated Common Stock and the issuance of shares of Associated Common
Stock in connection with the Merger pursuant to this Agreement shall fail
to receive the requisite vote for approval by Associated's shareholders;
(g) by FFC, if there shall exist a proposal for a Superior Competing
Transaction with respect to Associated and the Board of Directors
Associated shall have withdrawn or modified in a manner adverse to FFC its
approval and recommendation of this Agreement or its approval of the Merger
or any other transaction contemplated hereby or if the Board of Directors
of Associated shall have approved or recommended such Superior Competing
Transaction; or
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(h) by Associated, if there shall exist a proposal for a Superior
Competing Transaction with respect to FFC and the Board of Directors of FFC
shall have withdrawn or modified in any manner adverse to Associated its
approval and recommendation of this Agreement or its approval of the Merger
or any of the transaction contemplated hereby or if the Board of Directors
FFC shall have approved or recommend such Superior Competing Transaction.
Section 7.02. Effect of Termination. Except as provided in Section 8.02, in
the event of termination of this Agreement pursuant to Section 7.01, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Associated, Merger Sub or FFC or any of their
respective officers or directors and all rights and obligations of each party
hereto shall cease; provided that notwithstanding anything to the contrary in
this Agreement, none of Associated, Merger Sub or FFC shall be released from
any liabilities or damages arising out of its willful breach of any provision
of this Agreement.
Section 7.03. 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 FFC, 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 7.04. Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if
set forth in an instrument in writing signed by the party or parties to be
bound thereby.
ARTICLE VIII
General Provisions
Section 8.01. Closing. Subject to the terms and conditions of this
Agreement, the closing (the "Closing") of the Merger will take place at 10:00
a.m. on a date and place specified by the parties, which shall be no later
than three business days after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set forth in Article
VI unless extended by mutual agreement of the parties (the "Closing Date").
Section 8.02. 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 VII, except that the agreements set forth in
Article I shall survive the Effective Time indefinitely and those set forth in
Section 5.03(b), 5.12, 7.02 and Article VIII hereof shall survive termination
indefinitely.
Section 8.03. 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 or overnight mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or 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 Merger Sub:
Associated Banc-Corp
112 North Adams Street
Green Bay, Wisconsin 54307
Attention: Brian R. Bodager, General Counsel
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With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Creighton O'M. Condon
(b) If to FFC:
First Financial Corporation
1305 Main Street
Stevens Point, Wisconsin 54481
Attention: Robert M. Salinger, General Counsel
With a copy to:
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Stuart G. Stein
Section 8.04. Certain Definitions. For purposes of this Agreement, the term:
(a) "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 person or any of its affiliates or associates (as
such term is 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, warrants 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 purpose
of acquiring, 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;
(b) "business day" means any day other than a day on which banks in
Wisconsin are required or authorized to be closed;
(c) "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;
(d) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d) of the Exchange Act).
Section 8.05. 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 8.06. 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.
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Section 8.07. Entire Agreement. This Agreement, together with the Disclosure
Schedules and Exhibits hereto, constitutes the entire agreement of the parties
and supersedes all prior agreements and undertakings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof
and, except as otherwise expressly provided herein, is not intended to confer
upon any other person any rights or remedies hereunder.
Section 8.08. Assignment. This Agreement shall not be assigned by operation
of law or otherwise.
Section 8.09. 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 of by
reason of this Agreement.
Section 8.10. 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 8.11. 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.
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IN WITNESS WHEREOF, Associated, Merger Sub and FFC have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
ASSOCIATED BANC-CORP
/s/ H.B. Conlon
By: _________________________________
Name: H.B. Conlon
Title: Chief Executive Officer
BADGER MERGER CORP.
/s/ H.B. Conlon
By: _________________________________
Name: H.B. Conlon
Title: Chief Executive Officer
FIRST FINANCIAL CORPORATION
/s/ John C. Seramur
By: _________________________________
Name: John C. Seramur
Title: President and Chief
Executive Officer
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AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (the "Amendment") is
made and entered into as of July 14, 1997, by and among ASSOCIATED BANC-CORP,
a Wisconsin corporation ("Associated"); BADGER MERGER CORP., a Wisconsin
corporation and a wholly owned subsidiary of Associated ("Merger Sub"), and
FIRST FINANCIAL CORPORATION, a Wisconsin corporation ("FFC").
RECITALS
A. The parties hereto have previously entered into an Agreement and Plan of
Merger dated as of May 14, 1997 (the "Agreement"), pursuant to which Merger
Sub is to merge with FFC (the "Merger").
B. The parties hereto wish to amend Section 5.09 of the Agreement.
AGREEMENT
The parties to this Amendment agree as follows:
Section 1. Defined Terms. All capitalized terms not otherwise defined in
this Amendment shall have the meanings set forth in the Agreement.
Section 2. Continuing Effect of Agreement. All terms and provisions of the
Agreement which are not specifically deleted, amended or otherwise modified
by, or inconsistent with, this Amendment shall remain in full force and
effect.
Section 3. Amendments to the Agreement. The Agreement is hereby modified and
amended by adding to Section 5.09(b)(i) after the phrase "and, accordingly,"
and prior to the phrase "(a) each person serving as a director" the following:
"subject to the provisions of Section 4.8 of the Directors' Plan, as
amended,"
Section 4. Headings. The section headings contained in this Amendment are
for convenience of reference only, shall not be deemed to be a part of this
Amendment and shall not be referred to in connection with the construction or
interpretation of this Amendment.
Section 5. Counterparts. This Amendment may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
Section 6. Governing Law. This Amendment shall be governed and construed in
accordance with the laws of the State of Wisconsin without regard to
principles of conflict of laws.
<PAGE>
The parties hereto have caused this Amendment to be executed and delivered
on the date first written above.
Associated Banc-Corp
/s/ R. C. Gallagher
By: _________________________________
Name: R. C. Gallagher
Title: Vice Chairman
Badger Merger Corp.
/s/ R. C. Gallagher
By: _________________________________
Name: R. C. Gallagher
Title: Vice Chairman
First Financial Corporation
/s/ John Seramur
By: _________________________________
Name: John Seramur
Title: Chief Executive Officer
2
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ANNEX II
ASSOCIATED BANC-CORP
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 14, 1997, by and between Associated
Bank-Corp, a Wisconsin corporation (the "Issuer"), and First Financial
Corporation, a Wisconsin corporation ("Grantee").
WHEREAS, concurrently with the execution and delivery of this Agreement,
Issuer, Badger Merger Corp., a Wisconsin corporation and a wholly owned
subsidiary of Issuer ("Merger Sub"), and Grantee are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides for, among other things, upon the terms and
subject to the conditions thereof, the merger of Merger Sub with and into
Grantee (the "Merger");
WHEREAS, as a condition to Grantee's willingness to enter into the Merger
Agreement, Grantee has requested that the Issuer agree, and in order to induce
Grantee to enter into the Merger Agreement, Issuer has so agreed, to grant to
Grantee an option with respect to certain shares of Issuer's common stock on
the terms and subject to the conditions set forth herein; and
WHEREAS, as a condition to Issuer's willingness to enter into the Merger
Agreement, the Issuer has requested that Grantee agree, and in order to induce
the Issuer to enter into the Merger Agreement, Grantee has so agreed, to grant
to Issuer an option with respect to certain shares of Grantee's common stock
on substantially the same terms as set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants, representations, warranties and agreements contained herein and in
the Merger Agreement; and intending to be legally bound hereby, the parties
agree as follows:
1. Grant of Option. Issuer hereby grants Grantee an irrevocable option (the
"Stock Option") to purchase up to (a) 4,465,361 shares (the "Option Shares")
of common stock, $0.01 par value per share, of Issuer (the "Issuer Common
Stock") or (b) if, immediately prior to exercise, such number of shares of
Issuer Common Stock is less than 19.9% of the issued and outstanding shares of
Issuer Common Stock at the time of exercise of the Stock Option, such greater
number of shares of Issuer Common Stock as equals 19.9% of the issued and
outstanding shares of Issuer Common Stock at such time of exercise of the
Stock Option, in the manner set forth below, at a price of $32.50 per share
(the "Exercise Price"), payable in cash in accordance with Section 4 hereof.
Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Merger Agreement.
2. Exercise of Option. (a) Subject to the provisions of Sections 2(c) and
(d), the Stock Option may be exercised by Grantee, in whole or in part, at any
time or from time to time following the occurrence of a Purchase Event (as
defined below), provided that, except as provided in the last sentence of this
Section 2(a), the Stock Option shall terminate and be of no further force and
effect upon the earliest to occur of (i) the Effective Time, (ii) 12 months
after the first occurrence of a Purchase Event and (iii) termination of the
Merger Agreement in accordance with its terms prior to the occurrence of a
Purchase Event (provided that the Stock Option shall not terminate for a
period of 12 months following any occurrence specified in Sections 2(b)(iv)(A)
or 2(b)(v)(A); and provided further that any purchase of shares upon exercise
of the Stock Option shall be subject to compliance with applicable law,
including the Bank Holding Company Act of 1956, as amended (the "BHC Act").
Notwithstanding the termination of the Stock Option, Grantee shall be entitled
to purchase the Option Shares with respect to which it has exercised the Stock
Option in accordance with the terms hereof prior to the termination of the
Stock Option. The termination of the Stock Option shall not affect any rights
hereunder which by their terms extend beyond the date of such termination.
