<PAGE> 1
As filed with the Securities and Exchange Commission on July 7, 1999.
Registration Statement 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)
<TABLE>
<S> <C> <C>
WISCONSIN 6711 39-1098068
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
1200 HANSEN ROAD
P.O. BOX 13307
GREEN BAY, WI 54307-3307
(920) 491-7000
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
HARRY B. CONLON
ASSOCIATED BANC-CORP
1200 HANSEN ROAD
P.O. BOX 13307
GREEN BAY, WI 54307-3307
(920) 491-7000
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)
with copies to:
JAMES M. BEDORE, ESQ. JAMES C. MELVILLE, ESQ.
REINHART, BOERNER, VAN DEUREN, KAPLAN, STRANGIS AND KAPLAN, P.A.
NORRIS & RIESELBACH, S.C. 5500 NORWEST CENTER
1000 NORTH WATER STREET 90 SOUTH SEVENTH STREET
P.O. BOX 92900 MINNEAPOLIS, MN 55402-4137
MILWAUKEE, WI 53202-0900 (612) 375-1138
(414) 298-1000
Approximate date of commencement of proposed sale of the securities to
the public: AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION
STATEMENT.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
================================================================================
(THE FACING SHEET CONTINUES, AND THE CALCULATION OF
THE REGISTRATION FEE APPEARS, ON THE FOLLOWING PAGE)
<PAGE> 2
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Title of Each Class Proposed Maximum Proposed Maximum
Of Securities To Amount To Offering Aggregate Amount Of
Be Registered Be Registered(1) Price Per Unit Offering Price Registration Fee
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01
par value per share 2,784,375 Not Applicable Not Applicable $6,949(2)
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>
================================================================================
(1) This number is subject to adjustment in the accordance with the terms of
the Agreement and Plan of Merger between the Registrant and Riverside
Acquisition Corp. Accordingly, this Registration Statement covers any
additional shares of the Common Stock of the Registrant which may be
required to be issued by reason of such adjustments. Subject to increase
in accordance with Rule 416(a) and (b) under the Securities Act of 1933,
as amended, pursuant to stock splits or stock dividends.
(2) Pursuant to Rule 457(f)(2), the registration fee was computed on the basis
of $24,993,653, the book value of the Common Stock of Riverside
Acquisition Corp. to be exchanged in the Merger as of March 31, 1999, the
latest practicable date.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
2
<PAGE> 3
RIVERSIDE ACQUISITION CORP.
800 LASALLE PLAZA AVENUE
MINNEAPOLIS, MINNESOTA 55402-2008
________________, 1999
Dear Fellow Shareholder:
You are cordially invited to attend our special meeting of shareholders
to be held on ______________, 1999 at 10:00 a.m. (local time) at the offices of
Kaplan, Strangis and Kaplan, P.A., 5500 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota. At the special meeting, you will vote on a proposal to
approve an agreement for the merger of Associated Banc-Corp and Riverside
Acquisition Corp.
Subject to receipt of regulatory approval, approval by the shareholders
of Riverside and satisfaction of other conditions, the merger agreement provides
that Riverside will combine its business and operations with those of Associated
through a statutory merger. If the merger is completed, you will receive a
number of whole shares of Associated common stock in exchange for your shares of
Riverside common stock which will vary based upon the average price of
Associated common stock during a 10 trading-day period before the consummation
of the merger. If the average price is less than $32.00, you will receive
111.375 shares of Associated common stock for each share of Riverside common
stock you own. If the average price is at least $32.00 and not greater than
$38.00, you will receive the number of shares of Associated common stock equal
to $3,564 divided by the average price for each share of Riverside common stock
you own. If the average price is greater than $38.00, you will receive 93.78947
shares of Associated common stock for each share of Riverside common stock you
own. You will receive cash in lieu of any fractional share interest in
Associated common stock.
Riverside has the right to terminate the merger agreement if the
average price of Associated common stock as of a designated valuation date is
below $28.50 per share. If Riverside chooses to exercise such right, Associated
may avoid such termination by increasing the conversion ratio to approximately
$3,174 divided by the average price. Associated has the right to terminate the
merger agreement if the average price of Associated common stock as of the
designated valuation date is above $41.50 per share. If Associated chooses to
exercise such right, Riverside may avoid such termination by decreasing the
conversion ratio to approximately $3,892 divided by the average price. The
accompanying proxy statement/prospectus contains a detailed description of this
formula for the exchange of shares of Associated common stock for shares of
Riverside common stock in the merger.
Associated common stock trades on the NASDAQ National Market. The
shares of Associated common stock to be issued in the merger will offer greater
liquidity than that of the shares of Riverside common stock.
The accompanying Proxy Statement/Prospectus describes the merger in
greater detail. We encourage you to read it carefully.
The Board of Directors of Riverside has determined that the merger is
in the best interests of Riverside and its shareholders. Accordingly, the Board
has by unanimous vote
<PAGE> 4
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
Riverside and its shareholders. Whether or not you plan to attend the special
meeting, we urge you to complete, date and sign the enclosed proxy card and
return it promptly in the enclosed postage-paid envelope to ensure that your
shares will be represented at the special meeting. You may revoke your proxy at
any time before it is voted.
On behalf of the Board of Directors, we thank you for your support and
urge you to vote "for" the approval of the merger agreement.
Very truly yours,
/s/ David E. Cleveland
---------------------------
David E. Cleveland,
Chairman of the
Board of Directors
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE MERGER DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS
OR THE ASSOCIATED COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER, NOR
HAVE THEY DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Proxy Statement/Prospectus is dated __________, 1999
and is first being mailed to shareholders on or about __________, 1999.
2
<PAGE> 5
RIVERSIDE ACQUISITION CORP.
800 LASALLE PLAZA AVENUE
MINNEAPOLIS, MINNESOTA 55402-2008
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ____________, 1999
TO THE SHAREHOLDERS OF RIVERSIDE ACQUISITION CORP.
Notice is hereby given that a Special Meeting of Shareholders
(including any adjournments or postponements thereof, the "Special Meeting") of
holders of the Common Stock, no par value per share (the "Common Stock"), of
Riverside Acquisition Corp., a Minnesota corporation ("Riverside" or the
"Company"), will be held at the offices of Kaplan, Strangis and Kaplan, P.A.,
5500 Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota, on
__________, 1999 at 10:00 a.m. (local time). The Proxy Statement/Prospectus for
the Special Meeting is attached and a Proxy Card is enclosed.
The Special Meeting is for the purpose of considering and acting upon
the following proposals:
1. To approve the Agreement and Plan of Merger dated as of March
10, 1999, as amended, between Associated Banc-Corp
("Associated") and the Company (the "Merger Agreement")
providing for the merger of the Company with and into
Associated (the "Merger") (a copy of the Merger Agreement is
attached as Exhibit A to the Proxy Statement/Prospectus
following this notice and an amendment to the Merger Agreement
is attached as Exhibit A-1 to the Proxy Statement/Prospectus).
2. To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
THE DIRECTORS OF THE COMPANY HAVE UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND RECOMMEND THAT THE SHAREHOLDERS APPROVE THE MERGER AGREEMENT.
Only holders of record of Common Stock at the close of business on
_________, 1999, are entitled to notice of, and to vote at, the Special Meeting.
The affirmative vote of the holders of a majority of the voting power of the
outstanding shares of Common Stock is required to approve the Merger Agreement.
Each share of the Common Stock is entitled to one vote. Shareholders of
Associated are not required to approve the Merger Agreement and no further
corporate authorization by Associated is required to consummate the Merger.
Holders of Common Stock who do not vote their shares in favor of the Merger
Agreement and who strictly comply with Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act (the "MBCA") have the right to dissent from
the Merger Agreement and make written demand for payment of the "fair value" of
their shares ("Dissenting Shares"). For a description of the rights of holders
of Dissenting Shares, see Sections 302A.471 and 302A.473 of the MBCA, a copy of
which is included as Exhibit B to the accompanying Proxy Statement/Prospectus.
In addition, the description of the procedures to be followed in order to obtain
payment for Dissenting Shares
<PAGE> 6
is set forth under the caption "The Merger - Dissenters' Rights" in the Proxy
Statement/Prospectus.
It is very important that your shares be represented at the Special
Meeting. You are urged to complete and sign the accompanying Proxy Card, which
is solicited by the Board of Directors of the Company, and mail it promptly in
the enclosed envelope. All Proxies are important, so please complete each Proxy
Card sent to you and return it in the envelope provided. Your Proxy will not be
used if you attend and vote at the Special Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Michael J. Mollerus
---------------------------
Michael J. Mollerus
Secretary
Minneapolis, Minnesota
_____________, 1999
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES AT THIS TIME. IF THE MERGER IS
CONSUMMATED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE SURRENDER OF YOUR STOCK
CERTIFICATES.
2
<PAGE> 7
RIVERSIDE ACQUISITION CORP.
AND
ASSOCIATED BANC-CORP
PROXY STATEMENT/PROSPECTUS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER....................................................... 1
SUMMARY...................................................................................... 3
RISK FACTORS................................................................................. 8
SELECTED FINANCIAL DATA OF ASSOCIATED BANC-CORP
AND RIVERSIDE ACQUISITION CORP............................................................... 10
COMPARATIVE STOCK PRICES AND DIVIDENDS....................................................... 12
Associated Common Stock............................................................. 12
The Company Common Stock............................................................ 12
COMPARATIVE UNAUDITED PER SHARE DATA......................................................... 13
INTRODUCTION................................................................................. 14
ASSOCIATED BANC-CORP......................................................................... 14
THE SPECIAL MEETING.......................................................................... 14
Matters to Be Considered at the Special Meeting..................................... 14
Required Vote....................................................................... 14
Voting of Proxies................................................................... 15
Revocability of Proxies............................................................. 15
Record Date; Stock Entitled to Vote; Quorum......................................... 15
Solicitation of Proxies............................................................. 15
THE MERGER................................................................................... 16
Background of the Merger............................................................ 16
Reasons for the Merger.............................................................. 20
Recommendation of the Board of Directors of the Company............................. 21
Merger Consideration................................................................ 21
Conversion of Shares; Procedures for Exchange of Certificates;
Fractional Shares................................................................ 23
Termination Based on Stock Price.................................................... 25
Regulatory Approvals Required....................................................... 26
The Effective Time.................................................................. 27
Description of Associated Common Stock Issuable in the Merger....................... 27
Comparison of Shareholder Rights.................................................... 28
Authorized Capital Stock................................................... 28
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
Appraisal Rights and Dissenters' Rights.................................... 29
Required Vote.............................................................. 29
Classified Board of Directors.............................................. 29
Removal of Directors....................................................... 30
Newly Created Directorships and Vacancies
on the Board of Directors............................................... 30
Certain Business Combinations.............................................. 30
Advance Notice of Proposals to Be Brought
at the Annual Meeting................................................... 31
Advance Notice of Nominations of Directors................................. 31
Call of Shareholders' Meetings............................................. 31
Shareholder Action Without a Meeting....................................... 31
Dividends; Stock Repurchases............................................... 32
Indemnification of Directors, Officers and Employees....................... 32
Limitation of Personal Liability of Directors.............................. 32
Resale of Associated Common Stock Issued Pursuant to the Merger..................... 33
Pre-Merger Dividend Policy.......................................................... 33
Post-Merger Dividend Policy......................................................... 33
Conduct of Business Pending the Merger.............................................. 33
Certain Material Federal Income Tax Consequences.................................... 34
Anticipated Accounting Treatment.................................................... 36
Dissenters' Rights.................................................................. 36
Interests of Certain Persons in the Merger.......................................... 38
Other Related Party Transactions.................................................... 39
Management After the Merger......................................................... 39
CERTAIN PROVISIONS OF THE MERGER AGREEMENT................................................... 39
The Merger.......................................................................... 39
Representations and Warranties...................................................... 40
Certain Covenants................................................................... 40
No Solicitation of Transactions..................................................... 42
Conditions to Consummation of the Merger............................................ 42
Termination......................................................................... 43
Termination Fee..................................................................... 45
Amendment and Waiver................................................................ 45
Expenses............................................................................ 45
CERTAIN INFORMATION CONCERNING ASSOCIATED.................................................... 46
CERTAIN INFORMATION CONCERNING THE COMPANY................................................... 48
Principal Stockholders of the Company............................................... 48
EXPERTS...................................................................................... 49
LEGAL OPINIONS............................................................................... 49
FUTURE SHAREHOLDER PROPOSALS................................................................. 49
WHERE YOU CAN FIND MORE INFORMATION.......................................................... 50
</TABLE>
ii
<PAGE> 9
<TABLE>
<S> <C>
Exhibit A: Agreement and Plan of Merger between Associated Banc-Corp
and Riverside Acquisition Corp. dated as of March 10, 1999 .............. A-1
Exhibit A-1: First Amendment to Agreement and Plan of Merger between
Associated Banc-Corp and Riverside Acquisition Corp. ....................
dated as of June 24, 1999 ............................................... A-65
Exhibit B: Sections 302A.471 and 302A.473 of the Minnesota Business
Corporation Act ......................................................... B-1
Exhibit C: Riverside Acquisition Corp. and Subsidiaries Financial
Statements and Management's Discussion and Analysis
of Financial Condition and Results of Operations ........................ C-1
</TABLE>
iii
<PAGE> 10
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 merger will increase the financial strength and
resources of Riverside and enable Associated to increase its presence
and heighten its visibility in Minnesota. We believe that you will
benefit as a result of the greater liquidity, marketability and
dividend paying capacity of the Associated common stock which you will
receive in the merger.
Q: WHAT DO I NEED TO DO NOW?
A: 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.
You may attend the special 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 the special meeting by following the
directions on page 15.
PLEASE REMEMBER THAT THE REQUIRED VOTE OF SHAREHOLDERS IS BASED ON THE
TOTAL NUMBER OF OUTSTANDING SHARES, AND NOT UPON THE NUMBER OF SHARES
WHICH ARE ACTUALLY VOTED.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A. No. After the merger is completed, we will send you instructions on how
to receive the merger consideration in exchange for your shares of
Riverside common stock.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If the merger is completed, you will receive whole shares of Associated
common stock in exchange for the shares of Riverside common stock that
you own. The number of shares you receive will vary based upon the
average price of Associated common stock during the 10 trading days
ending on the third business day prior to the day on which the merger
occurs.
o If the average price is less than $32.00, each share of Riverside
common stock will convert into 111.375 Associated shares.
o If the average price is at least $32.00 and not greater than
$38.00, each share of Riverside common stock will convert into
the number of Associated shares equal to $3,564 divided by the
average price.
o If the average price is greater than $38.00, each share of
Riverside common stock will convert into 93.78947 Associated
shares.
If the average price is less than $28.50, Riverside may terminate the
merger agreement unless Associated elects to increase the conversion
ratio so that each Riverside share will convert into approximately
$3,174 divided by the average price. If the average price is greater
than $41.50, Associated may terminate the merger agreement unless
Riverside elects to decrease the conversion
<PAGE> 11
ratio so that each Riverside share will convert into approximately
$3,892 divided by the average price.
You will receive cash instead of any fractional Associated shares that
you would otherwise receive, based on the average price. To review a
detailed description of this formula, see pages 21 to 23.
Q: WHAT HAPPENS TO MY FUTURE DIVIDENDS?
A. The merger agreement prohibits Riverside from declaring or paying any
dividends. After the merger, we presently anticipate that Associated
will pay dividends at the current quarterly rate of $0.29 per share.
However, the directors of Associated 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 meeting.
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. To review
the tax consequences to shareholders in greater detail, see pages 34
and 35.
Q: WHO CAN I CONTACT IF I HAVE MORE QUESTIONS ABOUT THE MERGER?
A: Riverside Acquisition Corp.
c/o Kaplan, Strangis and Kaplan, P.A.
5500 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4137
Attention: James C. Melville, Esq.
Phone Number: (612) 375-1138
Q: WHO CAN I CONTACT IF I WOULD LIKE ADDITIONAL COPIES OF THE PROXY
STATEMENT/PROSPECTUS?
A: Associated Banc-Corp
1200 Hansen Road
P.O. Box 13307
Green Bay, Wisconsin 54307-3307
Attention: Brian R. Bodager, Esq.
Phone Number: (920) 491-7000
2
<PAGE> 12
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" (pages 50
and 51). We have included page references parenthetically to direct you to a
more complete description of the topics presented in this Summary.
THE COMPANIES (PAGES 46-49)
ASSOCIATED BANC-CORP
1200 Hansen Road
P.O. Box 13307
Green Bay, WI 54307-3307
(920) 491-7000
Associated is a diversified multi-bank holding company headquartered in Green
Bay, Wisconsin. At March 31, 1999, Associated had $11.3 billion in assets, 3,967
employees, and provided services through more than 200 banking locations in over
150 communities. Associated offers a variety of financial products and services
to complement its traditional line of banking products.
RIVERSIDE ACQUISITION CORP.
800 LaSalle Plaza Avenue
Minneapolis, MN 55402-2008
(612) 338-8600
Riverside Acquisition Corp. is a one-bank holding company which owns 100% of the
stock of Riverside Bancshares Corporation. Riverside Bancshares Corporation is a
bank holding company that owns 100% of the stock of Riverside Bank, a state
banking corporation. At March 31, 1999, Riverside Acquisition Corp. had assets
of $335.6 million. Riverside Bank has five offices in the Minneapolis-St. Paul
metropolitan area.
THE SPECIAL MEETING (PAGES 14-15)
The special meeting of shareholders will be held at the offices of Kaplan,
Strangis and Kaplan, P.A., 5500 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota, at 10:00 a.m. on ____________, 1999. At the special
meeting, shareholders of Riverside will be asked to approve the merger
agreement.
RECOMMENDATION TO SHAREHOLDERS (PAGE 21)
The Board of Directors of Riverside 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 (PAGE 15)
You are entitled to vote at the special meeting if you owned shares on
_________, 1999, the Record Date. Each shareholder is entitled to one vote for
each share of common stock.
On the Record Date, there were outstanding 25,000 shares of common stock.
VOTE REQUIRED (PAGES 14-15)
Approval of the merger agreement will require the affirmative vote of a majority
of the voting power of the common stock.
Each share of common stock will be entitled to one vote at the special meeting.
THE MERGER (PAGES 39-40)
The merger will combine our businesses under a single holding company. As a
result of the merger, Associated will become the holding company for Riverside's
direct subsidiary, Riverside Bancshares Corporation and its banking subsidiary,
Riverside Bank, and will remain the holding company of Associated's current
banks and subsidiaries.
3
<PAGE> 13
The merger agreement is attached as Exhibit A to this document and an amendment
to the merger agreement is attached as Exhibit A-1 to this document. We
encourage you to read the merger agreement and the amendment. They are the legal
documents governing the merger.
WHAT SHAREHOLDERS WILL RECEIVE IN THE MERGER (PAGES 21-22)
The merger agreement establishes a formula to calculate the conversion ratio for
the merger. The conversion ratio represents the number of shares of Associated
common stock which will be received in exchange for one share of Riverside
common stock in the merger. The formula for the conversion ratio values the
Associated common stock based on the Daily Average Price of the Associated
common stock, which is the average of the closing prices of a share of
Associated common stock as quoted on the NASDAQ National Market during the ten
trading-day period ending on the third business day immediately prior to the day
the merger is completed.
o If the Daily Average Price is less than $32.00, you will receive 111.375
shares of Associated common stock for each share of Riverside common stock
you own.
o If the Daily Average Price is at least $32.00 and not greater than $38.00,
you will receive the number of shares of Associated common stock equal to
$3,564 divided by the Daily Average Price for each share of Riverside
common stock you own.
o If the Daily Average Price is greater than $38.00, you will receive
93.78947 shares of Associated common stock for each share of Riverside
common stock you own.
If the average price of Associated common stock as of a designated valuation
date is less than $28.50, Riverside may terminate the merger agreement unless
Associated elects to increase the conversion ratio so that each Riverside share
will convert into approximately $3,174 divided by the Daily Average Price. If
the average price is greater than $41.50, Associated may terminate the merger
agreement unless Riverside elects to decrease the conversion ratio so that each
Riverside share will convert into approximately $3,892 divided by the average
price.
Associated will not issue fractional shares. Instead you will receive cash for
any fractional share of Associated common stock you would otherwise receive,
based on the Daily Average Price of Associated common stock described above.
Please refer to pages A-8 to A-10 of the merger agreement, which is attached as
an exhibit to this document, for a complete description of the formula for the
exchange ratio.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS (PAGES 48-49)
At the close of business on the Record Date, directors and executive officers of
Riverside possessed sole or shared voting power with respect to 10,866 shares of
common stock, which represented approximately 43.5% of the outstanding shares.
DIVIDEND POLICY OF ASSOCIATED AFTER THE MERGER (PAGE 33)
After the merger, it is presently expected that dividends will continue at
Associated's current quarterly dividend rate of $0.29 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 (PAGES 34-35)
We must receive an opinion from Associated's outside counsel stating that, as a
general matter, shareholders will not recognize gain or loss for federal income
tax purposes as a result of the
4
<PAGE> 14
merger, except if they receive cash for fractional shares or pursuant to the
exercise of dissenters' rights.
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.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGE 38-39)
Executives of Riverside Bank hold interests in a phantom stock plan for which
they will receive payment as a result of the merger. Additionally, the President
of Riverside Bank will enter into an employment agreement with Associated.
LISTING OF ASSOCIATED COMMON STOCK
Associated will file an application to list the shares of Associated common
stock to be issued in the merger on the NASDAQ National Market under
Associated's current symbol "ASBC."
STATUS OF ASSOCIATED COMMON STOCK (PAGES 33)
Shares of Associated common stock received in the merger will be freely-tradable
except for shares issued to affiliates of Riverside. Riverside has concluded
that its only affiliates who will receive Associated common stock in the merger
are its directors and Thomas M. Redmond who owns approximately 55% of the
outstanding shares of Riverside common stock.