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(b) As used herein, a "Purchase Event" means any of the following events:
(i) any person (other than Grantee or any subsidiary of Grantee) shall
have commenced (as such term is defined in Rule 14d-2 under the Exchange
Act), or shall have filed a registration statement under the Securities Act
with respect to, a tender offer or exchange offer to purchase any shares of
Issuer Common Stock such that, upon consummation of such offer, such person
or a "group" (as such term is defined under the Exchange Act) of which such
person is a member, would acquire beneficial ownership (as such term is
defined in Rule 13d-3 of the Exchange Act), or the right to acquire
beneficial ownership, of 15% or more of the then outstanding Issuer Common
Stock (any such offer, a "Tender Offer"), and the Board of Directors shall
not have recommended against such tender offer or exchange offer within 10
business days of such commencement or filing or at any time thereafter
shall recommend acceptance thereof;
(ii) Issuer or any subsidiary of Issuer shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person (other
than Grantee or any subsidiary of Grantee) to (A) effect a merger,
consolidation or other business combination involving Issuer or any of its
subsidiaries (other than internal mergers, reorganizing actions or
consolidations involving only existing subsidiaries of Issuer), (B) sell,
lease or otherwise dispose of assets of Issuer or its subsidiaries
aggregating 15% or more of the consolidated assets, net revenues or net
income of Issuer and its subsidiaries or (C) issue, sell or otherwise
dispose of (including by way of merger, consolidation, share exchange or
any similar transaction) securities representing 15% or more of the voting
power of Issuer or any of its subsidiaries (any of the foregoing, an
"Acquisition Transaction");
(iii) any person (other than Grantee or any subsidiary of Grantee) shall
have acquired beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act) or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of, shares of Issuer Common Stock (other than trust account
shares) aggregating 15% or more of the then outstanding Issuer Common
Stock;
(iv) (A) the holders of Issuer Common Stock shall not have approved the
increase in the number of authorized shares of Issuer Common Stock or the
issuance of Issuer Common Stock in connection with the Merger at the
meeting of such shareholders held for the purpose of voting on the increase
in the number of authorized shares of Issuer Common Stock and the issuance
of Issuer Common Stock in connection with the Merger, (B) such meeting
shall not have been held or shall have been cancelled prior to termination
of the Merger Agreement or (C) Issuer's Board of Directors shall have
withdrawn or modified in a manner adverse to Grantee or to Grantee's
ability to consummate the transactions contemplated by the Merger Agreement
the recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Grantee or any
subsidiary of Grantee) shall have (X) publicly announced, or taken actions
which have resulted in public disclosure of, a proposal, or publicly
disclosed an intention to make a proposal, to engage in an Acquisition
Transaction and shall not have withdrawn such proposal at least 10 business
days prior to the stockholders' meeting to consider the increase in the
number of authorized shares of Issuer Common Stock or the issuance of
Issuer Common Stock in connection with the Merger (provided that any public
disclosures to the effect that such person intends to or may make another
proposal shall result in the original proposal not being deemed to have
been withdrawn) or (Y) filed an application (or given a notice), whether in
draft or final form, to the Federal Reserve Board, the OCC, the FDIC or any
other governmental or regulatory authority for approval to engage in an
Acquisition Transaction; provided that the Stock Option shall not be
exercisable upon the occurrence specified in Section 2(b)(iv)(A) above
unless and until any of the events specified in Section 2 (b)(ii) or (iii)
above shall have occurred; or
(v) (A) there shall exist a willful or intentional breach under the
Merger Agreement by Issuer and such breach would entitle Grantee to
terminate the Merger Agreement; and (B) within 12 months from the date of
such breach, any of the events specified in Section 2(b)(ii) or (iii) above
shall have occurred.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
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(c) In the event Grantee wishes to exercise the Stock Option, it shall send
to Issuer a written notice (an "Exercise Notice" and the date of which being
herein referred to as a "Notice Date") specifying (i) the total number of
Option Shares that it intends to purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 20 business
days from the Notice Date for the closing of such purchase (a "Closing Date");
provided that if any closing of the purchase and sale pursuant to the Stock
Option (a "Closing") cannot be consummated by reason of any applicable order,
injunction, decree, judgment, law or regulation, the period of time that
otherwise would run pursuant to this sentence shall run instead from the date
on which such restriction on consummation has expired or been terminated; and
provided further, without limiting the foregoing, that if prior notification
to or approval of the Federal Reserve Board, the OCC, the FDIC or any other
governmental or regulatory authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which, as the
case may be, (A) any required notification period has expired or been
terminated or (B) such approval has been obtained, and in either event, any
requisite waiting period has passed.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date occur
later than 18 months after the related Notice Date, and if such Closing shall
not have occurred within 18 months after such Notice Date due to the failure
to obtain any required approval of the Federal Reserve Board, the OCC, the
FDIC or any other governmental or regulatory authority, the exercise of the
Stock Option or Substitute Option effected on such date shall be deemed to
have expired. In the event (i) Grantee receives official notice that any such
approval required for the purchase of Option Shares will not be issued or
granted or (ii) a Closing Date shall not have occurred within 18 months after
the related Notice Date due to the failure to obtain any such approval,
Grantee shall be entitled to exercise its rights to exercise the Stock Option
in connection with the resale of Issuer Common Stock or other securities
pursuant to a registration statement as provided in Section 8. The provisions
of this Section 2 and Section 4 shall apply with appropriate adjustments to
any such exercise.
3. Conditions to Closing. The obligation of Issuer to issue Option Shares to
Grantee hereunder is subject to the conditions that (a) all consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, the Federal Reserve Board, the OCC, the FDIC or any other
governmental or regulatory authority, if any, required in connection with the
issuance of Option Shares hereunder shall have been obtained or made, as the
case may be, and (b) no order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint preventing such
issuance shall be in effect.
4. Closing. At any Closing, (a) Issuer will deliver to Grantee a certificate
or certificates in definitive form, such certificate or certificates to be
registered in the name of Grantee, or such other affiliate of Grantee as
Grantee shall designate in the Exercise Notice and shall bear the legend set
forth in Section 11, representing the number of Option Shares designated by
Grantee in its Exercise Notice, which Option Shares shall be free and clear of
all Liens, and (b) Grantee will deliver to Issuer the aggregate Exercise Price
for the Option Shares so designated and being purchased at such Closing by
wire transfer of immediately available funds to a bank account designated by
Issuer.
5. Representations and Warranties of Issuer. Issuer represents and warrants
to Grantee that (a) Issuer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Wisconsin and has full
corporate power and authority to execute and deliver this Agreement and,
subject to any approvals referred to herein, to consummate the transactions
contemplated hereunder, (b) the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to approve this Agreement and
to consummate the transactions contemplated hereby, (c) this Agreement has
been duly and validly executed and delivered by Issuer and (assuming due
authorization, execution and delivery by Grantee) this Agreement constitutes a
valid and binding obligation of Issuer, enforceable against Issuer in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied
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in a court of law or equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally, (d) Issuer has taken all
necessary corporate action to authorize and reserve for issuance and to permit
it to issue, upon exercise of the Stock Option, and at all times from the date
hereof through the expiration of the Stock Option will have so reserved, the
requisite number of unissued shares of Issuer Common Stock necessary to permit
exercise in full of the Stock Option, all of which, upon their issuance and
delivery in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable (except as provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law), (e) upon delivery
of such shares of Issuer Common Stock to Grantee upon exercise of the Stock
Option, Grantee will acquire valid title to all of such shares, free and clear
of any and all Liens of any nature whatsoever, (f) the execution and delivery
of this Agreement by Issuer does not, and the performance of this Agreement by
Issuer will not (1) violate the certificate of incorporation or by-laws of
Issuer, (2) conflict with or violate any statute, rule, regulation, order,
judgment or decree applicable to Issuer or by which it or any of its assets or
properties is bound or affected or (3) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Lien on any of the property or assets of Issuer pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, or other instrument
or obligation to which Issuer or any of its subsidiaries is a party or by
which Issuer or any of its assets or properties is bound or affected (except,
in the case of clauses (2) and (3) above, for violations, breaches or defaults
which would not, individually or in the aggregate, have a Material Adverse
Effect on Issuer) and (g) any provisions of the Wisconsin Business Corporation
Law or Issuer's Articles of Incorporation prohibiting certain business
combinations shall not apply to Grantee in respect of Grantee's acquisition of
some or all of the Option Shares and (h) Grantee will not, as a result of its
exercise of the Stock Option, become subject to any anti-takeover provisions,
plans or arrangements in place at Issuer.
6. Representations and Warranties of Grantee. Grantee represents and
warrants to Issuer that (a) Grantee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin and has
full corporate power and authority to execute and deliver this Agreement and,
subject to any approvals referred to herein, to consummate the transactions
contemplated hereunder, (b) the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Grantee and no other corporate
proceedings on the part of Grantee are necessary to approve this Agreement and
to consummate the transactions contemplated hereby, (c) this Agreement has
been duly executed and delivered by Grantee and (assuming due authorization,
execution and delivery by Issuer) this Agreement constitutes a valid and
binding obligation of Grantee, enforceable against Grantee in accordance with
its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally, (d) the execution and delivery of this Agreement by Grantee does
not, and the performance of this Agreement by Grantee will not (1) violate the
certificate of incorporation or bylaws of Grantee, (2) conflict with or
violate any statute, rule, regulation, order, judgment or decree applicable to
Grantee or by which it or any of its properties or assets is bound or affected
or (3) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give rise to
any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien on any of the property or assets of Grantee
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, or other instrument or obligation to which Grantee is a party or by
which Grantee or any of its properties or assets is bound or affected (except,
in the case of clauses (2) and (3) above, for violations, breaches, or
defaults which would not, individually or in the aggregate, have a Material
Adverse Effect on Grantee) and (e) any Option Shares acquired upon exercise of
the Stock Option will be, and the Stock Option is being, acquired by Grantee
for its own account and not with a view to the public distribution or resale
thereof in any manner which would be in violation of applicable United States
securities laws.
7. Adjustment upon Changes in Capitalization; Substitute Option. (a) In the
event of any change in Issuer Common Stock by reason of a stock dividend,
split-up, recapitalization, combination, exchange of shares or similar
transaction, the type and number of shares or securities subject to the Stock
Option, and the Exercise
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Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall
receive upon exercise of the Stock Option the number and class of shares or
other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Stock Option had been exercised immediately prior
to such event or the record date therefor, as applicable.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one
of its subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property, or the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger shall after such merger represent less than 50% of the outstanding
voting securities of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Grantee or one of its subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provisions so that the Stock
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an
option (the "Substitute Option"), at the election of Grantee, of either (A)
the Acquiring Corporation (as defined below) or (B) any person that controls
the Acquiring Corporation (any such person being referred to as "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the Stock Option;
provided that the exercise price therefor and number of shares subject thereto
shall be as set forth in this Section 7; provided further that the Substitute
Option shall be exercisable immediately upon issuance without the occurrence
of a Purchase Event; and provided further that if the terms of the Substitute
Option cannot, for legal reasons, be the same as the Stock Option (subject to
the variations described in the foregoing provisos), such terms shall be as
similar as possible and in no event less advantageous to Grantee. Substitute
Option Issuer shall also enter into an agreement with Grantee in substantially
the same form as this Agreement (subject to the variations described in the
foregoing provisos), which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock (as defined below) as is equal to the Assigned Value
(as defined below) multiplied by the number of shares of Issuer Common Stock
for which the Stock Option was theretofore exercisable, divided by the Average
Price (as defined below), rounded up to the nearest whole share. The exercise
price per share of Substitute Common Stock of the Substitute Option (the
"Substitute Option Price") shall then be equal to the Exercise Price
multiplied by a fraction in which the numerator is the number of shares of
Issuer Common Stock for which the Stock Option was theretofore exercisable and
the denominator is the number of shares of Substitute Common Stock for which
the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of outstanding
Substitute Common Stock but for the limitation in the first sentence of this
Section 7(e), Substitute Option Issuer shall make a cash payment to Grantee
equal to the excess of (i) the value of the Substitute Option without giving
effect to the limitation in the first sentence of this Section 7(e) over (ii)
the value of the Substitute Option after giving effect to the limitation in
the first sentence of this Section 7(e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by
Grantee.
(f) Issuer shall not enter into any transaction described in Section 7(b)
unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section
7 are given full force and effect (including, without limitation, any action
that may be necessary so that the holders of the other shares of
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common stock issued by Substitute Option Issuer are not entitled to exercise
any rights by reason of the issuance or exercise of the Substitute Option and
the shares of Substitute Common Stock are otherwise in no way distinguishable
from or have lesser economic value than other shares of common stock issued by
Substitute Option Issuer (other than any diminution in value resulting from
the fact that the shares of Substitute Common Stock are restricted securities,
as defined in Rule 144 under the Securities Act or any successor provision)).
(g) For purposes hereof, the following terms have the following meanings:
(1) "Acquiring Corporation" means (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving corporation and (iii) the transferee of all or substantially all
of Issuer's assets or deposits.