CONDITIONS TO THE MERGER (PAGES 42-43)
We will complete the merger only if several conditions are satisfied, including
the following:
o shareholders of Riverside vote in favor of the merger agreement;
o no legal restraints or prohibitions exist which prevent the merger from
being completed;
o we receive all necessary regulatory approvals;
o Associated's counsel delivers an opinion concerning certain federal income
tax consequences of the merger;
o The sum of the fractional shares of Associated common stock paid in cash
and the number of shares of Associated common stock that is not issued in
the merger due to the exercise of dissenters' rights does not exceed 10% of
the maximum number of shares of Associated common stock which could
otherwise have been issued in the merger;
o Riverside has consolidated after-tax earnings for the six months ending
June 30, 1999 of at least $2,200,000 and Riverside Bank has after-tax
earnings for the six months ending June 30, 1999 of at least $2,700,000 if
the merger occurs on or before October 31, 1999 and if the merger occurs
after October 31, 1999, Riverside has consolidated after-tax earnings for
the nine months ending September 30, 1999 of at least $3,300,000 and
Riverside Bank has after-tax earnings for the nine months ending September
30, 1999 of at least $4,000,000, in each case excluding certain adjustments
relating to loan loss reserves and expenses related to the phantom stock
plan or to the merger;
o Associated is reasonably satisfied as to the Year 2000 compliance plan of
Riverside, Riverside Bancshares Corporation and Riverside Bank; and
o Associated receives a satisfactory report from its environmental consultant
regarding the environmental condition of Riverside's real property.
TERMINATION OF THE MERGER AGREEMENT (PAGES 43-45)
Our boards of directors can jointly agree to terminate the merger agreement at
any time
5
<PAGE> 15
without completing the merger. In addition, the merger agreement may be
terminated:
o by either party if we do not complete the merger by October 25, 1999;
o by Associated if the shareholders of Riverside do not vote in favor of the
merger agreement;
o by either party if the other 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;
o by Associated if the board of directors of Riverside withdraws or modifies
its recommendation for the merger;
o by Riverside if Riverside enters into a definitive agreement to be acquired
by a third party after its Board of Directors determines that the proper
discharge of the directors' duties under Minnesota law requires that
Riverside terminate the merger agreement and enter into the agreement with
the third party;
o by Riverside if the average price of Associated common stock as of a
designated valuation date is less than $28.50 per share and Associated does
not choose to increase the conversion ratio to approximately $3,174 divided
by the average price;
o by Associated if the average price of Associated common stock as of a
designated valuation date is greater than $41.50 per share and Riverside
does not choose to decrease the conversion ratio to approximately $3,892
divided by the average price; or
o by either party if the Federal Reserve Board or the Minnesota Department of
Commerce Financial Examination Division denies approval of the merger.
TERMINATION FEE (PAGE 45)
If the merger agreement is terminated under certain circumstances relating to
third party offers, the withdrawal or modification of the recommendation of the
board of directors of Riverside in favor of the merger agreement or the failure
of the shareholders to approve the merger agreement, Riverside will be obligated
to pay Associated a fee of $2,670,000.
REGULATORY APPROVALS (PAGES 26-27)
The merger is subject to prior approval by certain regulatory authorities
including the Federal Reserve Board and the Minnesota Department of Commerce.
DISSENTERS' RIGHTS (PAGES 36-38)
Shareholders of Riverside who follow certain procedural requirements may be
entitled to receive cash in the amount of the fair value of their shares instead
of the shares of Associated common stock offered pursuant to the merger. The
fair value of the shares of Riverside common stock would be determined pursuant
to Minnesota law.
ANY SHAREHOLDER WHO WISHES TO EXERCISE DISSENTERS' RIGHTS MUST NOT VOTE IN FAVOR
OF THE MERGER AGREEMENT AND MUST COMPLY WITH ALL OF THE PROCEDURAL REQUIREMENTS
PROVIDED BY MINNESOTA LAW. A COPY OF THE DISSENTERS' RIGHTS STATUTE IS ATTACHED
AS EXHIBIT B TO THIS DOCUMENT. WE ENCOURAGE YOU TO READ THE STATUTE CAREFULLY
AND TO CONSULT WITH LEGAL COUNSEL IF YOU DESIRE TO EXERCISE YOUR DISSENTERS'
RIGHTS.
ACCOUNTING TREATMENT (PAGE 36)
The merger will be accounted for by Associated under the purchase method of
accounting.
6
<PAGE> 16
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, Riverside 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, Riverside 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:
o operating, legal and regulatory risks;
o economic, political and competitive forces affecting our banking,
securities, asset management and credit services businesses; and
o 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> 17
RISK FACTORS
In deciding whether to vote in favor of the Merger, shareholders of
Riverside should consider the following factors, in addition to the other
matters set forth or incorporated by reference in this document.
Omitted Industry Financial Information. Riverside has excluded certain
financial disclosures required of bank holding companies under rules promulgated
by the Securities and Exchange Commission from the Management's Discussion and
Analysis of Financial Condition and Results of Operations of Riverside attached
hereto as Exhibit C. The omitted industry financial information relates to,
among other things, certain disclosures as to Riverside's investments and
deposits. Associated and Riverside have determined that as Riverside has not
been required to make such disclosures in the past to its shareholders, it has
not compiled and would be unable to create such financial information from
existing financial records without incurring considerable expense, effort and
delay. Associated and Riverside have determined that the omission of certain
bank holding company financial disclosure is not material to the shareholders of
Riverside.
Uncertain Legislative and Regulatory Environment. The banking and
financial services businesses in which Riverside and Associated engage are
highly regulated. The laws and regulations affecting such businesses may be
changed dramatically in the near future. Such changes could affect the ability
of banks to engage in nationwide branch banking and the ability of bank holding
companies to engage in non-banking businesses, such as securities underwriting
and insurance, in which they have been allowed to engage only on a limited
basis. Such changes may also affect the capital that banks and bank holding
companies are required to maintain, the premiums paid for or the availability of
deposit insurance or other matters directly affecting earnings. Neither
Riverside nor Associated can predict what changes will occur or the effect that
any such changes would have on the ability of the combined entity to compete
effectively or to take advantage of new opportunities after the merger.
Competition. The markets in which Riverside and Associated operate are
highly competitive. Competition in such markets is likely to increase in light
of the changing legislative and regulatory environment in which Riverside and
Associated operate. In addition, consolidation and mergers in the banking
industry are expected to continue, resulting in stronger and more effective
competitors. Neither Riverside nor Associated can predict the degree to which
competition in the industry will increase in the future or the effect any such
increased competition will have on the combined entity.
Rapid Technological Changes. Evolving technology will play a major role
in the processing and delivery of financial services. The effective use of new
technology will enable banking and financial service businesses to improve
information concerning their customers and markets. It will also enable them to
reduce overhead expenses while improving the quality of service to customers.
Communications technology will substantially improve the ability of financial
institutions to exchange information with their customers and employees. Banks
and financial institutions that are unwilling or unable to access this evolving
new technology could experience lower earnings and a loss of competitiveness.
Uncertain Economic Environment. Until recently, banks and financial
service companies in the Midwest have experienced a relatively long period of
price stability and a growing economy. Price stability enables banks to better
protect themselves against interest rate risks. A strong economy enhances the
opportunity of the commercial sector of the economy to improve earnings and
performance. It also provides an environment for financial institutions to
experience positive and profitable growth. Recent economic changes present
additional risks for all banks and financial service companies.
8
<PAGE> 18
Nature of Business. The financial performance of Riverside results
primarily from its retail banking activities conducted from five offices located
in the Minneapolis-St. Paul metropolitan area. Shareholders of Riverside who
receive shares of Associated Common Stock will own an interest in a diversified
multi-bank holding company with more than 200 banking offices, substantially all
of which are located in various communities in Wisconsin, Illinois and
Minnesota, and which is engaged in several non-banking businesses including
commercial property lease financing, commercial and residential mortgage
banking, trust services, full service brokerage and discount brokerage services,
reinsurance and general insurance agency activities. Financial performance of
Associated is accordingly dependent on its activities and the economic factors
in such markets and businesses. See "Certain Information Concerning Associated."
Business Combinations. Associated seeks additional expansion
opportunities and accordingly may enter into business combinations with banking
and non-banking entities involving the issuance of its shares or payment of cash
consideration which may not require a vote of holders of Associated Common
Stock.
Share Price Fluctuation. The price of shares of Riverside Common Stock
is based upon the financial condition of Riverside and the market value for
similar non-publicly traded bank holding companies and other factors. The share
price of Associated Common Stock on the NASDAQ National Market is by nature
subject to the general price fluctuations in the market for publicly-traded
equity securities. Such fluctuations are not necessarily related to a change in
the financial performance or condition of Associated.
9
<PAGE> 19
SELECTED FINANCIAL DATA OF ASSOCIATED BANC-CORP
AND RIVERSIDE ACQUISITION CORP.
(In thousands, except per share amounts)
The following financial information is provided to aid in your analysis
of the financial aspects of the merger. The information regarding Associated
Banc-Corp ("Associated") as of and for each of the years in the five-year period
ended December 31, 1998 has been derived from audited consolidated financial
statements for 1994 through 1998. The information regarding Riverside
Acquisition Corp. (the "Company" or "Riverside") as of and for each of the years
in the five-year period ended December 31, 1998 has been derived from the
audited consolidated balance sheets of the Company for the years ended December
31, 1998 and 1997, the unaudited consolidated balance sheets of the Company or
its predecessor, Riverside Bancshares Corporation, for the three years ended
December 31, 1996, the audited consolidated statements of income of the Company
for the three years ended December 31, 1998 and the unaudited consolidated
statements of income of the Company or its predecessor, Riverside Bancshares
Corporation, for the two years ended December 31, 1995. The selected historical
data as of and for the three months ended March 31, 1999 and 1998 are derived
from the unaudited consolidated financial statements of Associated and the
Company. The information is only a summary and should be read in conjunction
with the historical financial statements (and related notes) of Associated
contained in the annual reports and other information that Associated files with
the Securities and Exchange Commission, which are incorporated by reference in
this document, and the historical financial statements (and related notes) of
Riverside contained in Exhibit C hereto. See "Where You Can Find More
Information."
SELECTED FINANCIAL DATA
OF ASSOCIATED AND THE COMPANY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AS OF AND FOR THE
THREE MONTHS
ENDED MARCH 31,
---------------------------
1999 1998
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
ASSOCIATED:
CONDENSED STATEMENT OF INCOME
Interest income $ 195,977 $ 198,624
Interest expense 99,180 104,108
------------ ------------
Net interest income 96,797 94,516
------------ ------------
Provision for possible loan losses 4,451 3,758
Net interest income after provision
for possible loan losses 92,346 90,758
Noninterest income 44,617 41,576
Noninterest expense 78,993 71,575
------------ ------------
Income before income taxes and
extraordinary item 57,970 60,759
Income tax expense 19,019 20,899
Extraordinary item -- --
------------ ------------
Net income $ 38,951 $ 39,860
============ ============
PER COMMON SHARE DATA:
Basic earnings per share
Income before extraordinary item $ 0.62 $ 0.63
Net income 0.62 0.63
Diluted earnings per share
Income before extraordinary item $ 0.61 $ 0.62
Net income 0.61 0.62
Cash dividends per share 0.29 0.23
SELECTED BALANCE SHEET DATA:
Total Assets $ 11,302,194 $ 10,692,268
Long-Term Borrowings 27,848 30,150
Stockholders' Equity 903,531 836,826
<CAPTION>
AS OF AND FOR THE YEAR
ENDED DECEMBER 31,
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSOCIATED:
CONDENSED STATEMENT OF INCOME
Interest income $ 785,765 $ 787,919 $ 731,763 $ 696,858 $ 613,725
Interest expense 411,028 411,637 375,922 360,499 292,735
------------ ------------ ------------ ------------ ------------
Net interest income 374,737 376,282 355,841 336,359 320,990
------------ ------------ ------------ ------------ ------------
Provision for possible loan losses 14,740 31,668 13,695 14,029 9,035
Net interest income after provision
for possible loan losses 359,997 344,614 342,146 322,330 311,955
Noninterest income 167,951 95,302 116,274 104,989 84,155
Noninterest expense 294,985 323,648 293,231 252,927 245,310
------------ ------------ ------------ ------------ ------------
Income before income taxes and
extraordinary item 232,963 116,268 165,189 174,392 150,800
Income tax expense 75,943 63,909 57,487 62,381 54,203
Extraordinary item -- -- (686) -- --
------------ ------------ ------------ ------------ ------------
Net income $ 157,020 $ 52,359 $ 107,016 $ 112,011 $ 96,597
============ ============ ============ ============ ============
PER COMMON SHARE DATA:
Basic earnings per share
Income before extraordinary item $ 2.49 $ 0.83 $ 1.70 $ 1.82 $ 1.59
Net income 2.49 0.83 1.69 1.82 1.59
Diluted earnings per share
Income before extraordinary item $ 2.46 $ 0.82 $ 1.67 $ 1.79 $ 1.55
Net income 2.46 0.82 1.66 1.79 1.55
Cash dividends per share 1.04 0.89 0.76 0.65 0.57
SELECTED BALANCE SHEET DATA:
Total Assets $ 11,250,667 $ 10,690,442 $ 10,120,413 $ 9,393,609 $ 9,130,522
Long-Term Borrowings 26,004 15,270 33,239 36,907 94,537
Stockholders' Equity 878,721 813,692 803,562 725,211 626,591
</TABLE>
10
<PAGE> 20
<TABLE>
<CAPTION>
AS OF AND FOR THE
THREE MONTHS AS OF AND FOR THE YEAR
ENDED MARCH 31, ENDED DECEMBER 31,
--------------------- -------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994(1)
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
THE COMPANY:
CONDENSED STATEMENT OF INCOME
Interest income $ 6,201 $ 6,000 $ 25,075 $ 21,618 $ 16,363 $ 14,103 $ 10,334
Interest expense 1,891 2,068 8,284 7,325 5,031 4,289 2,177
--------- --------- --------- --------- --------- --------- ---------
Net interest income 4,310 3,932 16,791 14,293 11,332 9,813 8,158
--------- --------- --------- --------- --------- --------- ---------
Provision for possible loan losses 190 250 974 1,425 991 723 341
Net interest income after provision
for possible loan losses 4,120 3,682 15,816 12,868 10,341 9,090 7,816
Noninterest income 807 856 3,302 2,871 2,611 2,221 2,032
Noninterest expense 2,754 2,516 12,320 9,496 7,938 6,695 6,118
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes 2,173 2,023 6,798 6,243 5,014 4,616 3,731
Income tax expense 856 859 2,903 2,644 2,175 1,933 1,508
Minority interest in consolidated
earnings -- (1) (5) (9) (15) (16) (19)
--------- --------- --------- --------- --------- --------- ---------
Net income $ 1,316 $ 1,162 $ 3,890 $ 3,589 $ 2,824 $ 2,666 $ 2,205
========= ========= ========= ========= ========= ========= =========
PER COMMON SHARE DATA:
Basic and diluted earnings per share $ 52.65 $ 46.49 $ 155.61 $ 143.57 $ 112.97 $ 106.65 $ 88.20
Cash dividends per share $ -- $ -- $ -- $ -- $ -- $ -- $ --
SELECTED BALANCE SHEET DATA:
Total Assets $ 335,550 $ 316,667 $ 339,455 $ 292,392 248,892(2) $ 189,718 $ 141,894
Stockholders' Equity 24,994 20,860 23,669 19,641 15,853(2) 13,165 9,176
</TABLE>
(1) Riverside Bancshares Corporation was acquired by the Company on January 3,
1995. Prior thereto the Company had no operations. 1994 financial data for the
Company reflects the financial performance of Riverside Bancshares Corporation.
(2) Unaudited.
11
<PAGE> 21
COMPARATIVE STOCK PRICES AND DIVIDENDS
ASSOCIATED COMMON STOCK
Associated Common Stock trades on the NASDAQ National Market. The
following table sets forth, for the periods indicated, the high and low sales
prices per share as reported on the NASDAQ National Market and the regular cash
dividends declared for Associated Common Stock.
<TABLE>
<CAPTION>
Associated Common Stock
----------------------------------------
High Low Dividend
------ ------ --------
<S> <C> <C> <C>
1997
First Quarter $32.41 $27.61 $ 0.1934
Second Quarter 31.59 28.59 0.2320
Third Quarter 39.16 31.20 0.2320
Fourth Quarter 47.00 36.59 0.2320
1998
First Quarter $43.80 $38.09 $ 0.2320
Second Quarter 43.70 36.25 0.2320
Third Quarter 42.38 31.44 0.2900
Fourth Quarter 37.00 26.75 0.2900
1999
First Quarter $35.25 $30.31 $ 0.2900
</TABLE>
On March 9, 1999, the last trading day before the announcement of the
proposed merger between Associated and the Company, the last sale price of
Associated Common Stock as reported on the NASDAQ National Market was $33.25 per
share. On June 23, 1999, the last sale price of Associated Common Stock as
reported on the NASDAQ National Market was $39.94 per share. Shareholders are
urged to obtain current market prices for Associated Common Stock.
On June 18, 1999, there were approximately 10,422 holders of record of
Associated Common Stock.
THE COMPANY COMMON STOCK
The Common Stock, no par value per share (the "Company Common Stock"),
of the Company is not listed on any exchange nor quoted in the over-the-counter
market, and no established "bid" or "ask" price is available. In the opinion of
the Company, due to the lack of an active market for shares of the Company
Common Stock, transactions in Company Common Stock of which the Company is aware
are not frequent enough to constitute representative prices. The last sale of
Company Common Stock of which the Company is aware was at $572.88 per share in
June, 1998.
The Company has not previously paid dividends. Pursuant to the Merger
Agreement, the Company may not pay dividends on the Company Common Stock prior
to the Effective Time. See "The Merger - Pre-Merger Dividend Policy."
On ___________, 1999, the Record Date for the Special Meeting, there
were __ holders of record of Company Common Stock.
12
<PAGE> 22
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth for Associated Common Stock and Company
Common Stock unaudited historical, pro forma and pro forma equivalent per share
financial information as of and for the three months ended March 31, 1999 and as
of and for the year ended December 31, 1998. The following data assumes that
each outstanding share of Company Common Stock will be converted into 96.34872
shares of Associated Common Stock, based upon an assumed Daily Average Price of
$36.99063 (based on the average closing price of Associated Common Stock for the
ten trading day period ending June 23, 1999).
The information presented herein should be read in conjunction with the
audited consolidated financial statements of Associated for the year ended
December 31, 1998, and the unaudited consolidated financial statements for the
three months ended March 31, 1999, incorporated by reference (see "Where You Can
Find More Information"), and the audited consolidated financial statements of
the Company, including the notes thereto, attached hereto as Exhibit C.
<TABLE>
<CAPTION>
AS OF AND FOR THE AS OF AND FOR THE
THREE MONTHS YEAR ENDED
ENDED MARCH 31, DECEMBER 31,
1999 1998
----------------- -----------------
<S> <C> <C>
ASSOCIATED
Basic Net Income Per Common Share:
Historical $ 0.62 $ 2.49
Pro forma (1) 0.60 2.40
Diluted Net Income Per Common Share:
Historical $ 0.61 $ 2.46
Pro forma (1) 0.60 2.38
Dividends Per Common Share:
Historical $ 0.29 $ 1.04
Pro forma 0.29 1.04
Book Value Per Common Share:
Historical $ 14.27 $ 13.97
Pro forma (1) 15.10 14.82
THE COMPANY
Basic Net Income Per Common Share:
Historical $ 52.65 $ 155.61
Pro forma equivalent (2) 57.81 231.24
Diluted Net Income Per Common Share:
Historical $ 52.65 $ 155.61
Pro forma equivalent (2) 57.81 229.31
Dividends Per Common Share:
Historical $ -- $ --
Pro forma equivalent (2) 27.94 100.20
Book Value Per Common Share:
Historical $ 999.76 $ 946.76
Pro forma equivalent (2) 1,454.87 1,427.89
</TABLE>
13
<PAGE> 23
(1) Associated pro forma per share amounts give effect to the Merger
through the issuance of 2.4 million shares based upon an exchange ratio
of 96.34872 of Associated common stock for each share of Company common
stock. In addition, the estimated intangibles of $67.7 million
resulting from the transaction are assumed to be amortized upon
respective asset lives and the remaining goodwill on a straight line
basis over 25 years.
(2) The Company pro forma equivalent per share amounts are calculated by
multiplying the Associated pro forma per share amounts by the assumed
conversion ratio of 96.34872 shares.
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to holders of the
Company Common Stock in connection with the solicitation of proxies by the
Company's Board of Directors for use at the Special Meeting of Shareholders of
the Company (the "Special Meeting") and at any adjournment or postponement
thereof. The Special Meeting will be held at the offices of Kaplan, Strangis and
Kaplan, P.A., 5500 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota on __________, 1999. The Special Meeting will commence at 10:00 a.m.
At the Special Meeting, the shareholders of the Company will be asked
to approve the Agreement and Plan of Merger, dated as of March 10, 1999, as
amended, between Associated and the Company (the "Merger Agreement"), as more
fully described herein. The Merger Agreement provides for the merger of
Associated and Riverside Acquisition Corp. (the "Merger"). See "The Special
Meeting," "The Merger," and "Certain Provisions of the Merger Agreement." The
approximate date on which this Proxy Statement/Prospectus is first being mailed
to shareholders of the Company is on or about _________, 1999.
ASSOCIATED BANC-CORP
Associated is a diversified multi-bank holding company registered with
the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") pursuant to the Bank Holding Company Act of 1956, as amended (the "BHC
Act"). Associated owns directly or indirectly all of the capital stock of 9
commercial banks located in Wisconsin, Illinois and Minnesota, and all of the
capital stock of 34 nonbanking subsidiaries located in Arizona, California,
Delaware, Illinois, Missouri, Nevada and Wisconsin. As of March 31, 1999,
Associated had total assets of $11.3 billion. The principal executive offices of
Associated are located at 1200 Hansen Road, P.O. Box 13307, Green Bay, Wisconsin
54307-3307 and its telephone number is (920) 491-7000. See "Certain Information
Concerning Associated."
THE SPECIAL MEETING
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, holders of the Company Common Stock will
consider and vote upon a proposal to approve the Merger Agreement and any other
matters that may properly come before the Special Meeting. For a detailed
description of the Merger and the Merger Agreement, see "The Merger" and
"Certain Provisions of the Merger Agreement."
REQUIRED VOTE
The affirmative vote of the holders of a majority of the voting power
of the outstanding shares of Company Common Stock is required to approve the
Merger Agreement. Each share of the Company Common Stock outstanding
14
<PAGE> 24
on the Record Date (as defined herein) is entitled to one vote. Shareholders of
Associated are not required to approve the Merger Agreement and no further
corporate authorization by Associated is required to consummate the Merger.