(2) "Assigned Value" means the highest of (A) the price per share of
Issuer Common Stock at which a Tender Offer has been made after the date
hereof and prior to the consummation of the consolidation, merger or sale
referred to in Section 7(b), (B) the price per share to be paid by any
third party or the consideration per share to be received by holders of
Issuer Common Stock, in each case pursuant to the agreement with Issuer
with respect to the consolidation, merger or sale referred to in Section
7(b), (C) the highest closing sales price per share for Issuer Common Stock
quoted on the National Association of Securities Dealers' Automated
Quotation System (the "NASDAQS") (or, if the shares of Issuer Common Stock
are not quoted thereon, on the principal trading market on which such
shares are traded as reported by a recognized source) during the 12-month
period immediately preceding the consolidation, merger or sale referred to
in Section 7(b) and (D) in the event the transaction referred to in Section
7(b) is a sale of all or substantially all of Issuer's assets and/or
deposits, an amount equal to (i) the sum of the price paid in such sale for
such assets and/or deposits and the current market value of the remaining
assets of Issuer, as determined by a nationally recognized investment
banking firm selected by Grantee, divided by (ii) the number of shares of
Issuer Common Stock outstanding at such time. In the event that a Tender
Offer is made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the value
of the securities or other property issuable or deliverable in exchange for
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Grantee.
(3) "Average Price" means the average closing sales price per share of a
share of Substitute Common Stock quoted on the NASDAQS (or, if the shares
of Substitute Common Stock are not quoted thereon, on the principal trading
market on which such shares are traded as reported by a recognized source)
for the one year immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation, merger or
sale; provided that if Substitute Option Issuer is Issuer, the Average
Price shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls
such person, as Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock (or
similar equity interest) with the greatest voting power in respect of the
election of directors (or persons similarly responsible for the direction
of the business and affairs) of the Substitute Option Issuer.
8. Registration Rights. (a) Issuer shall, if requested by Grantee at any
time and from time to time (a) within three years of the first exercise of the
Stock Option or (b) for 30 business days following the occurrence of either of
the events set forth in clauses (i) and (ii) of Section 2(d), as expeditiously
as possible prepare and file up to two registration statements under the
Securities Act if such registration is necessary in order to permit the sale
or other disposition of any or all shares of securities that have been
acquired by or are issuable to Grantee upon exercise of the Stock Option in
accordance with the intended method of sale or other disposition stated by
Grantee, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities under any applicable state
securities laws. Grantee agrees to use its best efforts to cause, and to cause
any underwriters of any sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement to be effected on a widely
distributed basis so that upon consummation thereof no purchaser or transferee
shall own beneficially
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more than 4.9% of the then outstanding voting power of Issuer. Issuer shall
use all reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement effective for such
period not in excess of 180 days from the day such registration statement
first becomes effective as may be reasonably necessary to effect such sale or
other disposition. Any registration statement prepared and filed under this
Section 9, and any sale covered thereby, shall be at Issuer's expense except
for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto.
(b) In the event that Grantee requests Issuer to file a registration
statement following the failure to obtain a required approval for an exercise
of the Stock Option as described in Section 2(d), the closing of the sale or
other disposition of Issuer Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Stock Option.
(c) The obligations of Issuer under this Section 8 to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding 60 days in the aggregate if the Board of
Directors of Issuer shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would require premature
disclosure of nonpublic information that would materially and adversely affect
Issuer.
(d) If during the time periods referred to in the first sentence of Section
8(a) Issuer effects a registration under the Securities Act of Issuer Common
Stock for its own account or for any other stockholders of Issuer (other than
on Form S-4 or Form S-8, or any successor form), Issuer shall allow Grantee
the right to participate in such registration, and such participation shall
not affect the obligation of Issuer to effect two registration statements for
Grantee under this Section 8; provided that, if the managing underwriters of
such offering advise Issuer in writing that in their opinion the number of
shares of Issuer Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering, Issuer shall include
the shares requested to be included therein by Grantee pro rata with the
shares intended to be included therein by Issuer.
(e) Grantee shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. In connection
with any registration pursuant to this Section 8, Issuer and Grantee shall
provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution in
connection with such registration.
9. Restrictive Legends. Each certificate representing Option Shares issued
to Grantee hereunder shall initially be endorsed with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. SUCH SECURITIES ARE ALSO
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK
OPTION AGREEMENT, DATED MAY 14, 1997, A COPY OF WHICH MAY BE OBTAINED FROM
THE ISSUER HEREOF.
10. NASDAQS Listing. Upon any exercise of the Stock Option, Issuer shall use
its best efforts to cause the shares of Issuer Common Stock to be acquired in
connection with such exercise of the Stock Option to be approved for listing
on the NASDAQS and each other securities exchange on which such shares are
listed as soon as practicable after such exercise.
11. Assignment; Third Party Beneficiaries. (a) Neither this Agreement nor
any of the rights, interests or obligations of any party hereunder shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without prior written consent of the other party; provided that
Grantee may assign all or any part of its rights hereunder to (i) any
affiliate thereof or (ii) any person after the occurrence of a Purchase Event.
Subject
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to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns. This Agreement (including the documents and instruments referred
to herein) is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
(b) Any Option Shares sold by a party in compliance with the provisions of
Section 9 shall, upon consummation of such sale, be free of the restrictions
imposed with respect to such shares by this Agreement. In no event will any
transferee of any Option Shares be entitled to the rights of Grantee
hereunder.
(c) Certificates representing shares sold in a registered public offering
pursuant to Section 8 shall not be required to bear the legend set forth in
Section 9.
12. Enforcement of the Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
13. Entire Agreement. This Agreement and the Merger Agreement (together with
the other documents and instruments referred to in the Merger Agreement)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
14. Further Assurances. Each party will execute and deliver all such further
documents and instruments and take all such further action as may be necessary
in order to consummate the transactions contemplated hereby.
15. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
16. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or delivered by
express courier (with confirmation) to the parties at the following addresses
(or such other address for a party as shall be specified by like notice):
(a) if to Grantee, to:
First Financial Corporation
1305 Main Street
Stevens Point, Wisconsin 54481
Attention: Robert M. Salinger, General Counsel
With a copy to:
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Stuart G. Stein
and
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(b) if to Issuer, to:
Associated Banc-Corp
112 North Adams Street
Green Bay, Wisconsin 54307
Attention: Brian R. Bodager, General Counsel
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Creighton O'M. Condon
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin, without regard to any
applicable conflicts of law.
18. 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.
19. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered and shall become effective when counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
20. Expenses. Except as otherwise expressly provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense.
21. Amendments; Waiver. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
Associated Banc-Corp
/s/ H.B. Conlon
By: _________________________________
Name: H.B. Conlon
Title: Chief Executive Officer
First Financial Corporation
/s/ John C. Seramur
By: _________________________________
Name: John C. Seramur
Title: President and Chief
Executive Officer
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ANNEX III
FIRST FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 14, 1997, by and between First
Financial Corporation, a Wisconsin corporation (the "Issuer"), and Associated
Banc-Corp, a Wisconsin corporation ("Grantee").
WHEREAS, concurrently with the execution and delivery of this Agreement,
Issuer, Grantee, and Badger Merger Corp., a Wisconsin corporation and a wholly
owned subsidiary of Grantee, are entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), which provides
for, among other things, upon the terms and subject to the conditions thereof,
the merger of Merger Sub with and into Issuer (the "Merger");
WHEREAS, as a condition to Grantee's willingness to enter into the Merger
Agreement, Grantee has requested that the Issuer agree, and in order to induce
Grantee to enter into the Merger Agreement, Issuer has so agreed, to grant to
Grantee an option with respect to certain shares of Issuer's common stock on
the terms and subject to the conditions set forth herein; and
WHEREAS, as a condition to Issuer's willingness to enter into the Merger
Agreement, the Issuer has requested that Grantee agree, and in order to induce
the Issuer to enter into the Merger Agreement, Grantee has so agreed, to grant
to Issuer an option with respect to certain shares of Grantee's common stock
on substantially the same terms as set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants, representations, warranties and agreements contained herein and in
the Merger Agreement; and intending to be legally bound hereby, the parties
agree as follows:
1. Grant of Option. Issuer hereby grants Grantee an irrevocable option (the
"Stock Option") to purchase up to (a) 7,245,877 shares (the "Option Shares")
of common stock, $1.00 par value per share, of Issuer (the "Issuer Common
Stock") or (b) if, immediately prior to exercise, such number of shares of
Issuer Common Stock is less than 19.9% of the issued and outstanding shares of
Issuer Common Stock at the time of exercise of the Stock Option, such greater
number of shares of Issuer Common Stock as equals 19.9% of the issued and
outstanding shares of Issuer Common Stock at such time of exercise of the
Stock Option, in the manner set forth below, at a price of $ 23.25 per share
(the "Exercise Price"), payable in cash in accordance with Section 4 hereof.
Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Merger Agreement.
2. Exercise of Option. (a) Subject to the provisions of Sections 2(c) and
(d), the Stock Option may be exercised by Grantee, in whole or in part, at any
time or from time to time following the occurrence of a Purchase Event (as
defined below), provided that, except as provided in the last sentence of this
Section 2(a), the Stock Option shall terminate and be of no further force and
effect upon the earliest to occur of (i) the Effective Time, (ii) 12 months
after the first occurrence of a Purchase Event and (iii) termination of the
Merger Agreement in accordance with its terms prior to the occurrence of a
Purchase Event (provided that the Stock Option shall not terminate for a
period of 12 months following any occurrence specified in Sections 2(b)(iv)(A)
or 2(b)(v)(A); and provided further that any purchase of shares upon exercise
of the Stock Option shall be subject to compliance with applicable law,
including the Bank Holding Company Act of 1956, as amended (the "BHC Act").
Notwithstanding the termination of the Stock Option, Grantee shall be entitled
to purchase the Option Shares with respect to which it has exercised the Stock
Option in accordance with the terms hereof prior to the termination of the
Stock Option. The termination of the Stock Option shall not affect any rights
hereunder which by their terms extend beyond the date of such termination.
<PAGE>
(b) As used herein, a "Purchase Event" means any of the following events:
(i) any person (other than Grantee or any subsidiary of Grantee) shall
have commenced (as such term is defined in Rule 14d-2 under the Exchange
Act), or shall have filed a registration statement under the Securities Act
with respect to, a tender offer or exchange offer to purchase any shares of
Issuer Common Stock such that, upon consummation of such offer, such person
or a "group" (as such term is defined under the Exchange Act) of which such
person is a member, would acquire beneficial ownership (as such term is
defined in Rule 13d-3 of the Exchange Act), or the right to acquire
beneficial ownership, of 15% or more of the then outstanding Issuer Common
Stock (any such offer, a "Tender Offer"), and the Board of Directors shall
not have recommended against such tender offer or exchange offer within 10
business days of such commencement or filing or at any time thereafter
shall recommend acceptance thereof;
(ii) Issuer or any subsidiary of Issuer shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person (other
than Grantee or any subsidiary of Grantee) to (A) effect a merger,
consolidation or other business combination involving Issuer or any of its
subsidiaries (other than internal mergers, reorganizing actions or
consolidations involving only existing subsidiaries of Issuer), (B) sell,
lease or otherwise dispose of assets of Issuer or its subsidiaries
aggregating 15% or more of the consolidated assets, net revenues or net
income of Issuer and its subsidiaries or (C) issue, sell or otherwise
dispose of (including by way of merger, consolidation, share exchange or
any similar transaction) securities representing 15% or more of the voting
power of Issuer or any of its subsidiaries (any of the foregoing, an
"Acquisition Transaction");
(iii) any person (other than Grantee or any subsidiary of Grantee) shall
have acquired beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act) or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of, shares of Issuer Common Stock (other than trust account
shares) aggregating 15% or more of the then outstanding Issuer Common
Stock;
(iv) (A) the holders of Issuer Common Stock shall not have approved the
Merger Agreement at the meeting of such shareholders held for the purpose
of voting on the Merger Agreement, (B) such meeting shall not have been
held or shall have been cancelled prior to termination of the Merger
Agreement or (C) Issuer's Board of Directors shall have withdrawn or
modified in a manner adverse to Grantee or to Grantee's ability to
consummate the transactions contemplated by the Merger Agreement the
recommendation of Issuer's Board of Directors with respect to the Merger
Agreement, in each case after any person (other than Grantee or any
subsidiary of Grantee) shall have (X) publicly announced, or taken actions
which have resulted in public disclosure of, a proposal, or publicly
disclosed an intention to make a proposal, to engage in an Acquisition
Transaction and shall not have withdrawn such proposal at least 10 business
days prior to the stockholders' meeting to consider the Merger (provided
that any public disclosures to the effect that such person intends to or
may make another proposal shall result in the original proposal not being
deemed to have been withdrawn) or (Y) filed an application (or given a
notice), whether in draft or final form, to the Federal Reserve Board, the
OCC, the FDIC or any other governmental or regulatory authority for
approval to engage in an Acquisition Transaction; provided; that the Stock
Option shall not be exercisable upon the occurrence specified in Section
2(b)(iv)(A) above unless and until any of the events specified in Section
2(b)(ii) or (iii) above shall have occurred; or
(v) (A) there shall exist a willful or intentional breach under the
Merger Agreement by Issuer and such breach would entitle Grantee to
terminate the Merger Agreement; and (B) within 12 months from the date of
such breach, any of the events specified in Section 2(b)(ii) or (iii) above
shall have occurred.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Stock Option, it shall send
to Issuer a written notice (an "Exercise Notice" and the date of which being
herein referred to as a "Notice Date") specifying (i) the total number of
Option Shares that it intends to purchase pursuant to such exercise and (ii) a
place and date not earlier
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than three business days nor later than 20 business days from the Notice Date
for the closing of such purchase (a "Closing Date"); provided that if any
closing of the purchase and sale pursuant to the Stock Option (a "Closing")
cannot be consummated by reason of any applicable order, injunction, decree,
judgment, law or regulation, the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated; and provided
further, without limiting the foregoing, that if prior notification to or
approval of the Federal Reserve Board, the OCC, the FDIC or any other
governmental or regulatory authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which, as the
case may be, (A) any required notification period has expired or been
terminated or (B) such approval has been obtained, and in either event, any
requisite waiting period has passed.
(d) Notwithstanding Section 2(c), in no event shall any Closing Date occur
later than 18 months after the related Notice Date, and if such Closing shall
not have occurred within 18 months after such Notice Date due to the failure
to obtain any required approval of the Federal Reserve Board, the OCC, the
FDIC or any other governmental or regulatory authority, the exercise of the
Stock Option or Substitute Option effected on such date shall be deemed to
have expired. In the event (i) Grantee receives official notice that any such
approval required for the purchase of Option Shares will not be issued or
granted or (ii) a Closing Date shall not have occurred within 18 months after
the related Notice Date due to the failure to obtain any such approval,
Grantee shall be entitled to exercise its rights to exercise the Stock Option
in connection with the resale of Issuer Common Stock or other securities
pursuant to a registration statement as provided in Section 9. The provisions
of this Section 2 and Section 4 shall apply with appropriate adjustments to
any such exercise.
3. Conditions to Closing. The obligation of Issuer to issue Option Shares to
Grantee hereunder is subject to the conditions that (a) all consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, the Federal Reserve Board, the OCC, the FDIC or any other
governmental or regulatory authority, if any, required in connection with the
issuance of Option Shares hereunder shall have been obtained or made, as the
case may be, and (b) no order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint preventing such
issuance shall be in effect.
4. Closing. At any Closing, (a) Issuer will deliver to Grantee a certificate
or certificates in definitive form, such certificate or certificates to be
registered in the name of Grantee, Merger Sub or such other affiliate of
Grantee as Grantee shall designate in the Exercise Notice and shall bear the
legend set forth in Section 11, representing the number of Option Shares
designated by Grantee in its Exercise Notice, which Option Shares shall be
free and clear of all Liens, and (b) Grantee will deliver to Issuer the
aggregate Exercise Price for the Option Shares so designated and being
purchased at such Closing by wire transfer of immediately available funds to a
bank account designated by Issuer.
5. Representations and Warranties of Issuer. Issuer represents and warrants
to Grantee that (a) Issuer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Wisconsin and has full
corporate power and authority to execute and deliver this Agreement and,
subject to any approvals referred to herein, to consummate the transactions
contemplated hereunder, (b) the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to approve this Agreement and
to consummate the transactions contemplated hereby, (c) this Agreement has
been duly and validly executed and delivered by Issuer and (assuming due
authorization, execution and delivery by Grantee) this Agreement constitutes a
valid and binding obligation of Issuer, enforceable against Issuer in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally, (d) Issuer has taken all necessary corporate action to
authorize and reserve for issuance and to permit it to issue, upon exercise of
the Stock Option, and at all times from the date hereof through the expiration
of the Stock Option will have so reserved, the requisite number of unissued
shares of Issuer Common
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Stock necessary to permit exercise in full of the Stock Option, all of which,
upon their issuance and delivery in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable (except as
provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law),
(e) upon delivery of such shares of Issuer Common Stock to Grantee upon
exercise of the Stock Option, Grantee will acquire valid title to all of such
shares, free and clear of any and all Liens of any nature whatsoever, (f) the
execution and delivery of this Agreement by Issuer does not, and the
performance of this Agreement by Issuer will not (1) violate the certificate
of incorporation or by-laws of Issuer, (2) conflict with or violate any
statute, rule, regulation, order, judgment or decree applicable to Issuer or
by which it or any of its assets or properties is bound or affected or (3)
result in any breach or violation of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give rise to any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Lien on any of the property
or assets of Issuer pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, or other instrument or obligation to
which Issuer or any of its subsidiaries is a party or by which Issuer or any
of its assets or properties is bound or affected (except, in the case of
clauses (2) and (3) above, for violations, breaches or defaults which would
not, individually or in the aggregate, have a Material Adverse Effect on
Issuer) and (g) any provisions of the Wisconsin Business Corporation Law or
Issuer's Articles of Incorporation prohibiting certain business combinations
shall not apply to Grantee in respect of Grantee's acquisition of some or all
of the Option Shares and (h) Grantee will not as a result of its exercise of
the Stock Option, become subject to any anti-takeover provisions, plans or
arrangements in place at Issuer.
6. Representations and Warranties of Grantee. Grantee represents and
warrants to Issuer that (a) Grantee is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin and has
full corporate power and authority to execute and deliver this Agreement and,
subject to any approvals referred to herein, to consummate the transactions
contemplated hereunder, (b) the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Grantee and no other corporate
proceedings on the part of Grantee are necessary to approve this Agreement and
to consummate the transactions contemplated hereby, (c) this Agreement has
been duly executed and delivered by Grantee and (assuming due authorization,
execution and delivery by Issuer) this Agreement constitutes a valid and
binding obligation of Grantee, enforceable against Grantee in accordance with
its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally, (d) the execution and delivery of this Agreement by Grantee does
not, and the performance of this Agreement by Grantee will not (1) violate the
certificate of incorporation or bylaws of Grantee, (2) conflict with or
violate any statute, rule, regulation, order, judgment or decree applicable to
Grantee or by which it or any of its properties or assets is bound or affected
or (3) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give rise to
any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien on any of the property or assets of Grantee
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, or other instrument or obligation to which Grantee is a party or by
which Grantee or any of its properties or assets is bound or affected (except,
in the case of clauses (2) and (3) above, for violations, breaches, or
defaults which would not, individually or in the aggregate, have a Material
Adverse Effect on Grantee) and (e) any Option Shares acquired upon exercise of
the Stock Option will be, and the Stock Option is being, acquired by Grantee
for its own account and not with a view to the public distribution or resale
thereof in any manner which would be in violation of applicable United States
securities laws.
7. Adjustment upon Changes in Capitalization; Substitute Option. (a) In the
event of any change in Issuer Common Stock by reason of a stock dividend,
split-up, recapitalization, combination, exchange of shares or similar
transaction, the type and number of shares or securities subject to the Stock
Option, and the Exercise Price therefor, shall be adjusted appropriately, and
proper provision shall be made in the agreements governing such transaction,
so that Grantee shall receive upon exercise of the Stock Option the number and
class of shares or other securities or property that Grantee would have
received in respect of Issuer Common Stock if the Stock Option had been
exercised immediately prior to such event or the record date therefor, as
applicable.
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(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one
of its subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger shall be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property, or the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger shall after such merger represent less than 50% of the outstanding
voting securities of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Grantee or one of its subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provisions so that the Stock
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an
option (the "Substitute Option"), at the election of Grantee, of either (A)
the Acquiring Corporation (as defined below) or (B) any person that controls
the Acquiring Corporation (any such person being referred to as "Substitute
Option Issuer").
(c) The Substitute Option shall have the same terms as the Stock Option;
provided that the exercise price therefor and number of shares subject thereto
shall be as set forth in this Section 7; provided further that the Substitute
Option shall be exercisable immediately upon issuance without the occurrence
of a Purchase Event; and provided further that if the terms of the Substitute
Option cannot, for legal reasons, be the same as the Stock Option (subject to
the variations described in the foregoing provisos), such terms shall be as
similar as possible and in no event less advantageous to Grantee. Substitute
Option Issuer shall also enter into an agreement with Grantee in substantially
the same form as this Agreement (subject to the variations described in the
foregoing provisos), which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock (as defined below) as is equal to the Assigned Value
(as defined below) multiplied by the number of shares of Issuer Common Stock
for which the Stock Option was theretofore exercisable, divided by the Average
Price (as defined below), rounded up to the nearest whole share. The exercise
price per share of Substitute Common Stock of the Substitute Option (the
"Substitute Option Price") shall then be equal to the Exercise Price
multiplied by a fraction in which the numerator is the number of shares of
Issuer Common Stock for which the Stock Option was theretofore exercisable and
the denominator is the number of shares of Substitute Common Stock for which
the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of outstanding
Substitute Common Stock but for the limitation in the first sentence of this
Section 7(e), Substitute Option Issuer shall make a cash payment to Grantee
equal to the excess of (i) the value of the Substitute Option without giving
effect to the limitation in the first sentence of this Section 7(e) over (ii)
the value of the Substitute Option after giving effect to the limitation in
the first sentence of this Section 7(e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by
Grantee.
(f) Issuer shall not enter into any transaction described in Section 7(b)
unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section
7 are given full force and effect (including, without limitation, any action
that may be necessary so that the holders of the other shares of common stock
issued by Substitute Option Issuer are not entitled to exercise any rights by
reason of the issuance or exercise of the Substitute Option and the shares of
Substitute Common Stock are otherwise in no way distinguishable from or have
lesser economic value than other shares of common stock issued by Substitute
Option Issuer (other than any diminution in value resulting from the fact that
the shares of Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision)).