VOTING OF PROXIES
Shares represented by all properly executed proxies for the Company
Common Stock received in time for the Special Meeting will be voted at the
Special Meeting in the manner specified by the holders thereof. Proxies which do
not contain voting instructions will be voted FOR approval of the Merger
Agreement.
It is not expected that any matter other than that referred to herein
will be brought before the Special Meeting. If, however, other matters are
properly presented, the persons named as proxies will vote in accordance with
their judgment with respect to such matters.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form of proxy does not preclude a
shareholder from voting in person. A shareholder may revoke a proxy at any time
prior to its exercise by delivering to the Secretary of the Company a duly
executed proxy or revocation of proxy bearing a later date or by voting in
person at the Special Meeting. Attendance at the Special Meeting will not of
itself constitute revocation of a proxy.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of the Company Common Stock at the close of
business on ___________, 1999 (the "Record Date") will be entitled to receive
notice of and to vote at the Special Meeting.
At the Record Date, 25,000 shares of the Company Common Stock were
outstanding. Shares representing a majority of the outstanding shares of the
Company Common Stock entitled to vote must be represented in person or by proxy
at the Special Meeting in order for a quorum to be present. Abstentions will be
treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of the Merger Agreement. If a broker or other holder of record
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
SOLICITATION OF PROXIES
The Company will bear the cost of the solicitation of proxies from its
shareholders, except that Associated and the Company will share equally the cost
of printing this Proxy Statement/Prospectus and all regulatory filing fees in
connection therewith. In addition to solicitation by mail, the directors,
officers and employees of the Company may solicit proxies from shareholders of
the Company by telephone or telegram, or in person, but will receive no
additional compensation for such services.
SHAREHOLDERS SHOULD NOT RETURN THEIR STOCK CERTIFICATES WITH THEIR
PROXY CARDS. AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE TIME, THE COMPANY
SHAREHOLDERS WILL BE PROVIDED WITH MATERIALS RELATING TO THE EXCHANGE OF THEIR
STOCK CERTIFICATES. SEE "THE MERGER - CONVERSION OF SHARES; PROCEDURES FOR
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES."
15
<PAGE> 25
THE MERGER
This section of the Proxy Statement/Prospectus describes certain
aspects of the proposed Merger. To the extent that it relates to the Merger
Agreement, the following description does not purport to be complete and is
qualified in its entirety by reference to the Merger Agreement which is attached
hereto as Exhibit A (including an amendment to the Merger Agreement which is
attached hereto as Exhibit A-1) and is incorporated herein by reference. All
shareholders are urged to read the Merger Agreement and the other exhibits to
this Proxy Statement/Prospectus in their entirety.
BACKGROUND OF THE MERGER
In September 1973, Riverside Bank (the "Bank") was organized under the
name "Riverside Community State Bank of Minneapolis." The Bank's founding
shareholders, David E. Cleveland, R. Glen Berryman, Duane E. Joseph and J.
Kimball Whitney, together with approximately 400 other investors, subscribed for
10,000 shares of the Bank's capital stock at an aggregate purchase price of
$1,000,000.
The Bank was formed in response to a Department of Housing and Urban
Development urban revitalization program that envisioned the development of
comprehensive, neighborhood-based business services. The Bank was intended to be
the banking component for that infrastructure in the Cedar-Riverside section of
Minneapolis. Within a few years after the Bank's formation, however, it became
evident that the Cedar-Riverside neighborhood alone would be unable to support
the Bank's continuing viability.
In September 1975, the Bank expanded its geographic reach with the
opening of a branch office near St. Mary's Hospital in Minneapolis, which was
followed in October 1977 with the opening of a second branch in Dinkytown, a
neighborhood adjacent to the University of Minnesota campus.
In September 1981, Riverside Bancshares Corporation ("RBC") was formed
as a one-bank holding company by Messrs. Cleveland, Berryman, Joseph and Whitney
for the purpose of purchasing the outstanding shares of the Bank held by other
investors. By mid-February 1982, RBC had acquired 9,412 shares of the Bank's
15,000 then outstanding shares. Since that time RBC has from time to time
purchased the remaining shares of the Bank from investors as the opportunity
arose. The Bank became a wholly owned subsidiary of RBC in March 1999.
In 1982, Mr. Cleveland resigned his position as President of the Bank
and RBC to assist in the formation of Resource Bank and Trust located in
Minneapolis, Minnesota, where he remained until 1987. During this period, the
Bank continued to focus its lending strategies to meet the needs of small,
community-based businesses, the Dinkytown branch was closed and a new facility
was opened at the Riverplace retail complex in Minneapolis.
Following Mr. Cleveland's return to the Bank in March 1987, a strategic
decision was made to expand the Bank's lending services to include mid-size
businesses. Consistent with the Bank's decision to broaden its lending strategy
to include mid-size businesses, the Bank opened its first suburban branch office
in Bloomington, Minnesota in 1988. Following this strategic redirection, the
Bank increased its market share in its core businesses while achieving levels of
profitability and asset quality that were competitive with similarly situated
bank holding companies by increasing the number and size of the customers
served, expanding banking related activities in its target markets, and
expanding its product offerings for its business customers.
In 1994, Messrs. Berryman, Joseph and Whitney determined that for
estate planning and other reasons they desired to sell their respective
interests in RBC and the Bank. In response to their wishes, on January 3, 1995,
RBC was acquired by the Company, a bank holding company formed by Mr. Cleveland,
Thomas M. Redmond, a private investor, and others.
16
<PAGE> 26
During the mid-1990's, the financial services industry witnessed
substantial and rapid change characterized by increasing consolidation,
intensifying competition and acquisition growth of many of the larger domestic
banking organizations. In response to the changing regulatory and market
conditions, the Company began to explore opportunities that would enhance the
Bank's profitability and competitive position and thereby increase shareholder
value.
As part of the investigation and evaluation process of the Board of
Directors, since 1995 Mr. Cleveland has met from time to time with senior
executives of other industry participants to discuss changes in the banking
industry and to understand the opportunities for strategic alliances or other
business relationships or transactions that might be of benefit to the Company
and its shareholders.
In late 1997, as part of the Company's ongoing evaluation process, the
Board of Directors of the Company began to more formally study and analyze
various alternatives that would allow the Bank to remain competitive in a
consolidating marketplace while providing liquidity for the Company's
shareholders. The Board considered, among options, whether to: (i) continue to
operate as an independent organization, (ii) become a publicly-held company,
(iii) acquire or merge with other similarly situated banks, or (iv) be acquired
or enter into a business combination with a larger, publicly-held financial
institution. It was determined that significant investments in technology,
training, marketing, management development and services would be required to
continue the Company's growth as an independent organization with no assurance
that the Company could achieve sufficient growth to profitably compete in a
consolidating marketplace. Additionally, the Company determined that growth
through acquisition of similarly situated financial institutions that faced the
same challenges would require larger capital investments in a competitive
platform of products and services. It was deemed unlikely that the Company could
consummate transactions that would be accretive to shareholder value due to the
seller favorable acquisition pricing in the marketplace and the Company's lack
of a publicly traded security with which to make acquisitions.
The Board of Directors concluded that a business combination with a
larger publicly-traded organization was attractive in that it would aid the
Company in competitive respects and provide shareholders with liquidity for
their investment. Alternatively, the Board of Directors recognized that an
initial public offering by the Company might provide the Company's shareholders
with greater liquidity and provide the Company with a publicly-traded security
with which to make acquisitions, but understood that there was no assurance that
sufficient capital could be obtained to remain competitive in a consolidating
marketplace.
By mid-1998, the Company was discussing an initial public offering with
an investment banking firm and continuing preliminary exploratory discussions
with a number of strategic partners. In October 1998, Associated announced that
it would acquire Windsor Bancshares, a one-bank holding company based in
Minneapolis. Shortly thereafter, the Company was contacted by an intermediary,
who expressed Associated's interest in discussing a possible merger with the
Company. A meeting was arranged, and on October 23, 1998, Mr. Cleveland met with
Mr. H.B. Conlon, the Chairman and Chief Executive Officer of Associated, to
discuss the strategic opportunities inherent in a combination of Associated and
the Company. During the next few weeks Mr. Cleveland and Mr. Conlon had several
telephonic discussions regarding a business combination. By the end of October
1998, the Board of Directors of the Company had been informed of Mr. Cleveland's
discussions with Associated and it was decided that an initial public offering
would not be pursued pending further discussions with Associated.
On December 14, 1998, Mr. Conlon contacted Mr. Cleveland to confirm
Associated's interest in pursuing a transaction and indicated that Associated
estimated that the transaction would be in the $80-$90 million range. On the
same day, Mr. Cleveland was contacted by the business development representative
of another midwest based bank-holding company who also expressed an interest in
initiating discussions for a potential business combination and provided a
preliminary estimate that the transaction would be in the $70 to $80 million
range.
17
<PAGE> 27
During the ensuing weeks, Mr. Cleveland continued his discussions with
both Associated and the other bank holding company while at the same time
consulting with the Company's investment banking contacts and others to assess
which transaction presented the better opportunity to enhance shareholder value.
Mr. Cleveland advised the Board members of the status of these ongoing
discussions. Of primary importance to the Board in consideration of any
transaction was the ability to maximize shareholder value, compatibility of the
acquiror with the Bank's existing customers and markets, and the availability of
professional opportunities for the Bank's officers and employees.
On December 22-23, 1998, Mr. Cleveland met with Associated's senior
management at Associated's corporate offices in Green Bay, Wisconsin, during
which time substantive discussions focused on the two organizations'
compatibility, strengths, performance, short- and long-term goals, and other
issues of mutual interest. During the days following his return from Green Bay,
Mr. Cleveland reported on his discussions with Associated to the Board of
Directors and other significant shareholders. It was the consensus of the Board
and the shareholders that Associated would be a preferred merger partner, both
from the standpoint of the past and future potential market performance of
Associated stock, and due to the compatibility of the two organizations'
approach to various social issues and management philosophies.
On January 8, 1999, Mr. Conlon and an investment banker representing
Associated met in Minneapolis with Mr. Cleveland and other members of the Bank's
senior management. At that time, Mr. Conlon extended a firm offer for the
acquisition of the Bank and outlined the basic terms of Associated's proposal,
subject to a due diligence review period. The Company's Board of Directors
authorized Mr. Cleveland to enter into exclusive negotiations with Associated
after analyzing the proposed terms of Associated's offer, the perceived level of
interest by Associated in pursuing the transaction, the likelihood that a
transaction with Associated would be consummated if mutually acceptable terms
could be agreed upon, Associated's prior record of making acquisitions, and the
perceived product and geographic synergies of the operations of Associated and
the Company.
The due diligence process commenced on January 18, 1999 and continued
through February 1999, during which time financial and other information of the
Company and Associated was exchanged and analyzed and various aspects of the
transaction were discussed. The due diligence period reconfirmed Company
management's belief that a transaction with Associated would achieve the
necessary updates of bank services, training, technology and marketing to serve
the Bank's customers better, and would also present professional opportunities
to the Bank's employees and officers. During this period, Associated also
conducted on-site due diligence of the Bank's loan files and premises.
At a special meeting of the Board of Directors of the Company held on
February 8, 1999, senior management, together with the Company's outside legal
counsel, reported to the Board of Directors on the status of the proposed merger
with Associated and outlined the terms of an initial draft of the Merger
Agreement prepared by Associated. The Company's legal counsel reviewed the
Board's fiduciary responsibilities and the Board discussed whether a fairness
opinion would be obtained. The Board concluded that the incremental value of a
fairness opinion was not justified by the additional expense in view of the fact
that the Company had continually monitored the Bank's market value since 1994
through discussions with other strategic partners and had recently consulted
with several investment bankers to evaluate the various strategic alternatives
under consideration. The Board of Directors authorized Mr. Cleveland to pursue
the transaction with Associated and recommended that he arrange to meet with Mr.
Thomas Redmond, one of the Company's significant shareholders, to discuss the
proposed transaction.
On February 15, 1999, Mr. Cleveland and the Company's outside legal
counsel met with other members of the Company's Board of Directors and Mr.
Redmond to discuss the Merger and to review the terms of the proposed
transaction. Following a substantive discussion of the proposal by Associated,
the meeting participants directed the Company's management to continue
negotiations with Associated.
18
<PAGE> 28
On February 19, 1999, Mr. Cleveland sent a letter to all of the
Company's shareholders confirming his recent discussions with them that the
Board was currently in negotiations regarding the financial terms of a possible
merger with Associated that, if consummated, would result in the Company's
shareholders receiving shares of Associated, a publicly-traded company. Mr.
Cleveland also advised the shareholders that the Board of Directors had
determined that the Company would not engage in an auction of the Company or
seek the services of an investment banker due to, among other considerations,
the preemptive nature of the financial aspects of the proposed transaction, the
limited universe of potential strategic partners, the potential risks to the
ongoing business of the Bank that could result from the uncertainty of a
prolonged sales process, the right of the Board to engage in discussions
regarding unsolicited expressions of interest after the signing of a definitive
agreement and the overall costs associated with investment banking services.
Each of the Company's shareholders evidenced their concurrence with the Board's
decision not to engage the services of an investment banker by returning a
signed counterpart of this letter to the Company.
On March 10, 1999, at a special meeting of the Board of Directors of
the Company, senior management and outside legal counsel reviewed with the Board
the financial terms of the proposed transaction and a financial analysis of this
transaction as compared to more than a dozen comparable transactions based on
publicly available data. The Board noted that on March 9, 1999, the business day
immediately preceding the day of the meeting, the closing price of Associated
Common Stock on the NASDAQ National Market was $33.25 per share, resulting in a
transaction value of approximately $89,100,000. The Board also noted that the
transaction would result in the merged entity making approximately $4.6 million
in phantom stock payments and assuming or retiring approximately $4 million in
Company debt. The total dollar value of $89,100,000 represented approximately
22.90 times the Company's latest 12-month earnings as of December 31, 1998 and
3.76 times the Company's book value. These multiples were at or slightly below
the median of all comparable transactions reviewed by the Board and compared
favorably with proposed transactions discussed between management and other
potential strategic partners. The Board also noted that the transaction value to
the Company's shareholders would not fluctuate so long as the average daily
price of the Associated Common Stock is at least $32.00 but not greater than
$38.00, but recognized that the transaction value may fluctuate if the market
value of Associated's Common Stock went outside of the range. The Board's legal
counsel reviewed and discussed with the Board of Directors the fiduciary duties
owed by the Company's Board of Directors to Company shareholders in connection
with the proposed transaction, the Company's Articles of Incorporation and the
definitive terms of the Merger Agreement.
The Board of Directors reviewed and discussed the market performance of
Associated Common Stock and the financial performance of Associated. In
analyzing the value of consideration to be received by the Company's
shareholders, the Board considered the relative financial condition, earnings,
and history of dividend payments of Associated and the Company, in addition to
the benefits to shareholders of liquidity and diversification in Associated
Common Stock, and the prospective growth potential of Associated and the
Company, based on their respective businesses, locations and market areas. The
Board of Directors also reviewed the economic terms of the proposed employment
agreement between Mr. Cleveland and Associated.
Following a review and discussion of the definitive terms of the
transaction and the fairness of the transaction to the shareholders from a
financial perspective, the Company's Board of Directors, without Mr. Cleveland
voting, (i) determined that the Merger is fair to and in the best interest of
the Company and its shareholders, (ii) unanimously approved and adopted the
Merger Agreement and the transactions contemplated thereby, (iii) directed that
the Merger Agreement be submitted to a vote of Company shareholders, and (iv)
recommended that such shareholders approve and adopt the Merger Agreement.
After the Board meeting on March 10, 1999, the Merger Agreement was
executed and the Company and Associated issued a joint press release announcing
the transaction.
19
<PAGE> 29
On June 24, 1999, the First Amendment to the Merger Agreement was
entered into by Associated and the Company. The primary purposes of the First
Amendment were to change the date after which either party has the right to
unilaterally terminate the Merger Agreement from December 10, 1999 to October
25, 1999 and to reflect the anticipated accounting treatment of the Merger from
the pooling-of-interests method to the purchase method of accounting.
REASONS FOR THE MERGER
The Company. The Company's Board of Directors, and the Board of
Directors with Mr. Cleveland abstaining, unanimously determined that the Merger
and the Merger Agreement are fair to and in the best interests of the Company
and its shareholders. In the course of reaching its decision, the Company's
Board of Directors consulted with the Bank's senior management, with the
Company's legal counsel with respect to the legal duties of the Board,
regulatory matters, the Merger Agreement and issues related thereto.
Prior to approving the Merger, the Company's Board of Directors
received information regarding, and analyzed and considered, among other things,
the following factors:
1. information concerning the business, earnings, operations, financial
condition, capital levels and asset quality of Associated and the
Company and the strategic fit of the operating philosophies of the two
institutions;
2. the current and prospective economic and competitive environments
facing the Company characterized by intensifying competition from
larger, better capitalized institutions, the increasing necessity for
fee-based income producing products and the growing costs associated
with regulatory compliance;
3. the increased opportunity and resources the combined company would
have to serve the Company's customers and to stay competitive in a
consolidating industry;
4. the valuation of the Company as implied by the $89,100,000 purchase
price as compared with the financial terms of other comparable business
combinations in the financial services industry completed during the
preceding twelve month period;
5. the marketability and liquidity of Associated Common Stock and the
dividend history of Associated as compared to the illiquidity and lack
of marketability of Company Common Stock and the Company's dividend
history;
6. the tax-free nature of the Merger for federal income tax purposes
which would permit the Company's shareholders who received Associated
Common Stock in the Merger to defer federal income taxation under
certain circumstances;
7. the potential for future appreciation of Associated Common Stock due
to Associated's greater resources and strategies;
8. the belief that the combined company would be well positioned to
grow through future acquisitions or internal development, while not
being so large as to diminish its attractiveness as a possible
acquisition candidate;
9. the enhanced possibility of career advancement which Bank employees
might be provided as a result of the Merger;
20
<PAGE> 30
10. the likelihood that the Merger will be consummated given the terms
and conditions of the Merger Agreement, the scope of the Company's
disclosure and Associated's due diligence review of the Company's
activities and conditions;
11. the scope and results of management's discussions with other
industry participants;
12. the extensive negotiations between Associated and the Company over
the amount of merger consideration, the treatment of phantom stock
payments and the unique strategic value of the Company to Associated
due to geographic and product line considerations; and
13. the contractual right of the Company to take certain actions in
response to unsolicited acquisition proposals, the circumstances under
which the Company may terminate the Merger Agreement, the amount of
termination fees and the circumstances under which such fees are
payable.
While each member of the Company's Board of Directors evaluated each of
the foregoing, as well as other factors, the Board of Directors collectively did
not assign any specific or relative weights to the factors considered and did
not make any determination with respect to any individual factor. The Company's
Board of Directors collectively made its determination with respect to the
Merger based on its unanimous conclusion that the Merger, in light of the
factors that each of them individually considered as appropriate, is fair and in
the best interests of the Company and its shareholders.
Associated. Prior to authorizing the Merger, Associated's Board of
Directors considered, among other things, the improving financial performance
and condition, business operations, capital levels, asset quality and future
growth prospects of the Company. The Board also considered the benefits to
Associated of expanding in Minnesota by acquisition of the Company as opposed to
the opening of a new branch bank, the positive impact of the Merger on
Associated by enhancing its visibility in the region and the terms of the Merger
Agreement.
Associated's Board of Directors believes the Merger will (i) result in
operational and managerial efficiencies which will better enable the Company to
contain costs and grow more rapidly than historic growth rates; (ii) result in
the Company having greater financial strength, increased competitiveness and
market diversification, thereby also benefiting Associated and its customers;
and (iii) result in an increase in long-term shareholder value for the
shareholders of Associated.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company has determined that the terms of
the Merger are fair to, and in the best interests of, the Company, and its
shareholders for the reasons stated immediately above.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
MERGER CONSIDERATION
At the Effective Time, each outstanding share of Company Common Stock,
except for shares for which dissenter rights have been perfected ("Dissenting
Shares"), will convert automatically into the right to receive the number of
shares of Associated Common Stock equal to the conversion ratio (the "Conversion
Ratio") determined as follows:
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<PAGE> 31
o The Conversion Ratio will equal (a) 89,100,000 divided by (b) the
average of the closing prices of a share of Associated Common
Stock on the NASDAQ National Market during the ten-day trading
period ending on the third business day prior to the date on
which the Effective Time occurs (the "Daily Average Price")
divided by (c) the number of shares of Company Common Stock
outstanding at the Effective Time, if the Daily Average Price is
at least $32.00 but not greater than $38.00;
o The Conversion Ratio will equal 2,784,375 divided by the number
of shares of Company Common Stock outstanding at the Effective
Time if the Daily Average Price is less than $32.00; and
o The Conversion Ratio will equal 2,344,736.842 divided by the
number of shares of Company Common Stock outstanding at the
Effective Time if the Daily Average Price is greater than $38.00.
Based on the 25,000 shares of Company Common Stock issued and
outstanding on the Record Date, if the Daily Average Price is at least $32.00
but not greater than $38.00, each share of Company Common Stock will be
converted into a number of shares of Associated Common Stock equal to $3,564
divided by the Daily Average Price. If the Daily Average Price is below $32.00,
the Conversion Ratio will be 111.375 and if the Daily Average Price is above
$38.00, the Conversion Ratio will be 93.78947.
The following table indicates, based on the assumed Daily Average
Prices indicated and the 25,000 shares of Company Common Stock issued and
outstanding on the Record Date, the aggregate number of shares which would be
issuable in the Merger, the resulting aggregate value of the merger
consideration and the resulting adjusted Conversion Ratio:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Number of Shares of
Assumed Daily Average Associated Common Stock to Aggregate Value of Merger
Prices be Issued Consideration Conversion Ratio
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
$44(1) 2,211,513 $97,306,579 88.46053
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
42(1) 2,316,823 97,306,579 92.67293
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
40 2,344,737 93,789,470 93.78947
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
38 2,344,737 89,099,997 93.78947
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
36 2,475,000 89,100,000 99.00000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
34 2,620,588 89,100,000 104.82353
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
32 2,784,375 89,100,000 111.37500
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
30 2,784,375 83,531,250 111.37500
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
28(2) 2,834,096 79,354,686 113.36384
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
26(2) 3,052,103 79,354,686 122.08413
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 32
(1) Assumes that the Company elects to decrease the Conversion Ratio to avoid
Associated's termination right as described under "Termination Based on Stock
Price" below.