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(g) For purposes hereof, the following terms have the following meanings:
(1) "Acquiring Corporation" means (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving corporation and (iii) the transferee of all or substantially all
of Issuer's assets or deposits.
(2) "Assigned Value" means the highest of (A) the price per share of
Issuer Common Stock at which a Tender Offer has been made after the date
hereof and prior to the consummation of the consolidation, merger or sale
referred to in Section 7(b), (B) the price per share to be paid by any
third party or the consideration per share to be received by holders of
Issuer Common Stock, in each case pursuant to the agreement with Issuer
with respect to the consolidation, merger or sale referred to in Section
7(b), (C) the highest closing sales price per share for Issuer Common Stock
quoted on the National Association of Securities Dealers' Automated
Quotation System (the "NASDAQS") or, if the shares of Issuer Common Stock
are not quoted thereon, on the principal trading market on which such
shares are traded as reported by a recognized source) during the 12-month
period immediately preceding the consolidation, merger or sale referred to
in Section 7(b) and (D) in the event the transaction referred to in Section
7(b) is a sale of all or substantially all of Issuer's assets and/or
deposits, an amount equal to (i) the sum of the price paid in such sale for
such assets and/or deposits and the current market value of the remaining
assets of Issuer, as determined by a nationally recognized investment
banking firm selected by Grantee, divided by (ii) the number of shares of
Issuer Common Stock outstanding at such time. In the event that a Tender
Offer is made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the value
of the securities or other property issuable or deliverable in exchange for
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Grantee.
(3) "Average Price" means the average closing sales price per share of a
share of Substitute Common Stock quoted on the NASDAQS (or, if the shares
of Substitute Common Stock are not quoted thereon, on the principal trading
market on which such shares are traded as reported by a recognized source)
for the one year immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the shares of
Substitute Common Stock on the day preceding such consolidation, merger or
sale; provided that if Substitute Option Issuer is Issuer, the Average
Price shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls
such person, as Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital stock (or
similar equity interest) with the greatest voting power in respect of the
election of directors (or persons similarly responsible for the direction
of the business and affairs) of the Substitute Option Issuer.
8. Cash-out Rights. If and to the extent the Stock Option is not exercisable
with respect to any of the Option Shares due to Article 9 of the Articles of
Incorporation of the Issuer, Grantee has the right to, and may with respect to
such Option Shares which are not exercisable, in its sole determination, elect
to receive a cash payment in an amount equal to (A) the amount by which (1)
the "Market/Tender Offer Price" for shares of Issuer Common Stock as of the
date Grantee gives notice of its intent to exercise its rights under this
Section 8 (defined as the higher of (x) the highest price per share of Issuer
Common Stock paid as of such date pursuant to any tender or exchange offer or
other Acquisition Proposal and (y) the average of the closing sale prices of
shares of Issuer Common Stock on the NASDAQS or, if not quoted thereon, the
principal trading market on which such shares are traded by a recognized
source for the 10 trading days immediately preceding such date) exceeds (2)
the Exercise Price, multiplied by the number of such Option Shares.
9. Registration Rights. (a) Issuer shall, if requested by Grantee at any
time and from time to time (a) within three years of the first exercise of the
Stock Option or (b) for 30 business days following the occurrence of either of
the events set forth in clauses (i) and (ii) of Section 2(d), as expeditiously
as possible prepare and file up to two registration statements under the
Securities Act if such registration is necessary in order to permit the sale
or other disposition of any or all shares of securities that have been
acquired by or are issuable to Grantee upon exercise of the Stock Option in
accordance with the intended method of sale or other disposition stated by
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Grantee, including a "shelf' registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities under any applicable state
securities laws. Grantee agrees to use its best efforts to cause, and to cause
any underwriters of any sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement to be effected on a widely
distributed basis so that upon consummation thereof no purchaser or transferee
shall own beneficially more than 4.9% of the then outstanding voting power of
Issuer. Issuer shall use all reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers
of other parties which are required therefor and to keep such registration
statement effective for such period not in excess of 180 days from the day
such registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. Any registration statement
prepared and filed under this Section 9, and any sale covered thereby, shall
be at Issuer's expense except for underwriting discounts or commissions,
brokers' fees and the fees and disbursements of Grantee's counsel related
thereto.
(b) In the event that Grantee requests Issuer to file a registration
statement following the failure to obtain a required approval for an exercise
of the Stock Option as described in Section 2(d), the closing of the sale or
other disposition of Issuer Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Stock Option.
(c) The obligations of Issuer under this Section 9 to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding 60 days in the aggregate if the Board of
Directors of Issuer shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would require premature
disclosure of nonpublic information that would materially and adversely affect
Issuer.
(d) If during the time periods referred to in the first sentence of Section
9(a) Issuer effects a registration under the Securities Act of Issuer Common
Stock for its own account or for any other stockholders of Issuer (other than
on Form S-4 or Form S-8, or any successor form), Issuer shall allow Grantee
the right to participate in such registration, and such participation shall
not affect the obligation of Issuer to effect two registration statements for
Grantee under this Section 10; provided that, if the managing underwriters of
such offering advise Issuer in writing that in their opinion the number of
shares of Issuer Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering, Issuer shall include
the shares requested to be included therein by Grantee pro rata with the
shares intended to be included therein by Issuer.
(e) Grantee shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. In connection
with any registration pursuant to this Section 9, Issuer and Grantee shall
provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution in
connection with such registration.
10. Restrictive Legends. Each certificate representing Option Shares issued
to Grantee hereunder shall initially be endorsed with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND
APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. SUCH SECURITIES ARE ALSO
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK
OPTION AGREEMENT, DATED MAY 14, 1997, A COPY OF WHICH MAY BE OBTAINED FROM
THE ISSUER HEREOF.
11. NASDAQS Listing. Upon any exercise of the Stock Option, Issuer shall use
its best efforts to cause the shares of Issuer Common Stock to be acquired in
connection with such exercise of the Stock Option to be approved for listing
on the NASDAQS and each other securities exchange on which such shares are
listed as soon as practicable after such exercise.
7
<PAGE>
12. Assignment; Third Party Beneficiaries. (a) Neither this Agreement nor
any of the rights, interests or obligations of any party hereunder shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without prior written consent of the other party; provided that
Grantee may assign all or any part of its rights hereunder to (i) any
affiliate thereof or (ii) any person after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns. This Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
(b) Any Option Shares sold by a party in compliance with the provisions of
Section 9 shall, upon consummation of such sale, be free of the restrictions
imposed with respect to such shares by this Agreement. In no event will any
transferee of any Option Shares be entitled to the rights of Grantee
hereunder.
(c) Certificates representing shares sold in a registered public offering
pursuant to Section 9 shall not be required to bear the legend set forth in
Section 10.
13. Enforcement of the Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
14. Entire Agreement. This Agreement and the Merger Agreement (together with
the other documents and instruments referred to in the Merger Agreement)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
15. Further Assurances. Each party will execute and deliver all such further
documents and instruments and take all such further action as may be necessary
in order to consummate the transactions contemplated hereby.
16. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
17. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or delivered by
express courier (with confirmation) to the parties at the following addresses
(or such other address for a party as shall be specified by like notice):
(a) If to Grantee, to:
Associated Banc-Corp
112 North Adams Street
Green Bay, Wisconsin 54307
Attention: Brian R. Bodager, General Counsel
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Creighton O'M. Condon
8
<PAGE>
and
(b) If to Issuer, to:
First Financial Corporation
1305 Main Street
Stevens Point, Wisconsin 54481
Attention: Robert M. Salinger, General Counsel
With a copy to:
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Stuart G. Stein
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin, without regard to any
applicable conflicts of law.
19. 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.
20. Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered and shall become effective when counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
21. Expenses. Except as otherwise expressly provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense.
22. Amendments; Waiver. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
9
<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
FIRST FINANCIAL CORPORATION
/s/ John C. Seramur
By: _________________________________
Name: John C. Seramur
Title: President andChief
Executive Officer
ASSOCIATED BANC-CORP
/s/ H.B. Conlon
By: _________________________________
Name: H.B. Conlon
Title: Chief Executive Officer
10
<PAGE>
ANNEX IV
- ---------------------------------------------------------------
SANDLER O'NEILL CORPORATE STRATEGIES Telephone: 212-466-7700
- ---------------------------------------------------------------
Division of Sandler O'Neill & Partners, L.P. 800-635-6855
- ---------------------------------------------------------------
Two World Trade Center, 104th Floor Facsimile: 212-466-7711
- ---------------------------------------------------------------
(LOGO-Sandler O'Neill)
May 14, 1997
Board of Directors
Associated Banc-Corp
112 North Adams Street
Green Bay, WI 54301
Directors:
Associated Banc-Corp (the "Company") and First Financial Corporation ("First
Financial") have entered into an Agreement and Plan of Merger, dated as of May
14, 1997 (the "Agreement"), pursuant to which First Financial will be merged
with a subsidiary of the Company (the "Merger"). Under the terms of the
Agreement, upon consummation of the Merger, each outstanding share of First
Financial's common stock, par value $1.00 per share (the "First Financial
Shares"), will be converted into the right to receive .765 of a share (the
"Exchange Ratio") of the common stock, par value $.01 per share, of the
Company (the "Company Shares"). The terms and conditions of the Merger are
more fully set forth in the Agreement. You have requested our opinion as to
the fairness, from a financial point of view, of the Exchange Ratio to the
holders of the Company Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other
corporate transactions.
In connection with this opinion, we have reviewed, among other things: (i)
the Agreement and exhibits thereto; (ii) the Stock Option Agreements, dated as
of May 14, 1997, by and between the Company and First Financial; (iii) the
Company's audited consolidated financial statements and management's
discussion and analysis of the financial condition and results of operations
contained in its annual reports to shareholders for the years ended December
31, 1994, December 31, 1995, and December 31, 1996; (iv) First Financial's
audited consolidated financial statements and management's discussion and
analysis of the financial condition and results of operations contained in its
annual reports to shareholders for the fiscal years ended December 31, 1994,
December 31, 1995, and December 31, 1996; (v) the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997; (vi)
First Financial's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1997 and June 30, 1997; (vii) certain financial analyses and forecasts of
First Financial prepared by and reviewed with management of First Financial
and the views of senior management of First Financial regarding First
Financial's past and current business operations, results thereof, financial
condition and future prospects; (viii) certain financial analyses and
forecasts of the Company prepared by and reviewed with management of the
Company and the views of senior management of the Company regarding the
Company's past and current business operations, results thereof, financial
condition and future prospects; (ix) the pro forma impact of the Merger on the
combined companies; (x) the historical reported price and trading activity for
the Company's and First Financial's common stock, including a comparison of
certain financial and stock market information for the Company and First
Financial with similar information for certain other companies the
Sandler O'Neill & Partners, L.P., is a limited partnership, the general
partner of which is Sandler O'Neill & Partners Corp., a New York Corporation.