(2) Assumes that Associated elects to increase the Conversion Ratio to avoid the
Company's termination right as described under "Termination Based on Stock
Price" below.
Riverside shareholders should understand that the number of shares of
Associated Common Stock that they will receive in the Merger will be determined
by the Conversion Ratio, as described above. Because the market price of
Associated Common Stock fluctuates, the market value of the Associated shares
that Riverside shareholders will receive in the Merger (whether measured at the
Effective Time of the Merger or at another date) may be less than or greater
than the Daily Average Price used for determining the Conversion Ratio.
Under certain limited conditions, the Conversion Ratio may be increased
if the market value of Associated Common Stock is below $28.50 or the Conversion
Ratio may be decreased if the market value of Associated Common Stock is above
$41.50. See "The Merger - Termination Based on Stock Price" and "Certain
Provisions of the Merger Agreement Termination."
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
At the Effective Time and without any action on the part of Associated,
the Company or the holders of the Company Common Stock, each share of the
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares held by Company shareholders exercising their
dissenters' rights under the Minnesota Business Corporation Act (the "MBCA"))
shall be converted into the right to receive shares of Associated Common Stock.
See "The Merger - Dissenters' Rights." All such shares of the Company Common
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each stock certificate previously
representing any such shares of the Company Common Stock (other than shares held
by dissenting shareholders as described above) shall thereafter represent the
right to receive the shares of Associated Common Stock into which such Company
Common Stock has been converted. Certificates previously representing shares of
the Company Common Stock shall be exchanged for the shares of Associated Common
Stock to which such shares are entitled upon the surrender of such certificates
as provided below. No fractional share of Associated Common Stock shall be
issued, and, in lieu thereof, a cash payment shall be made as provided below.
As of the Effective Time, Associated shall deposit, or cause to be
deposited, with a bank or trust company designated by Associated (the "Exchange
Agent") for the benefit of the holders of shares of the Company Common Stock and
for exchange in accordance with the terms of the Merger Agreement, certificates
representing the shares of Associated Common Stock and an estimated amount of
cash to make any cash payments in lieu of fractional shares (such certificates
for shares of Associated Common Stock to be exchanged for the Company Common
Stock, together with such cash amount, the "Company Exchange Fund") issuable
pursuant to the terms of the Merger Agreement in exchange for outstanding shares
of the Company Common Stock.
As soon as reasonably practicable after the approval of the Merger by
the shareholders of the Company, the Exchange Agent shall mail to each holder of
record of a certificate which immediately prior to the Effective Time
represented outstanding shares of the Company Common Stock whose shares were
converted into the right to receive shares of Associated Common Stock, (i) a
letter of transmittal and (ii) instructions for use in effecting the surrender
of the certificates representing shares of the Company Common Stock in exchange
for certificates representing shares of Associated Common Stock. At the
Effective Time and upon surrender of a certificate previously representing
shares of the Company Common Stock to the Exchange Agent together with such duly
executed letter of transmittal, the holder of such certificate shall receive in
exchange therefor a certificate representing that number of whole shares of
Associated Common Stock to which such holder is entitled and cash in lieu of
fractional shares, if any, and the certificate so
23
<PAGE> 33
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of shares which is not registered in the transfer records of the Company, the
shares of Associated Common Stock may be issued to a transferee if the
certificate representing such shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered, each certificate previously representing shares of the Company
Common Stock shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the shares of Associated Common
Stock to which the holder of such certificate is entitled.
THE COMPANY SHAREHOLDERS SHOULD NOT FORWARD THEIR STOCK CERTIFICATES TO
THE EXCHANGE AGENT WITHOUT A LETTER OF TRANSMITTAL NOR RETURN THEIR STOCK
CERTIFICATES WITH THE ENCLOSED PROXY.
No dividends or other distributions declared or made after the
Effective Time with respect to Associated Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered certificate
with respect to the shares of Associated Common Stock represented thereby, and
no cash payment in lieu of fractional shares shall be paid to any such holder,
until such certificate is surrendered. Subject to the effect of applicable laws,
following surrender of any such certificate, there shall be paid to the holder
of said certificate, which represents whole shares of Associated Common Stock
issued in exchange therefor, without interest, (i) promptly, the amount of cash
payable with respect to a fractional share of Associated Common Stock to which
such holder is entitled and the amount of dividends or other distributions with
a record date after the Effective Time 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.
The shares of Associated Common Stock issued upon conversion of the
shares of the Company Common Stock shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of the Company Common
Stock.
No certificates or scrip representing fractional shares of Associated
Common Stock shall be issued upon the surrender for exchange of the
certificates, and such fractional share interest will not entitle the owner
thereof to vote or to any rights as a shareholder of Associated. Each holder of
a fractional share interest shall be paid an amount in cash equal to the product
obtained by multiplying such fractional share interest to which such holder
would otherwise be entitled by the average of the daily closing prices of a
share of Associated Common Stock as quoted on the NASDAQ National Market during
the ten consecutive trading day period ending three business days prior to the
Effective Time. As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of fractional share interests, the Exchange
Agent shall notify Associated and Associated shall make available such amounts
to such holders of such fractional share interests subject to and in accordance
with the terms of the Merger Agreement, as relevant.
Any portion of the Exchange Fund which remains undistributed to the
shareholders of the Company for six months after the Effective Time shall be
delivered to Associated, upon demand, and any shareholders of the Company who
have not theretofore complied with the procedures described above shall
thereafter look only to Associated for payment of their claim for the shares of
Associated Common Stock, any cash in lieu of fractional shares of Associated
Common Stock and any dividends or distributions with respect to Associated
Common Stock.
Neither Associated nor the Company shall be liable to any holder of
shares of the Company Common Stock for any such shares of the Company Common
Stock (or dividends or distributions with respect thereto) or cash delivered to
a public official pursuant to any abandoned property, escheat or similar law.
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<PAGE> 34
Associated shall be entitled to deduct and withhold from any cash
consideration payable pursuant to the Merger Agreement to any holder of shares
of the Company Common Stock such amounts as Associated is required to deduct and
withhold with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law.
At the Effective Time, the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers of shares of the
Company Common Stock thereafter on said record books. From and after the
Effective Time, the holders of certificates shall cease to have any rights with
respect to such shares of the Company Common Stock except as otherwise provided
in the Merger Agreement, or by law. On or after the Effective Time, any
certificates presented to the Exchange Agent or Associated for any reason shall
be converted into the shares of Associated Common Stock to which the holder of
such certificate is entitled in accordance with the terms of the Merger
Agreement as described above.
TERMINATION BASED ON STOCK PRICE
The Merger Agreement generally provides that the Company may terminate
the Merger Agreement if the Determination Price (as described below) is less
than $28.50 and that Associated may terminate the Merger Agreement if the
Determination Price is greater than $41.50.
The Company may terminate the Merger Agreement at any time during a
two-day period (the "Termination Notice Period") commencing on the second
business day prior to (i) the day on which the Merger is to be consummated in
accordance with the mutual agreement of the Company and Associated or, (ii) if
the Company and Associated do not agree on a closing date, the day which is
thirty days after certain conditions have been satisfied (the "Assumed Closing
Date") if the Determination Price is less than $28.50.
The "Determination Price" is the average of the closing prices of a
share of Associated Common Stock as quoted on the NASDAQ National Market during
the ten trading-day period ending on the third business day prior to the Assumed
Closing Date.
If the Company's Board of Directors elects to exercise the Company's
termination right, it must give prompt notice to Associated. During the
seven-day period commencing with its receipt of such notice, Associated has the
option to avoid such termination of the Merger Agreement by electing to increase
the Conversion Ratio to 79,354,686 divided by the Daily Average Price divided by
the number of shares of Company Common Stock outstanding. Assuming that 25,000
shares of Company Common Stock (the number of such shares outstanding as of the
date of the Record Date) were outstanding, each share of Company Common Stock
would be converted into shares of Associated Common Stock with a value (based on
the Daily Average Price) of approximately $3,174.
Associated may terminate the Merger Agreement at any time during the
Termination Notice Period if the Determination Price is greater than $41.50. If
Associated elects to exercise this termination right, it must give prompt notice
to the Company. During the seven-day period commencing with its receipt of
notice, the Company's Board of Directors has the option to avoid such
termination of the Merger Agreement by electing to decrease the Conversion Ratio
to 97,306,579 divided by the Daily Average Price divided by the number of shares
of Company Common Stock outstanding. Assuming that 25,000 shares of Company
Common Stock were outstanding, each share of Company Common Stock would be
converted into shares of Associated Common Stock with a value (based on the
Daily Average Price) of approximately $3,892.
It is not possible to know whether the termination rights described
above will be triggered until the Termination Notice Period. The Company's Board
of Directors has not decided whether it will exercise its right to terminate the
Merger Agreement or avoid a termination of the Merger Agreement by Associated by
decreasing the conversion ratio if
25
<PAGE> 35
such rights are triggered. Associated is under no obligation to increase the
Conversion Ratio, and there can be no assurance that Associated would elect to
increase the Conversion Ratio if the Company's Board of Directors were to
exercise its right to terminate the Merger Agreement as set forth above. In
making its decision as to whether to terminate or avoid the termination of the
Merger Agreement, the Company's Board of Directors will take into account,
consistent with its fiduciary duties, all relevant facts and circumstances
existing at the time, including, without limitation, the market for commercial
banking stocks in general, the relative value of Associated Common Stock in the
market, and the advice of its financial and other advisors. By approving the
Merger Agreement, the shareholders of the Company will confer on the Company's
Board of Directors the power, consistent with its fiduciary duties, to elect to
terminate the Merger Agreement as described above and to elect to decrease the
Conversion Ratio as described above and consummate the Merger in the event the
termination right of Associated is triggered, in either case without any further
action by, or resolicitation of, the shareholders of the Company.
REGULATORY APPROVALS REQUIRED
Federal. The Merger is subject to prior approval by the Federal Reserve
Board under the BHC Act, which requires that the Federal Reserve Board take into
consideration, among other factors, the financial and managerial resources and
future prospects of the respective institutions and the convenience and needs of
the communities to be served. The BHC Act prohibits the Federal Reserve Board
from approving the Merger if it would result in a monopoly or be in furtherance
of any combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States, or if its effect in any
section of the country may be to substantially lessen competition or to tend to
create a monopoly, or if it would in any other manner be a restraint of trade,
unless the Federal Reserve Board finds that the anti-competitive effects of the
Merger are clearly outweighed in the public interest by the probable effect of
the transaction in meeting the convenience and needs of the communities to be
served. The Federal Reserve Board also has the authority to deny an application
if it concludes that the combined organization would have an inadequate capital
position. Furthermore, the Federal Reserve Board must also assess the records of
the bank subsidiaries of Associated and the Company under the Community
Reinvestment Act of 1977, as amended (the "CRA"). The CRA requires that the
Federal Reserve Board analyze, and take into account when evaluating an
application, each bank's record of meeting the credit needs of its local
communities, including low- and moderate-income neighborhoods, consistent with
safe and sound operation.
Under the BHC Act, the Merger may not be consummated until up to 30
days following the date of Federal Reserve Board approval, during which time the
United States Department of Justice may challenge the Merger on antitrust
grounds. Although a challenge is improbable, there can be no assurance that the
Department of Justice will not challenge the Merger or, if such a challenge is
made, as to the result thereof. The commencement of an antitrust action would
stay the effectiveness of the Federal Reserve Board's approval unless a court
specifically orders otherwise. The BHC Act provides for the publication of
notice and public comment on the applications and authorizes the regulatory
agency to permit interested parties to intervene in the proceedings.
Associated filed an application with the Federal Reserve Bank of
Chicago (the "Federal Reserve Bank") that was accepted for filing by the Federal
Reserve Bank on June 1, 1999 and approved on ___________, 1999.
Minnesota. The Merger is also subject to prior approval by the
Minnesota Department of Commerce Financial Examination Division (the "Minnesota
Department") under Section 48.93 of the Minnesota Statutes which requires that
the Minnesota Department take into consideration (i) the financial condition of
the acquiring institution; (ii) the competence, experience and integrity of the
management of the acquiring institution; (iii) whether the acquisition will
result in undue concentration of resources or substantial lessening of
competition in Minnesota; and (iv) the CRA compliance record of the acquiring
institution.
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Associated filed an application with the Minnesota Department on May
21, 1999 and on _____________, 1999, received notice that the Minnesota
Department does not intend to disapprove the Merger.
General. The Merger cannot proceed in the absence of all requisite
regulatory approvals. See "Certain Provisions of the Merger Agreement -
Conditions to Consummation of the Merger." In the Merger Agreement, Associated
and the Company have agreed to take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed with respect to the
Merger, including furnishing information to the Federal Reserve Board or in
connection with approvals or filings with other governmental entities.
Associated and the Company have also agreed to take all reasonable action
necessary to obtain approvals of the Federal Reserve Board, the Minnesota
Department and other governmental entities. However, the obligation to take
reasonable actions is not to be construed as including an obligation to accept
any terms or conditions to an agreement or other approval of, or any exemption
by, any party that are not customarily contained in approvals of similar
transactions granted by such regulators or if Associated in good faith
determines that such terms or conditions would have a material adverse effect on
its business or financial condition or would materially detract from the value
of the Company to Associated. There can be no assurance that any regulatory
approvals will not contain a term or condition that causes such approvals to
fail to satisfy the conditions described above under "Certain Provisions of the
Merger Agreement - Conditions to Consummation of the Merger."
Associated and the Company are not aware of any other governmental
approvals or actions that are required for consummation of the Merger except as
described above. Should any other approval or action be required, it is
presently contemplated that such approval or action would be sought. There can
be no assurance that any such approval or action, if needed, could be obtained
and, if such approvals or actions are obtained, there can be no assurance as to
the timing thereof.
THE EFFECTIVE TIME
The Merger will be consummated and will become effective upon the
filing of Articles of Merger with the Department of Financial Institutions of
the State of Wisconsin and the Secretary of State of the State of Minnesota or
on such later date or time as specified in the Articles of Merger (the
"Effective Time"). The filing with respect to the Merger will occur as promptly
as practicable after the satisfaction or, if permissible, waiver of the
conditions to the Merger as set forth in the Merger Agreement. The Merger
Agreement may be terminated by either party if, among other reasons, the Merger
is not consummated on or before October 25, 1999. Upon consummation of the
Merger, the Company will be merged into Associated and will not continue its
separate existence or operations, to which Associated as the surviving
corporation will succeed. See "Certain Provisions of the Merger Agreement -
Conditions to Consummation of the Merger" and "Certain Provisions of the Merger
Agreement - Termination."
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 description
set forth below is subject in all respects to the Wisconsin Business Corporation
Law ("WBCL") and Associated's Articles of Incorporation.
THE FOLLOWING DESCRIPTION OF ASSOCIATED COMMON STOCK SHOULD BE READ
CAREFULLY BY THE COMPANY SHAREHOLDERS SINCE, AT THE EFFECTIVE TIME, THE COMPANY
SHAREHOLDERS MAY RECEIVE PART OR ALL OF THE MERGER CONSIDERATION IN THE FORM OF
SHARES OF ASSOCIATED COMMON STOCK.
General. Associated has one class of common stock, the Associated
Common Stock. Of the 100,000,000 shares of Associated Common Stock authorized,
63,295,216 shares were outstanding as of June 18, 1999, exclusive of shares
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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
March 31, 1999.
Dividend Rights. Dividends on Associated Common Stock will be payable
out of the assets of Associated legally available therefor as, if and when
declared by the Associated Board of Directors. No share of Associated Common
Stock is entitled to any preferential treatment with respect to dividends.
Voting Rights. Each holder of Associated Common Stock will be entitled
at each shareholders' meeting of Associated, as to each matter to be voted upon,
to cast one vote, in person or by proxy, for each share of Associated Common
Stock registered in his or her name on the stock transfer books of Associated.
Such voting rights are not cumulative.
Rights Upon Liquidation. Subject to the rights of holders of any
Associated preferred stock which may be issued from time to time, in the event
of liquidation, dissolution or winding up of Associated, whether voluntary or
involuntary, the holders of Associated Common Stock will be entitled to receive
all assets of Associated remaining for distribution to its shareholders, on a
pro rata basis.
Miscellaneous. Shares of Associated Common Stock are not convertible
into shares of any other class of capital stock. Shares of Associated Common
Stock are not and will not be entitled to any preemptive or subscription rights.
The issued and outstanding shares of Associated Common Stock are fully paid and
nonassessable (except as otherwise provided under the WBCL).
COMPARISON OF SHAREHOLDER RIGHTS
The following is a summary of material differences between the rights
of holders of Company Common Stock and Associated Common Stock. As the Company
is incorporated under the laws of the State of Minnesota and Associated is
incorporated under the laws of the State of Wisconsin, rights of shareholders of
Associated and the Company have a number of significant differences. Differences
in the rights of shareholders of the Company and Associated generally arise from
the change in governing law as well as from differences between the provisions
of Associated's Articles of Incorporation and Bylaws and those of the Company.
Shareholders of the Company, whose rights are governed by the Company's Articles
of Incorporation, By-laws and the MBCA 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 the Company and the rights of shareholders of Associated.
AUTHORIZED CAPITAL STOCK
The Company. Under the Company's Articles of Incorporation, the Company
is authorized to issue up to 100,000 shares of Common Stock, without par value.
The holders of Common Stock have one vote per share on all matters to come
before the shareholders, except that shareholders have the right to cumulate
votes with respect to the election of directors (See "The Merger - Comparison of
Shareholder Rights - Removal of Directors"). The Company has no authorized
shares of preferred stock and the Company's Board of Directors has no authority
to create classes of preferred stock.
Associated. Under Associated's Articles of Incorporation, Associated is
authorized to issue 100,000,000 shares of common stock, par value $0.01 per
share and 750,000 shares of preferred stock, $1.00 par value. All shares of
Associated Common Stock are identical in rights and have one vote. For a
description of Associated Common Stock, see "Description of Associated Common
Stock Issuable in the Merger." The preferred stock shall be cumulative and
dividends shall accrue thereon. The Board of Directors may divide the preferred
stock into series and establish the
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relative rights and preferences of preferred stock issued in the future as
specified in Associated's Articles of Incorporation without shareholder action
and issue such stock in series. As of the date hereof, no shares of any series
of Associated preferred stock are issued and outstanding.
APPRAISAL RIGHTS AND DISSENTERS' RIGHTS
The Company. Under the MBCA, shareholders have the right, in some
circumstances, to dissent from certain corporate transactions by demanding
payment in cash for their shares equal to the fair value of the shares as
determined by agreement with the corporation or by a court. The MBCA, in
general, affords dissenters' rights in the event of certain amendments to the
articles of incorporation that materially and adversely affect the rights or
preferences of the shares of the dissenting shareholder, the sale or other
disposition of substantially all corporate assets, or certain mergers and
statutory share exchanges involving the corporation, regardless of whether the
shares of the corporation are listed on a national securities exchange or widely
held. Shareholders of the Company have the right to dissent from the Merger. See
"The Merger - Dissenters' Rights."
Associated. Dissenters' rights under the WBCL are not available to
holders of shares, such as shares of Associated Common Stock, which are
registered on a national securities exchange or quoted on NASDAQ on the record
date filed to determine shareholders entitled to notice of the meeting at which
shareholders are to vote on the proposed corporate action. Associated Common
Stock is quoted on the NASDAQ National Market.
REQUIRED VOTE
The Company. Under the MBCA, the Company's Articles of Incorporation
generally can be amended if the proposed amendment is approved by the Company's
Board of Directors and by holders of a majority of the voting power of the
shares of the Company Common Stock present and entitled to vote at a meeting.
Under the MBCA, the affirmative vote of a majority of the voting power of all
shares of the Company Common Stock is required to approve mergers and certain
other extraordinary transactions.
Associated. Pursuant to 180.1706(1) of the WBCL, except as otherwise
provided in a corporation's articles of incorporation or bylaws, any amendment
to the articles of incorporation, merger or certain other extraordinary events
involving a corporation organized before January 1, 1973, which did not
expressly elect before January 1, 1991 to be governed by a majority or greater
voting requirement, must be approved by the affirmative vote of two-thirds of
the shares entitled to vote at a meeting called for that purpose. Associated's
Articles of Incorporation 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 Associated's Articles of Incorporation which create dissenters'
rights or approve mergers and certain other extraordinary transactions other
than those described in "Comparison of Shareholder Rights - Certain Business
Combinations."
CLASSIFIED BOARD OF DIRECTORS
The Company. The Company's Board of Directors consists of a single
class of directors, each of whom serves for one year or until his or her
successor is elected and qualified.
Associated. The Board of Directors of Associated is divided into three
classes as nearly equal in number as possible, with the directors in each class
serving for staggered three-year terms. However, Associated's 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 of Directors. At each
annual meeting of Associated's shareholders, the successors to the class of
directors whose term expires at the time of such
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meeting are elected by a majority of the votes cast, assuming a quorum is
present. Associated's Board of Directors consists of 14 directors.
REMOVAL OF DIRECTORS
The Company. Shareholders of the Company have the right to cumulate
their votes in the election of directors. Under the MBCA, a director may be
removed, with or without cause, by the shareholders, or by a majority of the
remaining directors if the director was named by the board to fill a vacancy and
the shareholders have not elected directors in the interval between the time of
appointment to fill a vacancy and the time of the removal. In a corporation
having cumulative voting, unless the entire board is removed simultaneously, a
director may not be removed from the board by the shareholders if the number of
votes cast against removal of a director is equivalent to that number of votes
sufficient to elect such director at an election of the board under cumulative
voting.
Associated. Shareholders of Associated may remove a director only for
"cause." "Cause" is defined as conviction of a felony, declaration of unsound
mind by an order of a court of competent jurisdiction, gross dereliction of duty
or commission of an action which constitutes intentional misconduct or a knowing
violation of law and that results in both an improper substantial personal
benefit and a material injury to Associated.
NEWLY CREATED DIRECTORSHIPS AND VACANCIES ON THE BOARD OF DIRECTORS
The Company. Under the MBCA, unless a corporation's articles of
incorporation or by-laws provide otherwise, (i) a vacancy on a corporation's
board of directors resulting from the death, resignation, removal or
disqualification of a director may be filled by the vote of a majority of
directors then in office, although less than a quorum, (ii) a newly created
directorship resulting from an increase in the number of directors may be filled
by the vote of a majority of the directors serving at the time of the increase
and (iii) in either case, any director so elected shall hold office only until a
qualified successor is elected at the next regular or special meeting of
shareholders. The Company's Articles of Incorporation and By-laws follow these
provisions.