<PAGE>
securities of which are publicly traded; (xi) the financial terms of recent
business combinations in the savings and banking institution industries; (xii)
the current market environment generally and the banking environment in
particular; and (xiii) such other information, financial studies, analyses and
investigations and financial, economic and market criteria as we considered
relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information reviewed by and discussed with us,
and we did not make an independent evaluation or appraisal of the specific
assets, the collateral securing assets or the liabilities of the Company or
First Financial or any of their subsidiaries, or the collectibility of any
such assets (relying, where relevant, on the analyses and estimates of the
Company and First Financial). With respect to the financial projections
reviewed with management, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the respective managements of the respective future financial
performances of the Company and First Financial and that such performances
will be achieved. We have also assumed that there has been no material change
in the Company's or First Financial's assets, financial condition, results of
operations, business or prospects since June 30, 1997, the date of the last
unaudited financial statements noted above. We have assumed that the Merger
will qualify for pooling of interests accounting treatment and have further
assumed that the Company and First Financial will remain as a going concern
for all periods relevant to our analyses and that the conditions precedent in
the Agreement are not waived.
Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date hereof.
Events occurring after the date hereof could materially affect the assumptions
used in preparing this opinion. We have not undertaken to reaffirm or revise
this opinion or otherwise comment upon events occurring after the date hereof.
We have acted as the Company's financial advisor in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon consummation of the Merger. We have also provided and
continue to provide general financial advisory services for the Company and
have received and will continue to receive fees for such services.
In the ordinary course of business, we may actively trade the equity
securities of the Company and First Financial for our own account and for the
accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities.
Our opinion is directed to the Board of Directors of the Company and does
not constitute a recommendation to any stockholder of the Company as to how
such stockholder should vote at any meeting of stockholders called to consider
and vote upon the Merger. Our opinion is not to be quoted or referred to, in
whole or in part, in a registration statement, prospectus, proxy statement or
in any other document, nor shall this opinion be used for any other purposes,
without Sandler O'Neill's prior written consent.
Based upon and subject to the foregoing, it is our opinion that the Exchange
Ratio is fair, from a financial point of view, to the holders of the Company
Shares.
Very truly yours,
Sandler O'Neill & Partners, L.P.
2
<PAGE>
ANNEX V
LOGO
MEMBER NEW YORK STOCK EXCHANGE
SUITE 2700
311 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
312-360-3870
FAX: 312-360-3899
WATTS: 800-648-8202
May 14, 1997
Board of Directors
First Financial Corporation
1305 Main Street
Stevens Point, WI 54481
Gentlemen:
You have requested our opinion with respect to the fairness, from a
financial point of view, as of the date hereof, to the holders of the common
stock, par value $1.00 per share ("First Financial Common"), of First
Financial Corporation ("First Financial"), of the exchange ratio, as set forth
in Section 1.07(a) of the proposed Agreement and Plan of Merger (the
"Agreement"), among First Financial, Associated Banc-Corp and Badger Merger
Corp ("Merger Sub"), a wholly-owned subsidiary of Associated Banc-Corp
("Associated").
The Agreement provides for the merger (the "Merger") of Merger Sub with and
into First Financial, pursuant to which, among other things, at the Effective
Time (as defined in the Agreement), each outstanding share of First Financial
Common (other than shares held in the treasury of First Financial, shares
owned by any of First Financial's subsidiaries, and certain shares owned by
Associated and its subsidiaries) will be converted in the right to receive
.765 shares of the common stock, $.01 par value ("Associated Common") of
Associated, as set forth in Section 1.07(a) of the Agreement (the "Exchange
Ratio"). The terms and conditions of the Merger are more fully set forth in
the Agreement.
McDonald & Company Securities, Inc., as part of its investment banking
business, is customarily engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
We have acted as First Financial's financial advisor in connection with, and
have participated in certain negotiations leading to, the Agreement. In
connection with rendering our opinion set forth herein, we have among other
things:
(i) Reviewed First Financial's Annual Reports to Shareholders and Annual
Reports on Form 10-K for each of the years ended December 31, 1996,
December 31, 1995 and December 31, 1994, including the audited financial
statements contained therein, and First Financial's unaudited financial
statements on Form 10-Q for the three months ended March 31, 1997;
(ii) Reviewed Associated's Annual Reports to Shareholders and Annual
Reports on Form 10-K for each of the years ended December 31, 1996,
December 31, 1995 and December 31, 1994, including the audited financial
statements contained therein, and Associated's unaudited financial
statements on Form 10-Q for the three months ended March 31, 1997;
<PAGE>
(iii) Reviewed certain other public and non-public information, primarily
financial in nature, relating to the respective businesses, earnings,
assets and prospects of First Financial and Associated provided to us or
publicly available;
(iv) Participated in meetings and telephone conferences with members of
senior management of First Financial and Associated concerning the
financial condition, business, assets, financial forecasts and prospects of
the respective companies, as well as other matters we believed relevant to
our inquiry;
(v) Reviewed certain stock market information for First Financial Common
and Associated Common, and compared it with similar information for certain
companies, the securities of which are publicly traded;
(vi) Compared the results of operations and financial condition of First
Financial and Associated with that of certain companies which we deemed to
be relevant for purposes of this opinion;
(vii) Reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions which we deemed to be relevant for
purposes of this opinion;
(viii) Reviewed a draft of the Agreement dated May 14, 1997 and its
schedules and exhibits and certain related documents; and
(ix) Performed such other reviews and analyses as we have deemed
appropriate.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have relied upon the accuracy and
completeness of the representations, warranties and covenants of First
Financial and Associated contained in the Agreement. We have not been engaged
to undertake, and have not assumed any responsibility for, nor have we
conducted, an independent investigation or verification of such matters. We
have not been engaged to and we have not conducted a physical inspection of
any of the assets, properties or facilities of either First Financial or
Associated, nor have we made or obtained or been furnished with any
independent valuation or appraisal of any of such assets, properties or
facilities or any of the liabilities of either First Financial and Associated.
With respect to financial forecasts used in our analysis, we have assumed that
such forecasts have been reasonably prepared by management of First Financial
and Associated, as the case may be, on a basis reflecting the best currently
available estimates and judgments of the management of First Financial and
Associated, as to the future performance of First Financial, Associated, and
First Financial and Associated combined, as the case may be. We have not been
engaged to and we have not assumed any responsibility for, nor have we
conducted any independent investigation or verification of such matters, and
we express no view as to such financial forecasts or the assumptions on which
they are based. We have also assumed that all of the conditions to the
consummation of the Merger, as set forth in the Agreement, including the tax-
free treatment of the Merger to the holders of First Financial Common, would
be satisfied and that the Merger would be consummated on a timely basis in the
manner contemplated by the Agreement.
We will receive a fee for our services as financial advisor to First
Financial, a substantial portion of which is contingent upon closing of the
Merger. We will also receive a fee for our services in rendering this opinion.
In the ordinary course of business, we may actively trade securities of
Associated and First Financial for our own account and for the accounts of
customers and accordingly, we may at any time hold a long or short position in
such securities.
This opinion is based on economic and market conditions and other
circumstances existing on, and information made available as of, the date
hereof. In addition, our opinion is, in any event, limited to the fairness, as
of the date hereof, from a financial point of view, of the Exchange Ratio, to
the holders of First Financial Common, and does not address the underlying
business decision by First Financial's Board of Directors to effect the
Merger, does not compare or discuss the relative merits of any competing
proposal or any other terms of the Merger, and does not constitute a
recommendation to any First Financial shareholder as to how such shareholder
should vote with respect to the Merger. This opinion does not represent an
opinion as to what the value of First
2
<PAGE>
Financial Common or Associated Common may be at the Effective Time of the
Merger or as to the prospects of First Financial's business or Associated's
business.
This opinion is directed to the Board of Directors of First Financial and
will not be reproduced, summarized, described or referred to or given to any
other person without our prior written consent. Notwithstanding the foregoing,
this opinion may be included in the proxy statement to be mailed to the
holders of First Financial Common in connection with the Merger, provided that
this opinion will be reproduced in such proxy statement in full, and any
description of or reference to us or our actions, or any summary of the
opinion in such proxy statement, will be in a form reasonably acceptable to us
and our counsel.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair to the holders of First Financial
Common from a financial point of view.
Very truly yours,
McDonald & Company Securities, Inc.
3
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Registrant is incorporated under the Wisconsin Business Corporation Law
(the "WBCL"). Under Section 180.0851 of the WBCL, the Registrant shall
indemnify a director or officer, to the extent such person is successful on the
merits or otherwise in the defense of a proceeding, for all reasonable expenses
incurred in the proceeding, if such person was a party to such proceeding
because he or she was a director or officer of the Registrant. In all other
cases, the Registrant shall indemnify a director or officer against liability
incurred in a proceeding to which such person was a party because he or she was
a director or officer of the Registrant; unless liability was incurred because
he or she breached or failed to perform a duty owed to the Registrant and such
breach or failure to perform constitutes: (i) a willful failure to deal fairly
with the Registrant or its shareholders in connection with a matter in which the
director or officer has a material conflict of interest; (ii) a violation of
criminal law, unless the director or officer had reasonable cause to believe his
or her conduct was lawful or no reasonable cause to believe his or her conduct
was unlawful; (iii) a transaction from which the director or officer derived an
improper personal profit; or (iv) willful misconduct. Section 180.0858 of the
WBCL provides that subject to certain limitations, the mandatory indemnification
provisions do not preclude any additional right to indemnification or allowance
of expenses that a director or officer may have under the Registrant's articles
of incorporation, bylaws, a written agreement between the director or officer
and the Registrant or a resolution of the Board of Directors or adopted by
majority vote of the Registrant's shareholders.
Section 180.0859 of the WBCL provides that it is the public policy of the
State of Wisconsin to require or permit indemnification, allowance of expenses
and insurance to the extent required or permitted under Sections 180.0850 to
180.0858 of the WBCL for any liability incurred in connection with a proceeding
involving a federal or state statute, rule or regulation regulating the offer,
sale or purchase of securities.
The Registrant's Articles of Incorporation contains no provisions in
relation to the indemnification of directors and officers of the Registrant.
Article XI of the Registrant's Bylaws ("Article XI") authorizes
indemnification of officers and directors of the Registrant consistent with the
description of the indemnification provisions in Section 180.0851 of the WBCL as
described above. Article XI provides that the Registrant shall indemnify a
director, officer, employee or agent of the Registrant to the extent such
individual has been successful on the merits or otherwise in the defense of any
threatened, pending or completed civil, criminal, administrative or
investigative action, suit, arbitration or other proceeding, whether formal or
informal (including, but not limited to, any act or failure to act alleged or
determined (i) to have been negligent, (ii) to have violated the Employee
Retirement Income Security Act of 1974; or (iii) to have violated Sections
180.0832, 180.0833 and 180.1202 of the WBCL, or any successor thereto, regarding
loans to directors, unlawful distributions and distributions of assets, which
involves foreign, federal, state or local law and which is brought by or in the
right of the Registrant or by any other person or entity, to which the director,
officer, employee or agent was a party because he or she is a director, officer,
employee or agent. In all other cases, the Registrant shall indemnify a
director, officer, employee or agent of the Registrant against liability and
expenses incurred by such person in a proceeding unless it shall have been
proven by final judicial adjudication that such person breached or failed to
perform a duty owed to the Registrant under the circumstances described above as
set forth in Section 180.0851 of the WBCL. Article XI defines a "director,
officer, employee or agent" as (i) a natural person who is or was a director,
officer, employee or agent of the Registrant, (ii) a natural person who, while a
director, officer, employee or agent of the Registrant, is or was serving either
pursuant to the Registrant's specific request or as a result of the nature of
such person's duties to the Registrant as a director, officer, partner, trustee,
member of any governing or decision making committee, employee or agent of
another corporation or foreign corporation, partnership, joint venture, trust or
other enterprise and (iii) a person who, while a director, officer, employee or
agent of the Registrant, is or was serving an employee benefit plan because his
or her duties to the Registrant also impose duties on, or otherwise involve
services by, the person to the plan or to participants in or beneficiaries of
the plan. Unless the context requires otherwise, Article XI indemnification
extends to the estate or personal representative of a director, officer,
employee or agent.