Associated. Associated's Articles of Incorporation provide that newly
created directorships and any vacancies on Associated's Board of Directors may
only be filled by the Board of Directors. Associated's Bylaws provide that the
remaining members of Associated's Board of Directors shall appoint a director in
accordance with the WBCL.
CERTAIN BUSINESS COMBINATIONS
The Company. The Company's Articles of Incorporation and By-laws do not
contain any supermajority voting provisions relating to the approval by holders
of the Company Common Stock of mergers or other business combinations. Minnesota
has enacted legislation aimed at regulating takeovers of certain corporations
and protecting shareholders of such corporations in connection with certain
business combinations. The two primary provisions of this nature, namely, the
business combination provision and the control share acquisition provision, are
applicable to the Company.
Associated. Article VII of Associated's Articles of Incorporation
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
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shareholder became "interested" and who is not otherwise affiliated with such
shareholder, or (ii) a director designated (prior to his or her initial election
as a director) as a continuing director by a majority of the then continuing
directors or (b) the transaction is between Associated and a subsidiary of
Associated and no interested shareholder (together with such shareholder's
affiliates and associates) owns any of the outstanding shares of the subsidiary.
The foregoing provision may only be amended, modified or repealed by the
affirmative vote of not less than 80% of the outstanding shares and the
non-interested outstanding shares of Associated.
ADVANCE NOTICE OF PROPOSALS TO BE BROUGHT AT THE ANNUAL MEETING
The Company. The Company's Articles of Incorporation and By-laws do not
contain any provisions relating to advance notice of proposals to be brought
before an annual meeting.
Associated. Pursuant to Article II, Section 5 of Associated's 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.
ADVANCE NOTICE OF NOMINATIONS OF DIRECTORS
The Company. The Company's Articles of Incorporation and By-laws do not
contain any provisions relating to advance notice of nominations of directors.
Associated. Pursuant to Article II, Section 6 of Associated's 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.
CALL OF SHAREHOLDERS' MEETINGS
The Company. Under the MBCA, a special meeting may be called by holders
of 10% or more of the outstanding shares entitled to vote, except that a special
meeting for the purpose of considering whether to directly or indirectly
facilitate or effect a business combination must be called by holders of 25% or
more of the outstanding shares.
Associated. Under the WBCL, holders of 10% or more of all the
outstanding shares entitled to vote have the right to demand a special
shareholders' meeting.
SHAREHOLDER ACTION WITHOUT A MEETING
The Company. Under the MBCA, any action which may be taken by the
shareholders at a meeting may be taken without a meeting only by unanimous
written consent of all shareholders entitled to vote on the action.
Associated. Under the WBCL, any action which may be taken by the
shareholders at a meeting may be taken without a meeting only by unanimous
written consent of all shareholders entitled to vote on the action, unless the
articles of incorporation permit approval by the consent of the shareholders who
would be entitled to cast not less than the minimum number of votes that would
be necessary to authorize or take the action at a meeting at which all shares
entitled to vote were present and voted. Associated's Articles of Incorporation
do not contain a provision permitting less than unanimous written consent to
take action without a meeting.
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DIVIDENDS; STOCK REPURCHASES
The Company. Under the MBCA, a corporation may pay dividends or
repurchase shares if the corporation will be able to pay its debts in the
ordinary course of business after paying the dividend or repurchasing the
shares, regardless of whether the corporation has surplus or net profits,
subject to certain limitations for the benefit of certain preference shares.
Associated. Under the WBCL, a corporation may pay dividends, repurchase
shares or make other distributions to its shareholders unless, after giving
effect to such dividend, repurchase or other distribution, (i) the corporation
would not be able to pay its debts as they become due in the ordinary course of
business, or (ii) the corporation's total assets would be less than the sum of
total liabilities plus the amount that would be needed, if the corporation were
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The Company. Unless limited by the articles of incorporation or by-laws
of a corporation, the MBCA provides for mandatory indemnification of a director,
officer, employee or committee member against certain liabilities and expenses
if such person (i) acted in good faith; (ii) received no improper personal
benefit; (iii) in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and (iv) depending upon the capacity in which
such person was serving, either believed the conduct was in the best interests
of the corporation or believed that the conduct was not opposed to the best
interests of the corporation.
Associated. Unless limited by the articles of incorporation of the
corporation, the WBCL provides for mandatory indemnification of 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 corporation. In all other cases, the corporation
must 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 corporation, unless liability was incurred because he or she breached or
failed to perform a duty owed to the corporation and such breach or failure to
perform constitutes: (i) a willful failure to deal fairly with the corporation
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. Associated's Articles of Incorporation
contain no provisions limiting the indemnification of directors and officers of
Associated and Associated's Bylaws authorize indemnification of officers and
directors of Associated consistent with the description of the indemnification
provisions in the WBCL as described above.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
The Company. The MBCA permits a corporation to eliminate a director's
personal liability to the corporation or its shareholders for monetary damages
for breach of fiduciary duty, except for conduct involving: (i) any breach of
the director's duty of loyalty to the corporation or its shareholders; (ii) acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law; (iii) declarations of illegal distributions and
certain violations of Minnesota securities laws; or (iv) participation in a
transaction from which the director received an improper personal benefit. The
Company's Articles of Incorporation eliminate the liability of directors to the
fullest extent permitted by the MBCA.
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Associated. Unless limited by the articles of incorporation of the
corporation, the WBCL provides for the elimination of a director's personal
liability to the corporation or its shareholders for monetary damages for breach
of fiduciary duty, unless the person asserting liability proves that the breach
constitutes any of the following: (i) a willful failure to deal fairly with the
corporation 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. Associated's Articles of
Incorporation contain no provisions limiting the foregoing provision of the
WBCL.
RESALE OF ASSOCIATED COMMON STOCK ISSUED PURSUANT TO THE MERGER
The Associated Common Stock issued pursuant to the Merger will be
registered under the Securities Act of 1933, as amended (the "Securities Act")
and be freely tradable under the Securities Act except for shares issued to any
shareholder of the Company who may be deemed to be an "affiliate" of the Company
for purposes of Rule 145 under the Securities Act. Each affiliate identified by
the Company will enter into an agreement with Associated providing that such
affiliate will be subject to Rule 145(d) of the Securities Act, and shall not
transfer any Associated Common Stock received in the Merger except in compliance
with the Securities Act. This Proxy Statement/Prospectus does not cover resales
of Associated Common Stock received by any person who may be deemed to be an
affiliate of the Company. The Company has concluded that the only affiliates of
the Company are its directors and Mr. Thomas M. Redmond.
PRE-MERGER DIVIDEND POLICY
The Company. Pursuant to the Merger Agreement, the Company is
prohibited from declaring or paying any dividend on, or making any other
distribution in respect of, its outstanding shares of capital stock without the
prior written consent of Associated.
Associated. Associated expects to continue to declare, until the
Effective Time, its regularly scheduled dividends.
POST-MERGER DIVIDEND POLICY
It is the current intention of the Board of Directors of Associated to
continue to declare cash dividends on the Associated Common Stock following the
Merger. The dividend is currently in the amount of $0.29 per quarter or $1.16
per year, in each case per share. Shareholders should note that no such
dividends payable following the date hereof have currently been declared and
that future dividends will be determined by the Associated Board of Directors in
light of the earnings and financial condition of Associated and its subsidiaries
and other factors, including applicable governmental regulations and policies.
In that regard, Associated is a legal entity separate and distinct from its
banking and non-banking subsidiaries, and the principal sources of Associated's
income are dividends and interest from such subsidiaries. The payment of
dividends by Associated's banking subsidiaries is subject to certain
restrictions under applicable governmental regulations. See also "The Merger -
Pre-Merger Dividend Policy."
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, the Company has agreed to carry on
its business, and the business of its subsidiaries, in the usual, regular and
ordinary course in substantially the same manner as conducted prior to the
execution of the Merger Agreement, subject to certain covenants and other
agreements agreed to by the Company in the Merger Agreement. See "Certain
Provisions of the Merger Agreement - Certain Covenants."
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CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES
Associated and the Company have received an opinion of Reinhart,
Boerner, Van Deuren, Norris & Rieselbach, s.c. that the Merger will qualify as a
tax-free reorganization under Section 368(a)(1)(A) of the Code and that each of
Associated and the Company will be a party to such reorganization within the
meaning of Section 368(b) of the Code. Accordingly, the Company and Associated
will recognize no gain or loss for federal income tax purposes as a result of
the Merger and no gain or loss will be recognized by any holder of the Company
Common Stock upon receipt of Associated Common Stock pursuant to the Merger
(except upon the receipt of cash in lieu of fractional shares of Associated
Common Stock or consideration received as a result of the exercise of
dissenters' rights). The Internal Revenue Service ("Service") has not been asked
to rule upon the tax consequences of the Merger and such request will not be
made. The opinion of Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c. is
based entirely upon the Code, regulations now in effect thereunder, current
administrative rulings and practice, and judicial authority, all of which are
subject to change. Unlike a ruling from the Service, an opinion of an advisor is
not binding on the Service and there can be no assurance, and none is hereby
given, that the Service will not take a position contrary to one or more
positions reflected herein or that the opinion will be upheld by the courts if
challenged by the Service. The tax treatment of each holder of Company Common
Stock will depend in part upon such shareholder's particular situation. Special
tax consequences not described below may be applicable to particular classes of
taxpayers, including financial institutions, insurance companies, tax-exempt
organizations, broker-dealers, persons who are not citizens or residents of the
United States or who are legal entities formed under the laws of jurisdictions
outside the United States, and holders of Company Common Stock who acquired
their shares through the exercise of employee stock options or otherwise as
compensation. This discussion also assumes that the holders of Company Common
Stock hold their Common Stock as a capital asset.
EACH SHAREHOLDER OF THE COMPANY IS URGED TO CONSULT HIS OR HER OWN TAX
AND FINANCIAL ADVISORS AS TO THE EFFECT OF SUCH FEDERAL INCOME TAX CONSEQUENCES
ON HIS OR HER OWN PARTICULAR FACTS AND CIRCUMSTANCES AND ALSO AS TO ANY STATE,
LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES ARISING OUT OF THE MERGER.
Based upon the opinion of Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, s.c., which in turn is based upon various representations and
subject to various assumptions and qualifications, the following federal income
tax consequences to the shareholders of the Company will result from the Merger:
(i) Provided that the Merger of the Company with and into
Associated qualifies as a statutory merger under applicable law, the
Merger will qualify as a reorganization within the meaning of Sections
368(a)(1)(A) of the Code, and the Company and Associated will each be
"a party to a reorganization" within the meaning of Section 368(b) of
the Code for purposes of this reorganization.
(ii) No gain or loss will be recognized by the holders of the
Company Common Stock upon the exchange of the Company Common Stock
solely for Associated Common Stock pursuant to the Merger, except with
respect to cash received in lieu of fractional shares of Associated
Common Stock or consideration received as a result of the exercise of
dissenters' rights.
(iii) A Company shareholder's aggregate basis in the
Associated Common Stock (including any fractional share interest to
which he or she may be entitled) received in the Merger will be the
same as the aggregate basis of the Company Common Stock exchanged
therefor.
(iv) The holding period of the Associated Common Stock
received by a holder of Company Common Stock pursuant to the Merger
will include the period during which the Company Common Stock exchanged
therefor was held, provided that the Company Common Stock surrendered
was held as a capital asset as of the time of the Merger.
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(v) The receipt by a holder of Company Common Stock of cash in
lieu of a fractional share of Associated Common Stock will be treated
as if he or she received such fractional share from Associated and then
had it redeemed for cash. Such receipt of cash will be treated under
Section 302(b)(1) of the Code as full payment in exchange for the
fractional share.
In rendering its tax opinion, Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, s.c. will rely on certain written representations as to factual
matters made by appropriate officers of Associated and the Company. Such
representations are customary for opinions of this type; however, this tax
opinion cannot be relied upon if any such representation is, or later becomes,
inaccurate.
Associated has announced a stock repurchase program whereby it may
redeem shares of Associated Common Stock in the public market, including shares
which it may issue to the Company's shareholders in the Merger. If the Service
treats this stock repurchase program as being in connection with the Merger and
if Associated were to redeem an amount of shares from the former shareholders of
the Company, either directly or indirectly as a part of this stock repurchase
program, in excess of 50% of the consideration received in the Merger, the
Merger may be taxable to the shareholders of the Company, including those who do
not sell any shares of Associated Common Stock. The Service could claim that any
shareholders of the Company who sell shares of Associated Common Stock while the
stock repurchase program is in effect have indirectly sold their shares to
Associated, even if Associated is not the actual buyer and even if the
shareholders of the Company may not know who the actual buyer is. The tax
opinion of Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c. assumes that
the former shareholders of the Company do not sell (or are not deemed to have
sold through the stock repurchase program) to Associated a sufficient number of
the shares of Associated Common Stock they receive in the Merger such that less
than 50% of the merger consideration would be deemed to be in the form of
Associated Common Stock.
Backup Withholding. Any cash received in the Merger by holders of
Company Common Stock may be subject to backup withholding at a rate of 31%.
Backup withholding will not apply, however, to a taxpayer who (i) furnishes a
correct taxpayer identification number ("TIN") and certifies that he or she is
not subject to backup withholding on Form W-9 (or an appropriate substitute
form), (ii) provides a certificate of foreign status on Form W-8 (or an
appropriate substitute form), or (iii) is otherwise exempt from backup
withholding. The Service may impose a $50 penalty upon any taxpayer who fails to
provide the correct TIN, as required.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT
TO BE A COMPLETE ANALYSIS OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A DECISION OF
A SHAREHOLDER OF THE COMPANY WHETHER TO VOTE IN FAVOR OF THE MERGER. BECAUSE
CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE PARTICULAR
CIRCUMSTANCES OF EACH HOLDER OF COMPANY COMMON STOCK, EACH HOLDER IS URGED TO
CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES
TO SUCH HOLDER OF THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF STATE,
LOCAL AND FOREIGN TAX LAWS.
The foregoing is only a general description of certain material federal
income tax consequences of the Merger for holders of the Company Common Stock
who are citizens or residents of the United States and who hold their shares as
capital assets, without regard to the particular facts and circumstances of the
tax situation of each holder of the Company Common Stock. It does not discuss
all of the consequences that may be relevant to holders of the Company Common
Stock entitled to special treatment under the Code (such as insurance companies,
financial institutions, dealers in securities, tax-exempt organizations or
foreign persons). The summary set forth above does not purport to be a complete
analysis of all potential tax effects of the transactions contemplated by the
Merger Agreements or the Merger itself. No information is provided herein with
respect to the application and effect of state, local and foreign tax laws and
the possible effects of changes in federal laws or other tax laws.
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ANTICIPATED ACCOUNTING TREATMENT
The business combination resulting from the Merger will be accounted
for under the purchase method of accounting. Under this method of accounting,
the total consideration paid in the Merger will be allocated among the Company's
assets and liabilities based on the fair values of the assets acquired and the
liabilities assumed and any amount of consideration in excess of the total fair
value of such assets and liabilities will be recorded as good will. The
consolidated financial statements of Associated will include the results of
operations of the Company from the date of acquisition.
DISSENTERS' RIGHTS
Sections 302A.471 and 302A.473 of the MBCA provide to each shareholder
the right to dissent from the Merger, and obtain payment for the "fair value" of
such shareholder's shares following the consummation of the Merger.
The following summary of the applicable provisions of Sections 302A.471
and 302A.473 of the MBCA is not intended to be a complete statement of such
provisions and is qualified in its entirety, by reference to such sections, the
full text of which is attached as Exhibit B to this Proxy Statement/Prospectus.
These sections should be reviewed carefully by any shareholder who wishes to
exercise dissenters' rights or who wishes to preserve the right to do so, since
failure to comply with the procedures set forth herein or therein will result in
the loss of dissenters' rights.
Under the MBCA, holders of Company Common Stock will have the right, by
fully complying with the applicable provisions of Sections 302A.471 and
302A.473, to dissent with respect to the Merger and to receive from Associated
as the surviving corporation in the Merger (the "Surviving Corporation") payment
in cash of the "fair value" of their shares of Company Common Stock after the
Merger is completed. The term "fair value" means the value of the shares of
Company Common Stock immediately before the Effective Time.
All references in Sections 302A.471 and 302A.473 and in this summary to
a "shareholder" are to a record holder of the shares of Company Common Stock as
to which dissenters' rights are asserted. A person having beneficial ownership
of shares of Company Common Stock that are held of record in the name of another
person, such as a broker, nominee, trustee or custodian, must act promptly to
cause the record holder to follow the steps summarized below properly and in a
timely manner in order to perfect whatever dissenters' rights such beneficial
owner may have.
Shareholders of record who desire to exercise their dissenters' rights
must satisfy all of the following conditions. A written notice of intent to
demand fair value for shares must be delivered to the executive offices of the
Company before the taking of the shareholder vote on the Merger. This written
demand must be in addition to and separate from any proxy or vote against the
Merger. Voting against, abstaining from voting or failing to vote on the Merger
does not constitute a demand for appraisal within the meaning of the MBCA.
Shareholders electing to exercise their dissenters' rights under the
MBCA must not vote for adoption of the Merger. A shareholder's failure to vote
against the Merger will not constitute a waiver of dissenters' rights. However,
if a shareholder returns a signed proxy but does not specify a vote against
adoption of the Merger or direction to abstain, the proxy will be voted for
adoption of the Merger, which will have the effect of waiving that shareholder's
dissenters' rights.
Company shareholders may not assert dissenters' rights as to less than
all of the shares registered in such holder's name except where certain shares
are beneficially owned by another person but registered in such holder's name.
If a record owner, such as a broker, nominee, trustee or custodian, wishes to
dissent with respect to shares beneficially owned by another person, such
shareholder must dissent with respect to all of such shares and must disclose
the name and address of the beneficial owner on whose behalf the dissent is
made. A beneficial owner of shares of
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<PAGE> 46
Company Common Stock who is not the record owner of such shares may assert
dissenters' rights as to shares held on such person's behalf, provided that such
beneficial owner submits a written consent of the record owner to the Company at
or before the time such rights are asserted.
A shareholder who elects to exercise dissenters' rights must send his
or her written demand, before the taking of the vote on the Merger, to the
Secretary of Riverside Acquisition Corp., 2655 Campus Drive, Plymouth, Minnesota
55441. The written demand should specify the shareholder's name and mailing
address, the number of shares owned and that the shareholder intends to demand
the value of his or her shares.
After approval of the Merger by the shareholders at the Special
Meeting, the Surviving Corporation will send a written notice to each
shareholder who filed a written demand for dissenters' rights. The notice will
contain the address to which the shareholder shall send a demand for payment and
the stock certificates in order to obtain payment and the date by which they
must be received, a form to be used in connection therewith and other related
information.
In order to receive fair value for his or her shares, a dissenting
shareholder must, within 30 days after the date such notice was given, send his
or her stock certificates, and all other information specified in the notice
from the Surviving Corporation, to the address specified in such notice. A
dissenting shareholder will retain all rights as a shareholder until the
Effective Time. After a valid demand for payment and the related stock
certificates and other information are received, or after the Effective Time,
whichever is later, the Surviving Corporation will remit to each dissenting
shareholder who has complied with statutory requirements the amount that the
Surviving Corporation estimates to be the fair value of such shareholder's
shares, with interest commencing five days after the Effective Time at a rate
prescribed by statute. Remittance will be accompanied by the Company's closing
balance sheet and statement of income for a fiscal year ending not more than 16
months before the Effective Time, together with the latest available interim
financial data, an estimate of the fair value of the shareholder's shares and a
brief description of the method used to reach the estimate, a brief description
of the procedure to be followed if such holder is demanding supplemental payment
and copies of Sections 302A.471 and 302A.473 of the MBCA.
If the dissenting shareholder believes that the amount remitted by the
Surviving Corporation is less than the fair value of such holder's shares, plus
interest, the shareholder may give written notice to the Surviving Corporation
of such holder's own estimate of the fair value of the shares, plus interest,
within 30 days after the mailing date of the remittance and demand payment of
the difference. Such notice must be given at the executive offices of Company at
the address set forth above. A shareholder who fails to give such written notice
within this time period is entitled only to the amount remitted by the Surviving
Corporation.
Within 60 days after receipt of a demand for supplemental payment, the
Surviving Corporation must either pay the shareholder the amount demanded or
agreed to by such shareholder after discussion with the Surviving Corporation or
petition a court for the determination of the fair value of the shares, plus
interest. The petition must name as parties all shareholders who have demanded
supplemental payment and have not reached an agreement with the Surviving
Corporation. The court, after determining that the shareholder or shareholders
in question have complied with all statutory requirements, may use any valuation
method or combination of methods it deems appropriate to use, whether or not
used by the Surviving Corporation or the dissenting shareholder, and may appoint
appraisers to recommend the amount of the fair value of the shares. The court's
determination will be binding on all Company shareholders who properly exercised
dissenters' rights and did not agree with the Surviving Corporation as to the
fair value of the shares. Dissenting shareholders are entitled to judgment for
the amount by which the court-determined fair value per share, plus interest,
exceeds the amount per share, plus interest, remitted to the shareholders by the
Surviving Corporation. The shareholders shall not be liable to the Surviving
Corporation for any amounts paid by the Surviving Corporation which exceed the
fair value of the shares as determined by the court, plus interest. The costs
and expenses of such a proceeding, including the expenses and compensation of
any appraisers, will be determined by the court and assessed against the
Surviving Corporation, except that the court may, in its discretion, assess part
or all of those costs and expenses against
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any shareholder whose action in demanding supplemental payment is found to be
arbitrary, vexatious or not in good faith. The court may award fees and expenses
to an attorney for the dissenting shareholders out of the amount, if any,
awarded to such shareholders. Fees and expenses of experts or attorneys may also
be assessed against any person who acted arbitrarily, vexatiously or not in good
faith in bringing the proceeding.
The Company may withhold the remittance of the estimated fair value,
plus interest, for any shares owned by any person who was not a shareholder or
who is dissenting on behalf of a person who was not a beneficial owner on March
10, 1999, the date on which the proposed Merger was first announced to the
public (the "Public Announcement Date"). The Surviving Corporation will forward
to any such dissenting shareholder who has complied with all requirements in
exercising dissenters' rights the notice and all other materials sent after
shareholder approval of the Merger to all shareholders who have properly
exercised dissenters' rights, together with a statement of the reason for
withholding the remittance and an offer to pay the dissenting shareholder the
amount listed in the materials if the shareholder agrees to accept that amount
in full satisfaction. The shareholder may decline this offer and demand payment
by following the same procedure as that described for demand of supplemental
payment by shareholders who owned their shares as of the Public Announcement
Date. Any shareholder who did not own shares on the Public Announcement Date and
who fails properly to demand payment will be entitled only to the amount offered
by the Company. Upon proper demand by any such shareholder, rules and procedures
applicable in connection with receipt by the Company of the demand for
supplemental payment given by a dissenting shareholder who owned shares on the
Public Announcement Date will also apply to any shareholder properly giving a
demand but who did not own shares of record or beneficially on the Public
Announcement Date, except that any such shareholder is not entitled to receive
any remittance from the Company until the fair value of the shares, plus
interest, has been determined pursuant to such rules and procedures.
Shareholders considering exercising dissenters' rights should bear in
mind that the fair value of their shares determined under Sections 302A.471 and
302A.473 of the MBCA could be more than, the same as or, in certain
circumstances, less than the consideration they would receive pursuant to the
Merger Agreement if they do not seek appraisal of their shares.
Cash received pursuant to the exercise of dissenters' rights may be
subject to federal or state income tax. See "The Merger - Certain Material
Federal Income Tax Consequences."
ANY HOLDER WHO FAILS TO COMPLY FULLY WITH THE STATUTORY PROCEDURE
SUMMARIZED ABOVE WILL FORFEIT HIS OR HER RIGHTS OF DISSENT AND WILL RECEIVE THE
MERGER CONSIDERATION FOR HIS OR HER SHARES. SEE EXHIBIT B.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
It is anticipated that David E. Cleveland, President and a director of
the Company, will, at the Effective Time of the Merger, enter into an employment
agreement with Associated to serve as Regional President and Chief Executive
Officer for the greater Minneapolis/St. Paul Region for a period of three years.
The terms of the employment agreement have not been fully negotiated. However,
it is contemplated that Mr. Cleveland will receive an annual base salary of
$275,000 and will be eligible to participate in incentive compensation plans
consistent with other similarly situated officers of Associated.
Ten key employees of Riverside Bank including Gwen N. Stanley, Senior
Vice President and Chief Financial Officer of the Bank, Michael T. Zenk, Senior
Vice President of the Bank, and Kate Barr, Senior Vice President of the Bank,
none of whom are shareholders of the Company, hold an aggregate of 1,280 Phantom
Shares (the "Phantom Shares") that were granted under the Riverside Bancshares
Corporation Amended and Restated Phantom Stock Plan (the "Phantom Stock Plan").
The Phantom Shares entitle the holders thereof to receive a cash bonus award
upon the occurrence of certain events. The consummation of the contemplated
Merger constitutes an event which will result in the
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automatic vesting of all outstanding grants of Phantom Shares and entitles those
holders to a cash bonus award for each vested Phantom Share in an amount based
upon the value of consideration received by Company shareholders in the Merger.
If the Daily Average Price is at least $32.00 but not greater than $38.00, the
holders of Phantom Shares will receive cash payments aggregating approximately
$4,600,000.
OTHER RELATED PARTY TRANSACTIONS
In the ordinary course of conducting their banking and financial
services businesses, each of Associated, the Company and their respective
subsidiaries, may do business and engage in banking transactions with the other
party and its subsidiaries, which may include but not be limited to interests or
participation in loans and interbank advances.
MANAGEMENT AFTER THE MERGER
In the Merger, the Company will be merged into Associated and the
separate corporate existence of the Company will cease.
The officers and directors of Associated prior to the Merger will
continue as officers and directors of the Surviving Corporation. The directors
of the Bank prior to the Effective Time will continue as directors after the
Effective Time until their successors shall have been duly elected and
qualified.
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
The following is a brief summary of certain provisions of the Merger
Agreement, which is attached as Exhibit A to this Proxy Statement/Prospectus and
the amendment to the Merger Agreement which is attached as Exhibit A-1 to this
Proxy Statement/Prospectus. The Merger Agreement is incorporated herein by
reference. Such summary is qualified in its entirety by reference to the Merger
Agreement.
THE MERGER
The Merger Agreement provides that, following the approval of the
Merger Agreement by the shareholders of the Company and the satisfaction or
waiver of the other conditions to the Merger, the Company will be merged with
and into Associated. If the Merger Agreement is approved by the shareholders of
the Company, the Merger will become effective upon the Effective Time.
At the Effective Time, each outstanding share of Company Common Stock,
except for Dissenting Shares, will convert automatically into the right to
receive the number of shares of Associated Common Stock equal to the Conversion
Ratio determined as follows:
o The Conversion Ratio will equal (a) 89,100,000 divided by (b) the
Daily Average Price divided by (c) the number of shares of
Company Common Stock outstanding at the Effective Time, if the
Daily Average Price is at least $32.00 but not greater than
$38.00;
o The Conversion Ratio will equal 2,784,375 divided by the number
of shares of Company Common Stock outstanding at the Effective
Time if the Daily Average Price is less than $32.00; and
o The Conversion Ratio will equal 2,344,736.842 divided by the
number of shares of Company Common Stock outstanding at the
Effective Time if the Daily Average Price is greater than $38.00.
Based on the 25,000 shares of Company Common Stock issued and
outstanding on the Record Date, if the Daily Average Price is at least $32.00
but not greater than $38.00, each share of Company Common Stock will be
converted
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into a number of shares of Associated Common Stock equal to $3,564 divided by
the Daily Average Price. If the Daily Average Price is below $32.00, the
Conversion Ratio will be 111.375 and if the Daily Average Price is above $38.00,
the Conversion Ratio will be 93.78947.
Riverside shareholders should understand that the number of shares of
Associated Common Stock that they will receive in the Merger will be determined
by the Conversion Ratio, as described above. Because the market price of
Associated Common Stock fluctuates, the market value of the Associated shares
that Riverside shareholders will receive in the Merger (whether measured at the
Effective Time of the Merger or at another date) may be less than or greater
than the Daily Average Price used for determining the Conversion Ratio.
Additionally, under certain limited circumstances the Conversion Ratio
may be increased if the market value of Associated Common Stock is below $28.50
or the Conversion Ratio may be decreased if the market value of Associated
Common Stock is above $41.50. See "The Merger - Termination Based on Stock
Price" and "Certain Provisions of the Merger Agreement - Termination."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains customary representations and warranties
relating to, among other things, (i) each of Associated's and the Company's and
their respective subsidiaries' organization and similar corporate matters; (ii)
each of Associated's and the Company's capital structure; (iii) authorization,
execution, delivery, performance and enforceability of the Merger Agreement and
other related matters; (iv) documents filed by Associated with the Securities
and Exchange Commission (the "Commission") and each of Associated and the
Company with the Federal Reserve Board and state banking authorities and the
accuracy of information contained therein; (v) the accuracy of information
supplied by each of Associated and the Company in connection with the
Registration Statement and this Proxy Statement/Prospectus; (vi) compliance with
laws including employment and lending laws; (vii) no material pending or
threatened litigation except as otherwise disclosed in filings by Associated
with the Commission and the Company in the regulatory reports; (viii) filing of
tax returns and payment of taxes; (ix) certain material contracts and contracts
relating to certain employment, consulting and benefits matters of the Company;
(x) matters relating to retirement and other employee plans of the Company; (xi)
the absence of any burdensome contracts, agreements or restrictions; (xii)
absence of certain material changes or events since December 31, 1998 with
respect to the Company and its subsidiaries and since December 31, 1997 with
respect to Associated and its subsidiaries, relating to the occurrence of a
material adverse effect in the business operations, properties (including
intangible properties), condition (financial or otherwise), assets or
liabilities (including contingent liabilities) of Associated or its
subsidiaries, taken as a whole, and the Company or its subsidiaries, taken as a
whole; (xiii) maintenance by the Company of books of account and accounting
controls, loan documentation and disclosure; (xiv) no action taken that would
prevent the Merger from qualifying as a reorganization under Section
368(a)(1)(A) of the Code; (xv) certain environmental matters relating to the
properties of the Company; (xvi) good title to the properties of the Company and
its subsidiaries, free of liens except as specified; (xvii) certain insurance
matters relating to the Company; and (xviii) absence of substandard or related
party loans by the Bank.
CERTAIN COVENANTS
Pursuant to the Merger Agreement, Associated and the Company have each
agreed that prior to the Effective Time (and unless the prior written consent of
the other shall have been obtained) each of them and their respective
subsidiaries will operate their respective businesses in a manner that does not
violate any law.
Pursuant to the Merger Agreement, the Company has also agreed that
prior to the Effective Time (and unless the prior written consent of Associated
shall have been obtained) the Company and its subsidiaries will (i) carry on
their business only in the usual, regular and ordinary course consistent with
past practices; (ii) use reasonable efforts to preserve intact their business
organization and assets, maintain their rights and franchises, retain the
services of their
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officers and key employees and maintain their relationships with customers;
(iii) use reasonable efforts to maintain and keep their properties good repair
and condition; (iv) use reasonable efforts to keep insurance and bonds in full
force and effect; (v) perform in all material respects all obligations under all
material contracts, leases, and documents relating to or affecting their assets,
properties, and business; (vi) comply with and perform in all material respects
all obligations and duties imposed by all applicable laws; (vii) purchase and
sell securities and other investments in accordance with certain guidelines;
(viii) comply with certain capital requirements; and (ix) maintain as of
December 31, 1998 and thereafter an aggregate loan loss reserve of not less than
1.75% of period ending loans (excluding overdrafts less than 30 days old).
The Company has also agreed that prior to the Effective Time (and
unless the prior written consent of Associated shall have been obtained),
neither the Company nor its subsidiaries will: (i) grant any general increase in
compensation (except in accordance with past practice or as required by law or
increases which are not material), effect any change in retirement benefits to
any class of employees or officers (unless required by applicable law) which
would increase its retirement benefit liabilities, adopt, enter into, amend or
modify any employee benefit plan or make any adjustments pursuant to any
employee benefit plan, or enter into or amend any employment, severance or
similar agreements or arrangements with any directors or officers, other than as
is consistent with the normal severance policies; (ii) declare or pay any
dividend on, or make any other distribution in respect of, its outstanding
shares of capital stock; (iii) 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; (iv) merge with or into any other corporation or
bank, permit any other corporation or bank to merge into it or consolidate with
any other corporation or bank, or effect any reorganization or recapitalization,
purchase or otherwise acquire any assets or stock of any corporation, bank or
other business, liquidate, sell, dispose of, or encumber any assets or acquire
any assets, other than in the ordinary course of its business consistent with
past practice, or split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock; (v) 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; (vi) propose or adopt any amendments to its corporate charter or Bylaws
in any way materially adverse to Associated; (vii) purchase any shares of
Associated Common Stock (except in fiduciary capacities for the account of
customers); (viii) change any of its methods of accounting in effect at December
31, 1998, 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, 1998, except
as may be required by law or generally accepted accounting principles; (ix)
except for the required loan loss reserve, change any lending, investment,
liability management or other material policies concerning the business or
operations of the Company or the Bank in any material respect; organize any new
subsidiaries or enter into any new non-banking line of business whether or not
permissible under applicable federal or state law, or make any material changes
in its operations; (x) incur or assume any material obligation or liability
(excluding deposit liabilities and repurchase agreements in the ordinary course
of business and any loan renewal of a loan not then classified as "substandard,"
"doubtful," "loss," "other loans especially mentioned" or any comparable
classifications) in an amount greater than $1,000,000, (xi) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly, contingent
or otherwise) for the obligations of any other person or entity; (xii) mortgage,
license, pledge or grant a security interest in any of its material assets or
allow to exist any material lien thereon (except for immaterial liabilities and
obligations incurred in the ordinary course of business consistent with past
practices or as may be required under existing agreements to which the Company
or the Bank is a party); (xiii) acquire assets (including equipment) in excess
of $400,000 in the aggregate (excluding loans to customers and investments
permitted above); (xiv) pay, discharge, or satisfy any debts or claims not in
the ordinary course of business and consistent with past practices; (xv) settle
any claim, action, suit, litigation, proceeding, arbitration, investigation or
controversy of any kind, for any amount in excess of $100,000 or in any manner
which would restrict in any material respect the operations or business of the
Company or the Bank; (xvi) purchase any new financial product or instrument
which involves entering into a contract with a term of six months or longer
(excluding loans to customers and investments
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permitted above); (xvii) take any action or fail to take any action which
individually or in the aggregate can be expected to have a material adverse
effect on the Company and the Bank, taken as a whole; or (xviii) incur or pay
legal or accounting, fees in connection with the Merger in excess of an
aggregate of $325,000.
NO SOLICITATION OF TRANSACTIONS
The Merger Agreement provides that the Company and its subsidiaries
will not initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to any Competing Transaction (as defined below) or negotiate
with any person in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize or
permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to take any such action. Notwithstanding the
foregoing, the Board of Directors of the Company is not prohibited from
furnishing or permitting any of its officers, directors, employees, investment
bankers, financial advisors, attorneys, accountants or other representatives to
furnish information to any party that requests information as to the Company if
the Board of Directors of the Company, after consultation with independent legal
counsel, determines in good faith that such action is reasonably required for
the Board of Directors of the Company to comply with its fiduciary duties
imposed by Minnesota law, and if prior to furnishing such information to such
party, the Company receives from such party an executed confidentiality
agreement in reasonably customary form and provides Associated seven days'
notice of the Company's intent to furnish such information.
For purposes of the Merger Agreement, a "Competing Transaction" means
any of the following involving the Company or any of the Company's subsidiaries:
(i) any merger, consolidation, share exchange, business combination, or other
similar transactions; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 10% or more of assets in a single transaction or series
of transactions, excluding from the calculation of such percentage any such
transactions undertaken in the ordinary course of business and consistent with
past practice; (iii) any sale of 10% or more of shares of capital stock (or
securities convertible or exchangeable into or otherwise evidencing, or any
agreement or instrument evidencing, the right to acquire capital stock); (iv)
any tender offer or exchange offer for 10% or more of outstanding shares of
capital stock; (v) any solicitation of proxies in opposition to approval by the
Company's shareholders of the Merger; (vi) the filing of an acquisition
application (or the giving of acquisition notice) whether in draft or final form
under the BHC Act or the Change in Bank Control Act with respect to the Company
or its subsidiaries; (vii) any person shall have acquired beneficial ownership
or the right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 10% or more of the then
outstanding shares of capital stock; or (viii) any public announcement of a
proposal, plan or intention to do any of the foregoing.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of each party to effect the Merger are
subject to various conditions which include, in addition to other customary
closing conditions, the following: (i) the Merger shall have been approved by
the holders of the Company Common Stock; (ii) the Registration Statement shall
have been declared effective by the Commission under the Securities Act (and no
stop order suspending the effectiveness of the Registration Statement shall have
been issued) and Associated shall also have received all other federal and state
securities permits and authorizations necessary to issue Associated Common Stock
pursuant to the Merger Agreement; (iii) the Merger shall have been approved by
the Federal Reserve Board, the Minnesota Department and all other required
regulatory agencies, which approvals shall not contain any condition which is
not reasonably satisfactory to Associated or the Company, and any waiting
periods with respect to the Merger shall have expired; (iv) the shares of
Associated Common Stock to be issued in the Merger have
42
<PAGE> 52
been authorized for listing on the NASDAQ National Market, subject to notice of
issuance, and (v) there shall not be any injunction or restraining order
preventing the consummation of the Merger in effect.
In addition, Associated's or the Company's respective obligation to
effect the Merger is subject to one or more of the following additional
conditions (any of which may be waived by such party): (i) the representations
and warranties of the other party to the Merger Agreement shall be true and
correct in all material respects and the other party shall have performed in all
material respects all agreements and covenants required to be performed by it
under the Merger Agreement and any agreements entered into in connection
therewith, and the other party shall have obtained all material consents and
approvals required to consummate the Merger; (ii) there shall not be any pending
action, proceeding or investigation before any court or administrative agency or
by any government agency or any other person (a) challenging or seeking material
damages in connection with the Merger, or the conversion of the Company Common
Stock into Associated Common Stock pursuant to the Merger, or (b) seeking to
restrain, prohibit or limit the exercise of full rights of ownership or
operation by Associated or its subsidiaries of all or any portion of the
business or assets of the Company or any of its subsidiaries, which in either
case is reasonably likely to have a material adverse effect on either the
Company and its subsidiaries, taken as a whole, or Associated and its
subsidiaries, taken as a whole; (iii) Associated and the Company shall have
received the opinion of independent counsel to Associated that the Merger will
be treated for federal income tax purposes as a "reorganization" within the
meaning of Section 368(a)(1)(A) of the Code (see "The Merger - Certain Material
Federal Income Tax Consequences," above); (iv) the number of shares of
Associated Common Stock which would have been issuable pursuant to the Merger
Agreement that will not be issued due to the exercise of dissenters' rights is
not more than 10% of the maximum aggregate number of shares of Associated Common
Stock which could be issuable as a result of the Merger; (v) Associated and the
Company each shall have received the opinion of counsel to the other party
regarding certain issues under the Securities Act and state corporate law; (vi)
Associated shall have received from each affiliate of the Company a signed
letter regarding certain restrictions on the resale of Associated Common Stock
under Rule 145 of the Securities Act; (vii) Associated shall have received a
written environmental evaluation by Associated's environmental consultant of the
Company's real property stating that the Company's property complies with
environmental laws and that there are no material contingent liabilities or that
the Company shall have taken reasonably appropriate action in response to any
environmental condition identified by Associated's environmental consultant;
(viii) the Company shall have consolidated after-tax earnings for the six months
ending June 30, 1999 of at least $2,200,000 and the Bank shall have after-tax
earnings for the six months ended June 30, 1999 of at least $2,700,000 if the
Merger occurs on or before October 31, 1999 and if the Merger occurs after
October 31, 1999, the Company shall have consolidated after-tax earnings for the
nine months ending September 30, 1999 of at least $3,300,000 and the Bank shall
have after-tax earnings for the nine months ending September 30, 1999 of at
least $4,000,000, in each case excluding certain adjustments relating to loan
loss reserves and expenses related to the Phantom Stock Plan or to the Merger;
(ix) Associated shall be reasonably satisfied that the Company and the Bank have
undertaken a Year 2000 compliance plan designed to comply with applicable
banking regulations; and (x) the Bank shall have provided to Associated evidence
that the Bank has achieved a satisfactory rating and performance under the CRA.
TERMINATION
The Merger Agreement may be terminated at any time prior to the
Effective Time by the applicable Board of Directors, whether before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Company:
1. by mutual consent of Associated and the Company;
2. by either the Company or Associated if (a) there has been a breach
in any material respect of any representation, warranty, covenant or agreement
on the part of the Company, on the one hand, or Associated, on the other hand,
respectively, set forth in the Merger Agreement, or (b) any representation or
warranty of the Company, on the one hand, or Associated, on the other hand,
respectively, shall be discovered to have become untrue in any material respect,
43
<PAGE> 53
in either case which breach or other condition has not been cured within 20
business days following receipt by the non-terminating party of notice of such
breach or other condition (provided that the Merger Agreement may not be
terminated by the breaching party or party making any representation or warranty
which shall have become untrue in any material respect);
3. by either Associated or the Company if any permanent injunction
preventing the consummation of the Merger shall have become final and
nonappealable;
4. by either Associated or the Company if the Federal Reserve Board or
the Minnesota Department denies approval of the Merger and neither Associated
nor the Company has, within 30 days after the entry of such order denying
approval, filed a petition seeking review of such order as provided by
applicable law;
5. by either Associated or the Company if the Merger has not been
consummated by October 25, 1999 for a reason other than the failure of the
terminating party to comply with its obligations under the Merger Agreement;
6. by Associated or the Company if all of the conditions to the
terminating party's obligation to consummate the Merger have not been satisfied
on or before October 25, 1999;
7. by Associated, if at any time prior to the Special Meeting, the
Company's Board of Directors withdraws or modifies or changes in a manner
adverse to the interests of Associated its recommendation to the Company
shareholders to vote in favor of the Merger;
8. by the Company, if the Company enters into a definitive agreement
with a third party immediately after such termination providing for an
Acquisition Transaction (as defined below) on terms determined, in good faith,
by the Board of Directors of the Company, after consultation with independent
counsel and financial advisors, to be such that termination of the Merger
Agreement and entry into such third-party agreement is required in order to
discharge properly the directors' duties in accordance with Minnesota law;
9. by the Company, if the Determination Price (already defined) is less
than $28.50, provided that if the Company makes an election to terminate the
Merger Agreement under this paragraph and Associated agrees that the Conversion
Ratio shall be increased to equal 79,354,686 divided by the Daily Average Price
divided by the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time, then no termination shall have occurred
and the Merger Agreement shall remain in full force and effect in accordance
with its terms (except that the Conversion Ratio shall have been so modified);
or
10. by Associated, if the Determination Price is greater than $41.50,
provided that if Associated makes an election to terminate the Merger Agreement
under this paragraph and the Company agrees that the Conversion Ratio shall be
decreased to equal 97,306,579 divided by the Daily Average Price divided by the
number of shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time, then no termination shall have occurred and the
Merger Agreement shall remain in full force and effect in accordance with its
terms (except that the Conversion Ratio shall have been so modified).
The Merger Agreement defines an "Acquisition Transaction" as a
transaction or series of transactions that, directly or indirectly, in substance
constitutes a disposition of all or substantially all of the assets or business
of the Company or the Bank, taken as a whole, whether by means of (i) a merger
or consolidation, share exchange or any similar transaction, (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition or (iii) a
purchase or other acquisition (including by way of a merger or consolidation,
share exchange or otherwise) of securities representing 50% or more of the
voting power of the Company or 50% or more of the Bank; provided, however, in
each of the situations described in clauses (i), (ii) or (iii), that the
Acquisition Transaction shall represent consideration having an
44
<PAGE> 54
aggregate value (reasonably determined) to the Company or its shareholders in
excess of the consideration to be received in the Merger.
In the event of termination of the Merger Agreement by either the
Company or Associated, other than as a result of a material breach by the
non-terminating party or as described under "The Merger - Termination Fee"
below, each party will pay its own expenses and the Merger Agreement will become
void and there will be no liability or obligation on the part of Associated or
the Company other than under certain specified provisions of the Merger
Agreement dealing with confidential treatment of non-public information. In the
event of termination of the Merger Agreement by a material breach, in addition
to other remedies at law or equity for breach, the party to have breached will
reimburse the non-breaching party's expenses under the Merger Agreement.