<PAGE>
All officers, directors, employees and agents of controlled subsidiaries of
the Registrant shall be deemed for purposes of Article XI to be serving as such
officers, directors, employees and agents at the request of the Registrant. The
right to indemnification granted to such officers and directors by Article XI is
not subject to any limitation or restriction imposed by any provision of the
Articles of Incorporation or Bylaws of a controlled subsidiary. For purposes of
Article XI, a "controlled subsidiary" means any corporation at least 80% of the
outstanding voting stock of which is owned by the Registrant or another
controlled subsidiary of the Registrant.
Upon written request by a director, officer, employee or agent who is a
party to a proceeding, the Registrant shall pay or reimburse his or her
reasonable expenses as incurred if the director, officer, employee or agent
provides the Registrant with: (i) a written affirmation of his or her good
faith belief that he or she is entitled to indemnification under Article XI; and
(ii) a written undertaking to repay all amounts advanced without interest to the
extent that it is ultimately determined that indemnification under Article XI is
prohibited. The Registrant shall have the power to purchase and maintain
insurance on behalf of any person who is a director, officer, employee or agent
against any liability asserted against or incurred by the individual in any such
capacity arising out of his or her status as such, regardless of whether the
Registrant is required or authorized to indemnify or allow expenses to the
individual under Article XI.
The right to indemnification under Article XI may be amended only by a
majority vote of the shareholders and any reduction in the right to
indemnification may only be prospective from the date of such vote.
Item 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are exhibits to the Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------ ----------------------- ------
<S> <C> <C>
2.1 Agreement and Plan of Merger, dated as of May 14, 1997, among
Associated Banc-Corp, Badger Merger Corp. and First Financial
Corporation (included as Annex I to the Joint Proxy
Statement/Prospectus which is part of this Registration Statement)
2.2 Amendment No. 1 to the Agreement and Plan of Merger, effective as of
July 14, 1997 (included as Annex I to the Joint Proxy
Statement/Prospectus which is part of this Registration Statement)
2.3 Stock Option Agreement, dated as of May 14, 1997, between Associated
Banc-Corp and First Financial Corporation (included as Annex II to the
Joint Proxy Statement/Prospectus which is part of this Registration
Statement)
2.4 Stock Option Agreement, dated as of May 14, 1997, between First
Financial Corporation and Associated Banc-Corp (included as Annex III
to the Joint Proxy Statement/Prospectus which is part of this
Registration Statement)
3.1 Articles of Incorporation of Registrant (Incorporated by reference to
Exhibit (3) to Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993)
3.2 By laws of Registrant (Incorporated by reference to Exhibit (3) to
Registrant's Form 10-Q for the quarter ended September 30, 1991)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------ ----------------------- ------
<S> <C> <C>
*5 Opinion of Brian R. Bodager, Secretary and General Counsel to
Associated Banc-Corp, concerning the validity of shares of Associated
Common Stock
*8 Opinion of Shearman & Sterling concerning tax treatment of the
transaction
10.1 The 1982 Incentive Stock Option Plan (Incorporated by reference to
Exhibit (10) to Registrant's Form 10-K for the fiscal year ended
December 31, 1987)
10.2 The Restated Long-Term Incentive Stock Option Plan of the Registrant
(Incorporated by reference to Registrant's registration statement
(File No. 33-86790)) on Form S-8 filed under the Securities Act of
1933.
10.3 Deferred Compensation Agreement dated November 1, 1986 between
Associated Bank Green Bay, National Association and Robert C.
Gallagher (Incorporated by reference to Exhibit (10)(c) to
Registrant's Report on Form 10-K for fiscal year ended December 31,
1992)
10.4 Change of Control Plan of the Registrant effective April 25, 1994
(Incorporated by reference to Exhibit (10)(d) to Registrant's Report
on Form 10-K for fiscal year ended December 31, 1994)
10.5 Deferred Compensation Plan and Deferred Compensation Trust effective
as of December 16, 1993, and Deferred Compensation Agreement of the
Registrant dated December 31, 1994 (Incorporated by reference to
Exhibit (10)(e) to Registrant's report on Form 10-K for fiscal year
ended December 31, 1994)
21 Subsidiaries of the Registrant (incorporated by reference to
Associated Banc-Corp's Annual Report on Form 10-K filed with the
Commission on March 24, 1997)
*23.1 Consent of KPMG Peat Marwick LLP (Associated Banc-Corp)
*23.2 Consent of Ernst & Young LLP (First Financial Corporation)
23.3 Consent of Shearman & Sterling (included in exhibit 8)
*23.4 Consent of Sandler O'Neill & Partners, L.P.
*23.5 Consent of McDonald & Company Securities, Inc.
*24 Powers of Attorney
99.1 Opinion of Sandler O'Neill & Partners, L.P. (included as Appendix IV
to the Joint Proxy Statement/Prospectus which is part of this
Registration Statement)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------- ----------------------- ------
<S> <C>
99.2 Opinion of McDonald & Company Securities, Inc. (included as Appendix V
to the Joint Proxy Statement/Prospectus which is part of this
Registration Statement)
*99.3 Form of Proxy Card for shareholders of Associated Banc-Corp
*99.4 Form of Proxy Card for shareholders of First Financial Corporation
*99.5 Consent of John C. Seramur as a person about to become a Director
</TABLE>
__________
*filed herewith
_______________
Item 22. UNDERTAKINGS
(a)(1) The undersigned Registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement (x) to
include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933, as amended (the "Securities Act"); (y) to reflect in the
prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement; (z) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(ii) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(iii) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(2) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (and,
where applicable, each filing of an employee benefit plan's annual report
to Section 15(d) of the Exchange Act), that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
<PAGE>
(4) The Registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph (3) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act
and is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to the registration statement
and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue .
(b) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES OF ASSOCIATED BANC-CORP
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Green Bay, State of
Wisconsin, on this 4th day of September, 1997.
ASSOCIATED BANC-CORP
By: *
--------------------------
Harry B. Conlon, Jr.
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman, President, Chief
- ----------------------- Executive Officer and a Director
Harry B. Conlon, Jr. (Principal Executive Officer)
* Executive Vice President and a
- ----------------------- Director
Robert C. Gallagher
/s/ Joseph B. Selner Senior Vice President, Chief
- ----------------------- Financial Officer and Principal
Joseph B. Selner Financial and Accounting Officer
* Director
- -----------------------
Robert Feitler
* Director
- -----------------------
Ronald R. Harder
Director
*
- -----------------------
John S. Holbrook, Jr.
Director
*
- -----------------------
William R. Hutchinson
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Director
*
- -----------------------
James F. Janz
Director
*
- -----------------------
John C. Meng
Director
*
- -----------------------
J. Douglas Quick
/s/ Brian R. Bodager *Attorney-in-fact
- -----------------------
Brian R. Bodager
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------- ----------------------- ------
<S> <C> <C>
2.1 Agreement and Plan of Merger, dated as of May 14, 1997, among Associated
Banc-Corp, Badger Merger Corp. and First Financial Corporation (included as
Annex I to the Joint Proxy Statement/Prospectus which is part of this
Registration Statement)
2.2 Amendment No. 1 to the Agreement and Plan of Merger, effective as of July 14,
1997 (included as Annex I to the Joint Proxy Statement/Prospectus which is
part of this Registration Statement)
2.3 Stock Option Agreement, dated as of May 14, 1997, between Associated Banc-
Corp and First Financial Corporation (included as Annex II to the Joint Proxy
Statement/Prospectus which is part of this Registration Statement)
2.4 Stock Option Agreement, dated as of May 14, 1997, between First Financial
Corporation and Associated Banc-Corp (included as Annex III to the Joint
Proxy Statement/Prospectus which is part of this Registration Statement)
3.1 Articles of Incorporation of Registrant (Incorporated by reference to Exhibit (3)
to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
1993)
3.2 By laws of Registrant (Incorporated by reference to Exhibit (3) to Registrant's
Form 10-Q for the quarter ended September 30, 1991)
*5 Opinion of Brian R. Bodager, Secretary and General Counsel to Associated
Banc-Corp, concerning the validity of shares of Associated Common Stock
*8 Opinion of Shearman & Sterling concerning tax treatment of the transaction
10.1 The 1982 Incentive Stock Option Plan (Incorporated by reference to Exhibit
(10) to Registrant's Form 10-K for the fiscal year ended December 31, 1987)
10.2 The Restated Long-Term Incentive Stock Option Plan of the Registrant
(Incorporated by reference to Registrant's registration statement (File No. 33-
86790)) on Form S-8 filed under the Securities Act of 1933.
10.3 Deferred Compensation Agreement dated November 1, 1986 between Associated Bank
Green Bay, National Association and Robert C. Gallagher (Incorporated by reference to
Exhibit (10) (c) to Registrant's Report on Form 10-K for fiscal year ended December 31, 1992)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------- ----------------------- ------
<S> <C> <C>
10.4 Change of Control Plan of the Registrant effective April 25, 1994 (Incorporated
by reference to Exhibit (10)(d) to Registrant's Report on Form 10-K for fiscal
year ended December 31, 1994)
10.5 Deferred Compensation Plan and Deferred Compensation Trust effective as of
December 16, 1993, and Deferred Compensation Agreement of the Registrant
dated December 31, 1994 (Incorporated by reference to Exhibit (10)(e) to
Registrant's report on Form 10-K for fiscal year ended December 31, 1994)
21 Subsidiaries of the Registrant (incorporated by reference to Associated Banc-
Corp's Annual Report on Form 10-K filed with the Commission on March 24,
1997)
*23.1 Consent of KPMG Peat Marwick LLP (Associated Banc-Corp)
*23.2 Consent of Ernst & Young LLP (First Financial Corporation)
23.3 Consent of Shearman & Sterling (included in exhibit 8)
*23.4 Consent of Sandler O'Neill & Partners, L.P.
*23.5 Consent of McDonald & Company Securities, Inc.
*24 Powers of Attorney
99.1 Opinion of Sandler O'Neill & Partners, L.P. (included as Appendix IV to the
Joint Proxy Statement/Prospectus which is part of this Registration Statement)
99.2 Opinion of McDonald & Company Securities, Inc. (included as Appendix V to
the Joint Proxy Statement/Prospectus which is part of this Registration
Statement)
*99.3 Form of Proxy Card for shareholders of Associated Banc-Corp
*99.4 Form of Proxy Card for shareholders of First Financial Corporation
*99.5 Consent of John C. Seramur as a person about to become a Director
</TABLE>
_________
*filed herewith
<PAGE>
EXHIBIT 5
Dated as of the Effective Date of the Registration Statement
Associated Banc-Corp
112 North Adams Street
P.O. Box 13307
Green Bay, Wisconsin 54307-3307
Gentlemen:
The following opinion is furnished by the undersigned in connection with the
Registration Statement on Form S-4 (the "Registration Statement") being filed by
Associated Banc-Corp, a Wisconsin corporation (the "Company"), under the
Securities Act of 1933, as amended, relating to the issuance of shares of Common
Stock, par value $0.01 per share, of the Company (the "Shares"), in connection
with the proposed merger of First Financial Corporation, a Wisconsin corporation
("First Financial"), with Badger Merger Corp., a wholly-owned subsidiary of the
Company.