TERMINATION FEE
If (i) Associated terminates the Merger Agreement pursuant to the
section of the Merger Agreement described in paragraph 7 of the preceding
section or the Company terminates the Merger Agreement pursuant to the section
of the Merger Agreement described in paragraph 8 of the preceding section and,
in either case, prior thereto or within twelve months after such termination the
Company shall have entered into an agreement to engage in an Acquisition
Transaction, or (ii) the Merger Agreement is terminated by Associated solely due
to the failure of the holders of Company Common Stock to approve the Merger at
the Special Meeting, then the Company will be obligated to pay Associated a fee
equal to $2,670,000. If such fee becomes payable under the circumstances
described in clause (i) above, the Company will be obligated to pay the fee to
Associated within two business days after the date of entering into the
agreement for an Acquisition Transaction and if such fee becomes payable under
the circumstances described in clause (ii) above, the Company will be obligated
to pay the fee to Associated within two business days of termination of the
Merger Agreement.
AMENDMENT AND WAIVER
The Merger Agreement may be amended at any time prior to the Effective
Time by action taken or authorized by the respective Boards of Directors of
Associated and the Company (except that after the Merger Agreement shall have
been approved by the shareholders of the Company, no amendment may be entered
into which would reduce the amount or change the consideration into which each
share of the Company Common Stock shall be converted upon consummation of the
Merger without further shareholder approval). At any time prior to the Effective
Time, either of the parties to the Merger Agreement may extend the time for the
performance of any of the obligations or other acts of the other party, waive
any inaccuracies in the representations and warranties contained in the Merger
Agreement or in any document delivered pursuant to the Merger Agreement and
waive compliance with any of the agreements or conditions contained in the
Merger Agreement.
EXPENSES
Whether or not the Merger is consummated, all costs and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such expense (except
that the parties shall share equally in the expense of printing and filing the
Registration Statement and this Proxy Statement/Prospectus and all Commission
and other regulatory filing fees incurred in connection with the Merger
Agreement), except if the Merger Agreement is terminated due to the breach of
the Merger Agreement by either party thereto, then, in addition to other
remedies at law or equity for breach of the Merger Agreement, the party so found
to have breached the Merger Agreement shall indemnify the other party for its
expenses.
45
<PAGE> 55
CERTAIN INFORMATION CONCERNING ASSOCIATED
Associated is a registered bank holding company pursuant to the BHC
Act. It was incorporated in Wisconsin in 1964 and was inactive until 1969, when
permission was received from the Federal Reserve Board to acquire three banks.
Associated currently owns 9 commercial banks located in Wisconsin, Minnesota and
Illinois serving their local communities and, measured by total assets held at
March 31, 1999, was the third largest commercial bank holding company
headquartered in Wisconsin. As of June 30, 1999, Associated owned 34 nonbanking
subsidiaries located in Arizona, California, Delaware, Illinois, Missouri,
Nevada and Wisconsin.
Associated provides advice and specialized services to its bank and
nonbank subsidiaries (the "Associated Affiliates") in various areas of banking
policy and operations, including auditing, data processing,
marketing/advertising, investing, personnel services, trust services and other
financial services functionally related to banking. Responsibility for the
management of the Associated Affiliates remains with their respective Boards of
Directors and officers. Services rendered to the Associated Affiliates by
Associated are intended to assist the local management of the Associated
Affiliates to expand the scope of the banking services offered by them. At March
31, 1999, bank affiliates of Associated provided services through over 200
locations in over 150 communities.
Associated, through the Associated Affiliates, provides a complete
range of banking services to individuals and small- to medium-sized businesses.
These services include checking and savings accounts, NOW, Super NOW and money
market deposit accounts, business loans, personal loans, residential and
commercial mortgage loans, MasterCard, VISA and other consumer-oriented
financial services, including IRA and Keogh accounts, and safe deposit and night
depository facilities. Automated teller machines ("ATMs"), which provide 24 hour
banking services to customers of the Associated Affiliates, have been installed
in many locations in the Associated Affiliates' service areas. The Associated
Affiliates are members of an interstate shared ATM network which allows their
customers to perform banking transactions from their checking, savings or credit
card accounts at ATM terminals in a multi-state environment. Among the services
designed specifically to meet the needs of businesses are various types of
specialized financing, cash management services and transfer/collection
facilities.
The Associated Affiliates provide lending, depository and related
financial services to commercial, industrial, financial and governmental
customers. Term loans, revolving credit arrangements, letters of credit,
inventory and accounts receivable financing, real estate construction lending
and international banking services are available.
Additional emphasis is given to non-credit services for commercial
customers, such as advice and assistance in the placement of securities,
corporate cash management and financial planning. The Associated Affiliates make
available check clearing, safekeeping, loan participation, lines of credit,
portfolio analyses, data processing and other services to approximately 120
correspondent financial institutions.
Three of the Associated Bank Affiliates, a trust company subsidiary,
and an investment management subsidiary, offer a wide variety of fiduciary,
investment management, advisory and corporate agency services to individuals,
corporations, charitable trusts, foundations and institutional investors. They
also administer (as trustee and in other fiduciary and representative
capacities) pension, profit sharing and other employee benefit plans, and
personal trusts and estates.
Investment subsidiaries provide discount and full-service brokerage
services, including the sale of fixed and variable annuities, mutual funds, and
securities, to the Associated Affiliates' customers and the general public.
Insurance subsidiaries provide commercial and individual insurance services,
including various life, property, casualty, credit, and mortgage products to the
Associated Affiliates' customers and the general public. Several investment
subsidiaries located in Nevada hold, manage, and trade cash, stocks, and
securities transferred from the Associated Affiliates and reinvest investment
income. A leasing subsidiary provides lease financing for a variety of capital
equipment for
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<PAGE> 56
commerce and industry. An appraisal subsidiary provides real estate appraisals
for customers, government agencies, and the general public.
The Associated Affiliates also provide certain mortgage banking
services including the origination and warehousing of mortgage loans and the
sale of loans to investors. The primary focus is on one- to four-family
residential and multi-family properties, all of which the mortgage loans are
salable into the secondary mortgage market.
Associated and the Associated Affiliates are not dependent upon a
single or a few customers, the loss of which would have a material adverse
effect on Associated. No material portion of Associated's or the Associated
Affiliates' business is seasonal.
At March 31, 1999 Associated and the Associated Affiliates, as a group,
employed 3,967 full-time equivalent employees.
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<PAGE> 57
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a bank holding company incorporated under the laws of
the State of Minnesota with its principal office in Minneapolis, Minnesota. The
Company owns all the issued and outstanding stock of Riverside Bancshares
Corporation, a bank holding company incorporated under the laws of the State of
Minnesota. Riverside Bancshares Corporation owns all of the issued and
outstanding stock of the Bank, a state banking corporation under the laws of the
State of Minnesota. As of March 31, 1999, the Company had total assets of
approximately $335.6 million and the Bank had deposits of approximately $297.8
million.
The Bank has offices in Minneapolis, Bloomington, Brooklyn Park and
Plymouth, Minnesota. Each of the offices offers a range of financial services to
commercial and individual customers, including checking accounts, short- and
medium-term loans and various savings programs.
The Company and the Bank are not dependent upon a single or a few
customers, the loss of which would have a material adverse effect on the Company
or the Bank. No material portion of the Company or the Bank's business is
seasonal.
At March 31, 1999, the Company and Bank employed approximately 122
full-time and 10 part-time employees.
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth, as of the Record Date, certain
information regarding the beneficial ownership of the Company Common Stock by
(i) each person who is a beneficial owner of more than 5% of the outstanding
Company Common Stock, (ii) each director of the Company, (iii) each executive
officer of the Company, and (iv) all directors and officers as a group. The
address of the directors and executive officers is the executive offices of the
Company. Except as otherwise noted, the named beneficial owner has sole voting
and/or investment power of the shares of Company Common Stock indicated.
<TABLE>
<CAPTION>
NAME SHARES PERCENT
---- ------ -------
<S> <C> <C>
David E. Cleveland
Director and President (1) 8,366 33.5%
Daniel A. Boeckermann
Director 833.3334 3.3
Michael J. Mollerus
Director and Secretary 833.3333 3.3
Larry A. Perkins
Director and Treasurer 833.3333 3.3
All Directors and Executive Officers
(4 persons) (1) 10,866 43.5
Thomas M. Redmond (2) 13,750 55.0
</TABLE>
- ------------------
(1) Includes 6,125 shares of Company Common Stock held by the Cleveland
Family Limited Partnership (the "Partnership"). Mr. Cleveland is a
General Partner in the Partnership and disclaims beneficial ownership
of these shares, except to the extent of his proportionate partnership
interest in the Partnership. Also includes 2,241 shares of Company
Common Stock held by David E. Cleveland, as trustee under the David E.
Cleveland Revocable Trust for the benefit of Mr. Cleveland.
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(2) Mr. Redmond's address is 4951 South Tierra Del Sol, Las Vegas, Nevada
89113.
EXPERTS
The consolidated financial statements of Associated as of December 31,
1998 and 1997, and for each of the years in the three-year period ended December
31, 1998, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated herein by reference, which are based in part on the
report of Ernst & Young LLP, independent certified public accountants,
incorporated herein by reference, and upon the authority of said firms as
experts in accounting and auditing.
The consolidated financial statements of the Company as of December 31,
1998 and 1997, and for each of the years in the three-year period ended December
31, 1998, have been included herein and in the registration statement in
reliance upon the report of McGladrey & Pullen, LLP, independent certified
public accountants, included herein, and upon the authority of said firm as
experts in accounting and auditing.
LEGAL OPINIONS
The validity of the shares issued in connection with the Merger and
certain other matters will be passed upon for Associated by Reinhart, Boerner,
Van Deuren, Norris & Rieselbach, s.c., Milwaukee, Wisconsin.
Associated has retained Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c.
to render an opinion on the federal income tax consequences of the Merger and in
connection therewith, Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c.
has reviewed the discussion herein entitled "The Merger - Certain Material
Federal Income Tax Consequences." Such opinion has been included in the
registration statement in reliance upon the authority of said firm as experts in
tax matters.
FUTURE SHAREHOLDER PROPOSALS
If the Merger is consummated, shareholders of the Company will become
shareholders of Associated. Proposals of a shareholder submitted pursuant to
Rule 14a-8 of the Securities and Exchange Commission for inclusion in the proxy
statement for Associated's 2000 annual meeting of shareholders must be received
by Associated at its executive offices not later than November 23, 1999.
A shareholder that intends to present business other than pursuant to
Rule 14a-8 at Associated's 2000 annual meeting must comply with the requirements
set forth in Associated's Bylaws. To bring business before an annual meeting,
Associated's Bylaws require, among other things, that the shareholder submit
written notice thereof to Associated's executive offices not less than 60 days
nor more than 75 days prior to the meeting. Therefore, Associated must receive
notice of a shareholder proposal submitted other than pursuant to Rule 14a-8 no
sooner than February 11, 2000, and no later than February 28, 2000. If notice is
received before February 11, 2000, or after February 28, 2000, it will be
considered untimely and the Company will not be required to present such
proposal at the 2000 annual meeting.
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WHERE YOU CAN FIND MORE INFORMATION
Associated files annual, quarterly and special reports, proxy
statements and other information with the Commission. You may read and copy any
such reports, statements or other information 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. Associated's Commission filings are also available to
the public from commercial document retrieval services and at the world wide 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 shareholders of Riverside in the Merger. This Proxy
Statement/Prospectus is a part of the Registration Statement and constitutes a
prospectus of Associated in addition to being a proxy statement of Riverside for
the Special Meeting. As allowed by Commission rules, this 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 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 Proxy Statement/Prospectus, except for any information superseded
by information in this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus incorporates by reference the documents set forth below
that Associated has previously filed with the Commission. These documents
contain important information about Associated and its financial condition.
ASSOCIATED COMMISSION FILINGS PERIOD
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended March 31, 1999
1999 Notice of Annual Meeting and Dated March 23, 1999
Proxy Statement
Description of the Associated Common
Stock set forth in Associated's Registration
Statement pursuant to Section 12 of the
Exchange Act
Associated also is incorporating by reference all additional documents
that it will file with the Commission between the date of this Proxy
Statement/Prospectus and the date of the Special Meeting.
Associated has supplied all information contained or incorporated by
reference in this Proxy Statement/Prospectus relating to Associated, and the
Company has supplied all such information relating to the Company.
Documents which Associated incorporates by reference are available from
Associated without charge, excluding all exhibits unless Associated has
specifically incorporated by reference an exhibit in this Proxy
Statement/Prospectus. Shareholders may obtain documents incorporated by
reference in this Proxy Statement/Prospectus by requesting them in writing or by
telephone from Associated at the following address:
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Associated Banc-Corp
1200 Hansen Road
P.O. Box 13307
Green Bay, WI 54307-3307
(920) 491-7000
If you would like to request documents from Associated, please do so by
____________, 1999 to receive them before the Special Meeting.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS 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 PROXY STATEMENT/PROSPECTUS. THIS PROXY STATEMENT/PROSPECTUS IS
DATED ___________, 1999. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THE PROXY STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE,
AND NEITHER THE MAILING OF THE PROXY STATEMENT/PROSPECTUS TO SHAREHOLDERS NOR
THE ISSUANCE OF ASSOCIATED COMMON STOCK IN THE MERGER SHALL CREATE ANY
IMPLICATION TO THE CONTRARY.
THIS 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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EXHIBITS TO THE PROXY STATEMENT/PROSPECTUS
Exhibit A: Agreement and Plan of Merger
Exhibit A-1: First Amendment to Agreement and Plan of Merger
Exhibit B: Sections 302A.471 and 302A.473 of the Minnesota Business
Corporation Act
Exhibit C: Riverside Acquisition Corp. and Subsidiary Financial
Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations
52
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BETWEEN
ASSOCIATED BANC-CORP
AND
RIVERSIDE ACQUISITION CORP.
March 10, 1999
A-1
<PAGE> 63
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
SECTION 1.01. The Merger..............................................................................A-7
SECTION 1.02. Effective Time..........................................................................A-7
SECTION 1.03. Effect of the Merger....................................................................A-8
SECTION 1.04. Articles of Incorporation and Bylaws....................................................A-8
SECTION 1.05. Directors and Officers..................................................................A-8
SECTION 1.06. Conversion of Securities................................................................A-8
SECTION 1.07. Exchange of Certificates...............................................................A-10
SECTION 1.08. Stock Transfer Books...................................................................A-13
SECTION 1.09. Anti-Dilution Adjustment...............................................................A-13
</TABLE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<TABLE>
<S> <C> <C>
SECTION 2.01. Organization and Qualification of the
Company; RBC; Subsidiary.............................................................A-14
SECTION 2.02. Articles of Incorporation and Bylaws...................................................A-15
SECTION 2.03. Capitalization.........................................................................A-15
SECTION 2.04. Authority..............................................................................A-16
SECTION 2.05. No Conflict; Required Filings and Consents.............................................A-16
SECTION 2.06. Compliance; Permits....................................................................A-17
SECTION 2.07. Banking Reports and Financial Statements...............................................A-18
SECTION 2.08. Absence of Certain Changes or Events...................................................A-19
SECTION 2.09. Absence of Litigation..................................................................A-19
SECTION 2.10. Employee Benefit Plans.................................................................A-20
SECTION 2.11. Employment Contracts; Material Contracts...............................................A-23
SECTION 2.12. Registration Statement.................................................................A-23
SECTION 2.13. Title to Property......................................................................A-23
SECTION 2.14. Compliance with Environmental Laws.....................................................A-24
SECTION 2.15. Absence of Agreements..................................................................A-26
SECTION 2.16. Taxes..................................................................................A-26
SECTION 2.17. Insurance..............................................................................A-27
SECTION 2.18. Absence of Adverse Agreements..........................................................A-28
SECTION 2.19. Internal Controls and Records..........................................................A-28
SECTION 2.20. Loans..................................................................................A-28
</TABLE>
A-2
<PAGE> 64
<TABLE>
<S> <C> <C>
SECTION 2.21. Labor Matters..........................................................................A-29
SECTION 2.22. Brokers................................................................................A-29
SECTION 2.23. Accounting and Tax Matters.............................................................A-29
SECTION 2.24. Year 2000 Compliance...................................................................A-30
SECTION 2.25. Full Disclosure........................................................................A-30
SECTION 2.26. Votes Required.........................................................................A-30
</TABLE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSOCIATED
<TABLE>
<S> <C> <C>
SECTION 3.01. Organization and Qualification.........................................................A-30
SECTION 3.02. Articles of Incorporation and Bylaws...................................................A-31
SECTION 3.03. Capitalization.........................................................................A-31
SECTION 3.04. Authority..............................................................................A-31
SECTION 3.05. No Conflict; Required Filings and Consents.............................................A-32
SECTION 3.06. Compliance; Permits....................................................................A-32
SECTION 3.07. Securities Reports; Financial Statements...............................................A-33
SECTION 3.08. Absence of Certain Changes or Events...................................................A-34
SECTION 3.09. Absence of Litigation..................................................................A-34
SECTION 3.10. Registration Statement.................................................................A-35
SECTION 3.11. Absence of Agreements..................................................................A-35
SECTION 3.12. Taxes..................................................................................A-36
SECTION 3.13. Brokers................................................................................A-36
SECTION 3.14. Accounting and Tax Matters.............................................................A-36
SECTION 3.15. Full Disclosure........................................................................A-36
SECTION 3.16. Absence of Adverse Agreements..........................................................A-37
SECTION 3.17. Year 2000 Compliance...................................................................A-37
</TABLE>
ARTICLE IV
COVENANTS OF THE COMPANY
<TABLE>
<S> <C> <C>
SECTION 4.01. Affirmative Covenants..................................................................A-37
SECTION 4.02. Negative Covenants.....................................................................A-38
SECTION 4.03. Access and Information.................................................................A-42
SECTION 4.04. Affiliates; Accounting and Tax Treatment...............................................A-42
SECTION 4.05. Expenses...............................................................................A-43
SECTION 4.06. Delivery of Shareholder List...........................................................A-43
</TABLE>
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ARTICLE V
COVENANTS OF ASSOCIATED
<TABLE>
<S> <C> <C>
SECTION 5.01. Affirmative Covenants..................................................................A-44
SECTION 5.02. Access and Information.................................................................A-44
SECTION 5.03. Accounting and Tax Treatment...........................................................A-45
</TABLE>
ARTICLE VI
ADDITIONAL AGREEMENTS
<TABLE>
<S> <C> <C>
SECTION 6.01. Registration Statement.................................................................A-45
SECTION 6.02. Meeting of Shareholders................................................................A-46
SECTION 6.03. Appropriate Action; Consents; Filings..................................................A-46
SECTION 6.04. Notification of Certain Matters........................................................A-47
SECTION 6.05. Public Announcements...................................................................A-47
SECTION 6.06. Environmental Matters..................................................................A-47
SECTION 6.07. Employee Benefits......................................................................A-48
SECTION 6.08 Indemnification........................................................................A-48
</TABLE>
ARTICLE VII
CONDITIONS OF MERGER
<TABLE>
<S> <C> <C>
SECTION 7.01. Conditions to Obligation of Each Party to
Effect the Merger....................................................................A-50
SECTION 7.02. Additional Conditions to Obligations of Associated.....................................A-51
SECTION 7.03. Additional Conditions to Obligations of the Company....................................A-55
</TABLE>
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
<TABLE>
<S> <C> <C>
SECTION 8.01. Termination............................................................................A-57
SECTION 8.02. Effect of Termination..................................................................A-60
SECTION 8.03. Amendment..............................................................................A-60
SECTION 8.04. Waiver.................................................................................A-60
</TABLE>
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ARTICLE IX
GENERAL PROVISIONS
<TABLE>
<S> <C> <C>
SECTION 9.01. Non-Survival of Representations, Warranties
and Agreements.......................................................................A-61
SECTION 9.02. Disclosure Schedules...................................................................A-61
SECTION 9.03. Notices................................................................................A-61
SECTION 9.04. Certain Definitions....................................................................A-62
SECTION 9.05. Headings...............................................................................A-63
SECTION 9.06. Severability...........................................................................A-63
SECTION 9.07. Entire Agreement.......................................................................A-63
SECTION 9.08. Assignment.............................................................................A-64
SECTION 9.09. Parties in Interest....................................................................A-64
SECTION 9.10. Governing Law..........................................................................A-64
SECTION 9.11. Counterparts...........................................................................A-64
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
4.01(g) Purchase and Sale of Securities
4.01(h) Capital Requirements
4.04 Affiliate Letter
7.02(e) Legal Opinion of Company Counsel
7.03(e) Legal Opinion of Associated Counsel
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 10, 1999 (the
"Agreement"), between ASSOCIATED BANC-CORP, a Wisconsin corporation
("Associated") and RIVERSIDE ACQUISITION CORP., a Minnesota corporation
("Company").