I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such corporate records and other documents, and have conducted
such other investigations of fact and law as I have deemed necessary or
advisable for purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that, subject to the
requisite shareholder approval, the Shares will be duly authorized and, subject
to the Registration Statement becoming effective, when issued in accordance with
the terms of the Agreement and Plan of Merger, dated as of May 14, 1997, among
the Company, Badger Merger Corp., and First Financial (attached as Annex I to
the Joint Proxy Statement/Prospectus forming a part of the Registration
Statement), and upon receipt by the Company of the consideration therefore, the
Shares will be legally issued, fully paid, and nonassessable.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to me in the Joint Proxy Statement/Prospectus
forming a part of the Registration Statement.
Sincerely,
/s/ Brian R. Bodager
Brian R. Bodager
<PAGE>
[LETTERHEAD OF SHEARMAN & STERLING]
EXHIBIT 8
September 4, 1997
Associated Banc-Corp
112 North Adams Street
P.O. Box 13307
Green Bay, WI 54307-3307
Ladies and Gentlemen:
We are acting as special counsel to Associated Banc-Corp, a Wisconsin
corporation ("Associated"), in connection with the proposed merger (the
"Merger") of First Financial Corporation ("First Financial"), a Wisconsin
corporation, with and into Badger Merger Corp. ("Merger Sub"), a Wisconsin
corporation and direct wholly-owned subsidiary of Associated, pursuant to an
Agreement and Plan of Merger, dated as of May 14, 1997, by and among Associated,
Merger Sub and First Financial (the "Agreement"). Associated is filing with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1993, as amended, a registration statement on Form S-4 (the "Registration
Statement") with respect to the common stock of Associated to be issued to
holders of shares of common stock of First Financial (the "Common Stock") in
connection with the Merger.
In rendering the opinion set forth below, we have assumed that the
transactions contemplated by the Agreement will be consummated in accordance
therewith and as described in the Joint Proxy Statement/Prospectus (together,
the "Proxy Statement") included in the Registration Statement, that the Merger
will qualify as a statutory merger under applicable state laws, and that the
representations as to certain factual matters to be provided to us by Associated
and First Financial in connection with our tax opinion concerning the federal
income tax treatment of the Merger will be true and accurate in all material
respects.
Based upon the foregoing, we are of the opinion that, subject to the
limitations set forth therein, the discussion contained in the Proxy Statement
under the caption "The Merger--Material Federal Income Tax Consequences", is an
accurate summary of the material federal income tax consequences of the Merger
under currently applicable law.
<PAGE>
2
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the reference to us under the
caption "The Merger--Material Federal Income Tax Consequences" and elsewhere in
the Proxy Statement. In giving such consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder.
Very truly yours
/s/ Sherman & Sterling
LMB:CAH
<PAGE>
[LOGO OF KPMG PEAT MARWICK LLP]
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
The Board of Directors
Associated Banc-Corp:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the "Experts" heading in the registration statement.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
September 4, 1997
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in the Joint Proxy Statement/Prospectus of Associated
Banc-Corp and First Financial Corporation, which is referred to and made a part
of this Registration Statement (Form S-4) of Associated Banc-Corp for the
registration of shares of its common stock of our report dated January 14, 1997,
with respect to the consolidated financial statements of First Financial
Corporation, incorporated by reference in its Annual Report (Form 10-K) for the
year ended December 31, 1996 filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
September 4, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Associated Banc-Corp (the "Company") in the Joint Proxy
Statement/Prospectus relating to the proposed merger of a subsidiary of the
Company with First Financial Corporation contained in the Registration Statement
on Form S-4 filed with the Securities and Exchange Commission on September 3,
1997, and to the references to our firm and such opinion in such Joint Proxy
Statement/Prospectus. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended (the "Act"), or the rules and regulations of
the Securities and Exchange Commission thereunder (the "Regulations"), nor do we
admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Act or the
Regulations.
SANDLER O'NEILL & PARTNERS, L.P.
September 4, 1997
<PAGE>
EXHIBIT 23.5
[MCDONALD & COMPANY LETTER HEAD]
CONSENT OF MCDONALD & COMPANY SECURITIES, INC.
We consent to the inclusion in the Associated Banc-Corp/First Financial
Corporation Joint Proxy Statement/Prospectus of our opinion dated as of May 14,
1997, and to the summarization of our opinion in the Joint Proxy
Statement/Prospectus under the caption "Opinion of the Financial Advisor to the
First Financial Board". Further, we consent to all reference to our firm in
such Joint Proxy Statement/Prospectus.
McDonald & Company Securities, Inc.
Chicago, Illinois
September 4, 1997
<PAGE>
EXHIBIT 24
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 21st day of May 1997.
/s/ H.B. Conlon
----------------------------
H.B. Conlon
Director
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 24th day of May 1997.
/s/ Robert Feitler
---------------------------
Robert Feitler
Director
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 21st day of May 1997.
/s/ Robert C. Gallagher
--------------------------
Robert C. Gallagher
Director
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 21st day of May 1997.
/s/ Ronald R. Harder
------------------------
Ronald R. Harder
Director
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 29th day of May 1997.
/s/ John S. Holbrook, Jr.
------------------------
John S. Holbrook, Jr.
Director
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 21st day of May 1997.
/s/ William R. Hutchinson
--------------------------
William R. Hutchinson
Director
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 22nd day of May 1997.
/s/ James F. Janz
--------------------------
James F. Janz
Director
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 21st day of May 1997.
/s/ John C. Meng
------------------------
John C. Meng
Director
<PAGE>
DIRECTOR'S POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Associated
Banc-Corp, a Wisconsin corporation (the "Corporation"), hereby constitutes and
appoints Brian R. Bodager his true and lawful attorney-in-fact and agent to sign
on his behalf a registration statement on Form S-4 in connection with the
issuance of shares of common stock to shareholders of First Financial
Corporation.
Said attorney-in-fact and agent shall have full power to act for him and in
his name, place, and stead in any and all capacities, to sign such Form S-4
Registration Statement and any and all amendments thereto (including post-
effective amendments), with power where appropriate to affix the corporate seal
of the Corporation thereto and to attest such seal, and to file such Form S-4
and each amendment (including post-effective amendments) so signed, with all
exhibits thereto, and any and all documents in connection therewith, with the
SEC, and to appear before the SEC in connection with any matter relating to such
Form S-4 and to any and all amendments thereto (including post-effective
amendments).
The undersigned hereby grants such attorney-in-fact and agent full power
and authority to do and perform any and all acts and things requisite and
necessary to be done as he might or could do in person, and hereby ratifies and
confirms all that such attorney-in-fact and agent may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney as
of the 21st day of May 1997.
/s/ J. Douglas Quick
-------------------------
J. Douglas Quick
Director
<PAGE>
EXHIBIT 99.3
ASSOCIATED BANC-CORP
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
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<S> <C> <C> <C>
1. The approval of an For Against Abstain 2. The approval of the issuance of up to For Against Abstain
amendment to the Associated 28,627,148 shares of Associated common stock
Banc-corp. ("Associated") pursuant to the Agreement and Plan of Merger
Articles of Incorporation to dated as of May 14, 1997, among Associated,
increase the number of Badger Merger Corp., and First Financial Corporation.
authorized shares of
Associated common stock Dated: , 1997
to 100,000,000 shares. ------------------
Signature(s)
---------------------------------------------
---------------------------------------------
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
</TABLE>
PROXY PROXY
ASSOCIATED BANC-CORP
112 NORTH ADAMS STREET, GREEN BAY, WI 54301
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ASSOCIATED BANC-CORP
for the Special Meeting of Shareholders to be held on October 27, 1997
The undersigned hereby appoints John S. Holbrook, Jr., John C. Meng, and J.
Douglas Quick, and each of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
below, all the shares of Common Stock of Associated Banc-Corp ("Associated")
held of record by the undersigned on September 2, 1997, at the Special Meeting
of Shareholders to be held on October 27, 1997, or any adjournment thereof on
the matters and in the manner indicated on the above proxy card and described in
the Joint Proxy Statement/Prospectus. This proxy revokes all prior proxies
given by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2, ABOVE, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTER THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING OF SHAREHOLDERS,
INCLUDING ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT!
YOU ARE URGED TO COMPLETE, DATE, AND SIGN THE PROXY ABOVE AND RETURN IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH
YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE
GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT
YOU ATTEND THE MEETING.
<PAGE>
EXHIBIT 99.4
________________________________________________________________________________
PROXY
FIRST FINANCIAL CORPORATION
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 27, 1997.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST FINANCIAL
CORPORATION
1305 MAIN STREET, STEVENS POINT, WISCONSIN 54481
The undersigned hereby appoints John C. Seramur and Ralph R. Staven as
Proxies, each with the power to appoint a substitute, and hereby authorizes
them to represent and to vote, as directed below, all the shares of common
stock, par value $1.00 per share, of First Financial Corporation held of record
by the undersigned on September 2, 1997, at the Special Meeting of Shareholders
to be held on October 27, 1997, at 10:00 a.m., local time, at The Holiday Inn
Convention Center, 1501 North Point Drive, Stevens Point, WI 54481.
(Continued and to be signed on the reverse.)
________________________________________________________________________________
<PAGE>
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<S> <C>
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR ITEM 1. Please mark your votes as [X]
indicated in this example
FOR AGAINST ABSTAIN
Item 1. The approval of the agreement and plan of merger, dated as of May 14, 1997 [_] [_] [_]
(the "merger agreement"), pursuant to which First Financial Corporation and Associated
Banc-Corp will merge, as described in the accompanying joint proxy statement/prospectus.
Other matters:
The proxies are authorized to vote upon such other business as may properly come before
the special meeting, or any adjournments or postponements thereof, including, without
limitation, a motion to adjourn the special meeting to another time and/or place for the
purpose of soliciting additional proxies in order to approve the merger agreement and
the merger provided for therein or otherwise, in the discretion of the proxy holders with
respect to such matters.
Dated: ___________________________________________________________________________, 1997
________________________________________________________________________________________
________________________________________________________________________________________
Signature(s)
This Proxy when properly executed will be voted in the manner directed herein by the
above signed shareholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEM 1 AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE SPECIAL MEETING OF SHAREHOLDERS OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF, INCLUDING A MOTION TO ADJOURN THE SPECIAL MEETING.
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
___________________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
EXHIBIT 99.5
DIRECTOR'S CONSENT
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as
amended, I, John C. Seramur, hereby consent to be named as a person about to
become a director of Associated Banc-Corp in the Registration Statement on Form
S-4 of Associated Banc-Corp dated September 4, 1997.
Dated: September 4, 1997 /s/ John C. Seramur
--------------------------------
John C. Seramur