W I T N E S S E T H:
WHEREAS, the Company is a bank holding company which owns all of the
common stock of Riverside Bancshares Corporation, a Minnesota corporation
("RBC"); and
WHEREAS, RBC is a bank holding company which owns 99.92% of the common
stock of Riverside Bank, a state banking association located in Minneapolis,
Minnesota (the "Bank" or the "Subsidiary"); and
WHEREAS, the Company upon the terms and subject to the conditions of this
Agreement and in accordance with the Wisconsin Business Corporation Law
("Wisconsin Law") and the Minnesota Business Corporation Act ("Minnesota Law"),
will merge with and into Associated (the "Merger"); and
WHEREAS, the Company and its Board of Directors have determined that the
Merger will enhance the ability of the Bank to better serve its existing
depositors and customers and increase the financial strength of the Bank; and
WHEREAS, the Board of Directors of the Company believes that the Merger
with Associated will benefit the shareholders and the employees of the Company,
RBC and the Subsidiary; and
WHEREAS, the respective Boards of Directors of Associated and the Company
have (i) determined that the Merger and the exchange of newly issued shares of
Associated Common Stock (as defined in Section 1.06) for shares of Company
Common Stock (as defined in Section 1.06) pursuant and subject to the terms and
conditions of this Agreement are fair to and in the best interests of the
respective corporations and their shareholders, and (ii) approved and adopted
this Agreement and the transactions contemplated hereby; and
WHEREAS, the Board of Directors of the Company has, subject to its
fiduciary duties under applicable law, resolved to recommend approval of the
Merger by the shareholders of the Company; and
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WHEREAS, Associated and the Company intend to effect a merger that
qualifies for pooling-of-interests accounting treatment and as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Associated and the Company hereby agree as follows:
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 and Minnesota Law,
at the Effective Time (as defined in Section 1.02), the Company shall be merged
with and into Associated. As a result of the Merger, the separate corporate
existence of the Company shall cease and Associated shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time. The parties hereto shall cause the Merger to
be consummated by filing Articles of Merger (the "Articles of Merger") with the
Department of Financial Institutions of the State of Wisconsin and the Secretary
of State of the State of Minnesota, in such form as required by, and executed in
accordance with the relevant provisions of Wisconsin Law and Minnesota Law (a)
after the satisfaction, or if permissible, waiver of conditions set forth in
Article VII, and (b) as promptly as possible within the thirty (30) day period
commencing with the latest of the following dates:
(i) The date of expiration of any applicable waiting period after
approval by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board") under the Bank Holding Company Act of 1956, as amended (the
"BHCA");
(ii) Such date as may be prescribed by the Federal Reserve Board or
any other agency or authority pursuant to applicable law, rules or regulations,
prior to which consummation of the transaction described and referred to herein
may not be effected;
(iii) The date of the shareholders meeting of the Company to vote
upon the Merger pursuant to Section 6.02;
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(iv) If the transaction contemplated by this Agreement is being
contested in any legal proceeding and Associated or the Company has elected to
contest the same, the date that such legal proceeding has been brought to a
conclusion favorable, in the judgment of Associated and the Company, to the
consummation of the transaction contemplated hereby; or
(v) May 31, 1999.
The date and time of the filing of the Articles of Merger or, on such
later date or later time as specified in the Articles of Merger, is hereinafter
referred to as the "Effective Time."
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Wisconsin Law
and Minnesota 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 Associated and the
Company shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Associated and the Company shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04. Articles of Incorporation and Bylaws. At the Effective Time,
the Articles of Incorporation and the Bylaws of Associated, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the Bylaws of the Surviving Corporation.
SECTION 1.05. Directors and Officers. The directors of Associated
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
Associated immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06. Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Associated, the Company or
the holders of any of the following securities:
(a) in the event that the Daily Average Price (as defined below) is
at least $32 but not greater than $38, each share of Common Stock of the
Company, no par value (the "Company Common Stock") (all issued and
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outstanding shares of the Company Common Stock being hereinafter collectively
referred to as the "Shares") issued and outstanding immediately prior to the
Effective Time, (other than any Shares to be canceled pursuant to Section
1.06(b) and other than any Dissenting Shares, as defined in Section 1.06(c))
shall be converted, in accordance with Section 1.07, into the right to receive
that number of shares (carried out to five decimal places and rounded up if the
sixth decimal place is five or greater) of common stock, par value $.01 per
share, of Associated ("Associated Common Stock") equal to 89,100,000 divided by
the Daily Average Price divided by the number of Shares issued and outstanding
immediately prior to the Effective Time. In the event the Daily Average Price is
less than $32, each Share (other than any Shares to be canceled pursuant to
Section 1.06(b) and other than any Dissenting Shares) shall, subject to Section
8.01(a)(xi), be converted, in accordance with Section 1.07, into the right to
receive that number of shares (carried out to five decimal places and rounded up
if the sixth decimal place is five or greater) of Associated Common Stock equal
to 89,100,000 divided by 32 divided by the number of Shares issued and
outstanding immediately prior to the Effective Time. In the event the Daily
Average Price is greater than $38, each Share (other than any Shares to be
canceled pursuant to Section 1.06(b) and other than any Dissenting Shares)
shall, subject to Section 8.01(a)(xii), be converted, in accordance with Section
1.07, into the right to receive that number of shares (carried out to five
decimal places and rounded up if the sixth decimal place is five or greater) of
Associated Common Stock equal to 89,100,000 divided by 38 divided by the number
of Shares issued and outstanding immediately prior to the Effective Time. The
term "Daily Average Price" means the average of the closing prices of a share of
Associated Common Stock as quoted on the NASDAQ National Market during the
ten-day trading period ending on the third business day prior to the day on
which the Effective Time occurs.
As of the Effective Time, all such Shares of the Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each certificate previously representing any such Shares
shall thereafter represent the right to receive a certificate representing
shares of Associated Common Stock into which such Company Common Stock is
convertible. Certificates previously representing shares of Company Common Stock
shall be exchanged for certificates representing whole shares of Associated
Common Stock issued in consideration therefor upon the surrender of such
certificates in accordance with the provisions of Section 1.07, without
interest. No fractional shares of Associated Common Stock shall be issued, and,
in lieu thereof, a cash payment shall be made pursuant to Section 1.07(e)
hereof.
(b) each Share held in the treasury of the Company and each Share
owned by Associated or any direct or indirect wholly-owned subsidiary of
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Associated immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto.
(c) each Share of the Company Common Stock which shall be issued and
outstanding as of the Effective Time and held by a shareholder who has not voted
such Shares in favor of the Merger, who shall have delivered, prior to any vote
on the Merger, a written demand for the fair value of such Shares in the manner
provided in section 302A.473 of Minnesota Law and who, as of the Effective Time,
shall not have effectively withdrawn or lost such right to dissenters' rights,
shall not be converted into and shall not become Associated Common Stock
hereunder (all such shares of the Company Common Stock are hereinafter called
"Dissenting Shares"), but the holders thereof shall be entitled only to such
rights as are granted by section 302A.473 of Minnesota Law. The Company shall
give Associated prompt notice upon receipt by the Company of any written notice
from any such shareholder of the Company ("Dissenting Shareholder"). The Company
agrees that prior to the Effective Time, it will not, except with the prior
written consent of Associated, voluntarily make any payment with respect to, or
settle or offer to settle, any demand for fair value under section 302A.473 of
Minnesota Law. Each Dissenting Shareholder who becomes entitled, pursuant to the
provisions of applicable law, to payment for his or her Shares of the Company
Common Stock pursuant to sections 302A.471 and 302A.473 of Minnesota Law shall
receive payment therefor from Associated (but only after the amount thereof
shall be agreed upon or finally determined pursuant to the provisions of
applicable law). If any Dissenting Shareholder shall fail to perfect or shall
effectively withdraw or lose his or her right to appraisal and payment of his or
her Shares of Company Common Stock, such Dissenting Shareholder shall forfeit
the right to appraisal of such Shares and, at the Effective Time, such Shares
shall be thereupon converted into Associated Common Stock in accordance with the
provisions of Section 1.06(a) and, if applicable, cash under Section 1.07(e).
SECTION 1.07. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Associated shall
deposit, or shall cause to be deposited, with a bank or trust company designated
by Associated and acceptable to the Company (the "Exchange Agent"), and such
deposit shall be solely for the benefit of the holders of Shares, for exchange
in accordance with this Article I through the Exchange Agent, certificates
representing the shares of Associated Common Stock together with an estimated
amount of cash necessary to make payment in lieu of fractional shares (such
certificates for shares of Associated Common Stock, and cash in lieu of
fractional
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shares (if any), together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") issuable pursuant
to Section 1.06 in exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail or personally deliver to each
holder of record (or his or her attorney-in-fact) of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted into the
right to receive shares of Associated Common Stock pursuant to Section 1.06 and
cash in lieu of fractional shares (if any), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Associated may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Associated
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Associated Common Stock which such
holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article I (after taking into account all
Shares then held by such holder) and cash in lieu of fractional shares (if any),
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Shares which is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Associated Common Stock may be issued to a transferee if the Certificate
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Certificates surrendered for
exchange by any affiliate of the Company shall not be exchanged for certificates
representing shares of Associated Common Stock until Associated has received a
written agreement from such person as provided in Section 4.04 hereof. Until
surrendered as contemplated by this Section 1.07, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of Associated
Common Stock and cash in lieu of any fractional shares of Associated Common
Stock as contemplated by Section 1.07(e).
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time with respect to
Associated Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the
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shares of Associated Common Stock represented thereby, and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
1.07(e), until the holder of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
whole shares of Associated Common Stock issued in exchange therefor, without
interest, (i) promptly, the amount of any cash payable with respect to a
fractional share of Associated Common Stock to which such holder is entitled
pursuant to Section 1.07(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Associated Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions, with a record date
after the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of Associated Common
Stock.
(d) No Further Rights in the Shares. All shares of Associated Common
Stock issued upon conversion of the Shares in accordance with the terms hereof
(including any cash paid pursuant to Section 1.07(e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or scrip representing
fractional shares of Associated Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share interest will not
entitle the owner thereof to vote or to any rights of a shareholder of
Associated. Each holder of a fractional share interest shall be paid an amount
in cash equal to the product obtained by multiplying such fractional share
interest to which such holder (after taking into account all fractional share
interests then held by such holder) would otherwise be entitled by the Daily
Average Price.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of the Company for six months
after the Effective Time shall be delivered to Associated, upon demand, and any
shareholders of the Company who have not theretofore complied with this Article
I shall thereafter look only to Associated for payment of their claim for
Associated Common Stock, any cash in lieu of fractional shares of Associated
Common Stock and any dividends or distributions with respect to Associated
Common Stock.
(g) No Liability. Neither Associated or the Company shall be liable
to any holder of Shares for any such Shares (or dividends or distributions with
respect thereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar law.
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(h) Withholding Rights. Associated shall be entitled to deduct and
withhold from any cash consideration payable pursuant to this Agreement to any
holder of Shares such amounts as Associated is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Associated, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Associated.
SECTION 1.08. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. From and after the Effective Time, the holders of
certificates evidencing ownership of shares of the Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided herein or by
law. On or after the Effective Time, any Certificates presented to the Exchange
Agent or Associated for any reason shall be converted into shares of Associated
Common Stock in accordance with this Article I.
SECTION 1.09. Anti-Dilution Adjustment. If, subsequent to the date hereof
and prior to the Effective Time, Associated shall pay a stock dividend or make a
distribution on Associated Common Stock or other capital stock of Associated in
shares of Associated Common Stock or any security convertible into Associated
Common Stock 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
resulting from such combination or subdivision, an appropriate adjustment (if
any) shall be made to the conversion formula set forth in Section 1.06 above,
for purposes of determining the number of shares of Associated Common Stock into
which the Company Common Stock shall be converted. For purposes hereof, the
payment of a dividend in Associated Common Stock, or the distribution on
Associated Common Stock in securities convertible into Associated Common Stock,
shall be deemed to have effected an increase in the number of outstanding shares
of Associated Common Stock equal to the number of shares of Associated Common
Stock into which such securities shall be initially convertible without the
payment by the holder thereof of any consideration other than the surrender for
cancellation of such convertible securities. Notwithstanding the foregoing, this
Section shall not apply to any shares of Associated Common Stock reserved for
issuance under option plans of Associated as of the date of this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule attached hereto (the
"Company Disclosure Schedule"), the Company hereby represents and warrants to
Associated that:
SECTION 2.01. Organization and Qualification of the Company; RBC;
Subsidiary. The Company and RBC are corporations duly organized and validly
existing under the laws of the State of Minnesota. The Bank is a duly organized
and validly existing state banking association under the laws of the State of
Minnesota. The Bank is and has been the only subsidiary of RBC. RBC and the Bank
are and have been the only direct or indirect subsidiaries of the Company. The
Company, RBC and the Subsidiary each has the requisite corporate power and
authority and are in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Company Approvals") necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing or in good standing or to have such power, authority
and Company Approvals would not, individually or in the aggregate, have a
Material Adverse Effect (as defined below) on the Company, RBC and the
Subsidiary, taken as a whole. The term "Material Adverse Effect" as used in this
Agreement shall mean any change or effect that is or is reasonably likely to be
materially adverse to a party's business, operations, properties (including
intangible properties), condition (financial or otherwise), assets or
liabilities (including contingent liabilities) 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. The Company has not received
any notice of proceedings relating to the revocation or modification of any
Company Approvals. The Company and RBC are each duly qualified or licensed as a
foreign corporation to do business, and are in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
them or the nature of their activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on the Company, RBC and the Subsidiary, taken as a
whole. The Company and RBC are registered with the Federal Reserve Board as one
bank holding companies under the BHCA. Neither the Company nor RBC holds any
interest, either directly or indirectly, in any other entity except, in the case
of the Company, RBC and the Subsidiary, and, in the case of RBC, the
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Subsidiary. The Bank holds no interest, either directly or indirectly, in any
other entity.
SECTION 2.02. Articles of Incorporation and Bylaws. The Company has
heretofore furnished to Associated complete and correct copies of the Articles
of Incorporation and the Bylaws, as amended or restated, of the Company, RBC and
the Subsidiary and such Articles of Incorporation and Bylaws of the Company, RBC
and the Subsidiary are in full force and effect and neither the Company, RBC nor
the Subsidiary is in violation of any of the provisions of its Articles of
Incorporation or Bylaws.
SECTION 2.03. Capitalization.
(a) Capitalization of the Company. The authorized capital stock of
the Company consists of 100,000 shares of Common Stock, no par value. As of the
date of this Agreement, (i) 25,000 shares of Common Stock are issued and
outstanding, all of which are validly issued, fully paid and non-assessable, and
all of which have been issued in compliance with applicable securities laws, and
(ii) no shares of Common Stock are held in the Company's treasury. Except as set
forth in the Company's Disclosure Schedule at Section 2.03(a), as of the date of
this Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or obligating the Company to issue or sell any
shares of capital stock of, or other equity interests in the Company. There are
no obligations, contingent or otherwise, of the Company to repurchase, redeem or
otherwise acquire any shares of the capital stock of the Company or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any other entity.
(b) Capitalization of RBC. The authorized capital stock of RBC
consists of 25,000 shares of Common Stock, par value $1 per share. As of the
date of this Agreement, (i) 25,000 shares of Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
all of which have been issued in compliance with applicable securities laws and
(ii) no shares of Common Stock are held in RBC's treasury. Except as set forth
in the Company's Disclosure Schedule at Section 2.03(b), as of the date of this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of RBC or obligating RBC to issue or sell any shares of capital
stock of, or other equity interests in RBC. There are no obligations, contingent
or otherwise, of RBC to repurchase, redeem or otherwise acquire any shares of
the capital stock of RBC or to provide
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funds to or make any investment (in the form a loan, capital contribution or
otherwise) in any other entity. The Company owns all of RBC's Common Stock.
(c) Capitalization of the Bank. The authorized capital stock of the
Bank consists of 15,000 shares of Common Stock, par value $50 per share. As of
the date of this Agreement, (i) 15,000 shares of the Bank's Common Stock are
issued and outstanding, all of which are validly issued, fully paid and
non-assessable, and all of which have been issued in compliance with applicable
securities laws, and (ii) except as reflected on the Company's Disclosure
Schedule at Section 2.03(c), the RBC owns all of the Bank's Common Stock. As of
the date of this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Bank or obligating the Bank to issue or sell
any shares of capital stock of, or other equity interests in the Bank. There are
no obligations, contingent or otherwise, of the Bank to repurchase, redeem or
otherwise acquire any shares of the Bank's 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.
SECTION 2.04. Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby (other than, with respect to the
Merger, the approval and adoption of this Agreement by the holders of a majority
of the voting power of all the outstanding shares of the Company Common Stock,
in accordance with Minnesota Law and the Company's Articles of Incorporation and
Bylaws and the filing of the appropriate merger documents required by Minnesota
Law and Wisconsin Law). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Associated, constitutes the legal, valid and binding obligation of
the Company enforceable in accordance with its terms.
SECTION 2.05. No Conflict; Required Filings and Consents.
(a) To the knowledge of the Company, the execution and delivery of
this Agreement by the Company does not, and the performance of this Agreement by
the Company shall not, (i) conflict with or violate the Articles of
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Incorporation or Bylaws of the Company, RBC or the Subsidiary, (ii) conflict
with or violate any domestic (federal, state or local) or foreign law, statute,
ordinance, rule, regulation, order, judgment or decree (collectively, "Laws")
applicable to the Company, RBC or the Subsidiary, or by which their respective
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company, RBC or the
Subsidiary pursuant to any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company, RBC or the Subsidiary is a party or by which the Company, RBC or the
Subsidiary or any of their respective properties are bound or affected, except
for any such breaches, defaults or other occurrences that would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
RBC and the Subsidiary, taken as a whole.
(b) To the knowledge of the Company, the execution and delivery of
this Agreement by the Company does not, and the performance of this Agreement by
the Company shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Securities Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange of 1934, as amended (the "Exchange Act"), state securities or blue sky
laws ("Blue Sky Laws"), BHCA, the banking laws and regulations of the State of
Minnesota (the "BL") and of the State of Wisconsin, the filing and recordation
of appropriate merger or other documents as required by Wisconsin Law and
Minnesota Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent the Company
from performing its obligations under this Agreement, and would not have a
Material Adverse Effect on the Company, RBC and the Subsidiary, taken as a
whole.
SECTION 2.06. Compliance; Permits. To the knowledge of the Company,
neither the Company, RBC nor the Subsidiary is in conflict with, or in default
or violation of, (a) any Law applicable to the Company, RBC or the Subsidiary or
by which any of their respective properties are bound or affected, or (b) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company, RBC or the
Subsidiary is a party or by which the Company, RBC or the Subsidiary or any of
their respective properties are bound or affected, except for any such
conflicts, defaults or
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violations which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, RBC and the Subsidiary, taken as a whole.
SECTION 2.07. Banking Reports and Financial Statements.
(a) The Company, RBC and the Subsidiary have timely filed all forms,
reports and documents together with any amendments required to be made with
respect thereto that were required to be filed with the Federal Reserve Board,
the Minnesota Department of Commerce Financial Examinations Division and any
other applicable federal or state securities or banking authorities (all such
reports and statements and amendments thereto are collectively referred to as
the "Company Reports"). The Company Reports, including all Company Reports filed
after the date of this Agreement, (i) were or will be prepared in accordance
with the requirements of applicable law and (ii) did not at the time they were
filed, or will not at the time they are filed, contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Company Reports,
including any Company Reports filed since the date of this Agreement and prior
to or on the Effective Time, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presents the consolidated financial position of the Company, RBC and the
Subsidiary as of the respective dates thereof and the consolidated results of
their operations and changes in financial position for the periods indicated,
except that any unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company, RBC and the Subsidiary as of December 31, 1998,
including all notes thereto (the "Company Balance Sheet"), neither the Company,
RBC nor the Subsidiary has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except (i) for liabilities or
obligations incurred in the ordinary course of business since December 31, 1998,
that would not, individually or in the aggregate have a Material Adverse Effect
on the Company, RBC and the Subsidiary, taken as a whole, or (ii) as otherwise
reflected in the reports referred to in Section 2.07(a) hereof.
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SECTION 2.08. Absence of Certain Changes or Events. Except as disclosed in
the Company Reports filed prior to the date of this Agreement, since December
31, 1998, to the date of this Agreement, the Company, RBC and the Subsidiary
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since December 31, 1998, there has not been
(a) any change in the financial condition, results of operations or business of
the Company, RBC or the Subsidiary having a Material Adverse Effect on the
Company, RBC and the Subsidiary, taken as a whole, (b) any damage, destruction
or loss (whether or not covered by insurance) with respect to any assets of the
Company, RBC or the Subsidiary having a Material Adverse Effect on the Company,
RBC and the Subsidiary, taken as a whole, (c) any change by the Company, RBC or
the Subsidiary in its accounting methods, principles or practices, except for
compliance with applicable new requirements of the Financial Accounting
Standards Board, (d) any revaluation by the Company, RBC or the Subsidiary of
any of its material assets in any material respect, (e) except in the ordinary
course of business, any entry by the Company, RBC or the Subsidiary into any
commitment or transaction material to the Company, RBC and the Subsidiary, taken
as a whole, (f) any declaration, setting aside or payment of any dividends or
distributions in respect of shares of the Company Common Stock or any
redemption, purchase or other acquisition of any of its securities or any of the
securities of RBC or the Subsidiary, or (g) any increase in or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including, without limitation, the granting of
stock options, stock appreciation rights, performance awards, or restricted
stock awards), stock purchase or other employee benefit plan, or any other
increase in compensation payable or to become payable to any officers or key
employees of the Company, RBC or the Subsidiary.
SECTION 2.09. Absence of Litigation. Except as disclosed in the Company
Disclosure Schedule at Section 2.09 or in the Company Reports filed prior to the
date of this Agreement: (a) neither the Company, RBC nor the Subsidiary is
subject to any continuing order of, or written agreement or memorandum of
understanding with, or continuing material investigation by, any federal or
state banking authority or other governmental entity, or any judgment, order,
writ, injunction, decree or award of any governmental entity or arbitrator,
including, without limitation, cease-and-desist or other orders of any bank
regulatory authority, (b) there is no claim of any kind, action, suit,
litigation, proceeding, arbitration, investigation, or controversy affecting the
Company, RBC or the Subsidiary pending or, to the knowledge of the Company,
threatened, except for matters which (i) as of the date of this Agreement
individually seek damages not in excess of $20,000 and (ii) otherwise will not
have, and cannot reasonably
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be expected to have, a Material Adverse Effect on the Company, RBC and the
Subsidiary, taken as a whole, and (c) there are no uncured material violations,
or violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to the Company, RBC or the Subsidiary
as a result of the examination by any bank regulatory authority.
SECTION 2.10. Employee Benefit Plans.
(a) The Company Disclosure Schedule at Section 2.10 lists all
"employee pension benefit plans," as such term is defined in section 3(2) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), maintained, sponsored
or contributed to by the Company, RBC or the Subsidiary (the "Pension Plans").
The term "Pension Plan" shall include the trusts and other funding vehicles
related to the Pension Plans. The term "Pension Plan" shall also include any
terminated "employee pension benefit plan" previously maintained, sponsored or
contributed to by the Company, RBC or the Subsidiary which, as of the Effective
Time, has not distributed all of its assets in full satisfaction of accrued
benefits and/or obligations.
(b) The Company Disclosure Schedule at Section 2.10 lists all
"employee welfare benefit plans," as defined in ERISA section 3(1), maintained,
sponsored or contributed to by the Company, RBC or the Subsidiary (the "Welfare
Plans"). The term "Welfare Plan" shall include the trusts and other funding
vehicles related to the Welfare Plans. The term "Welfare Plans" shall also
include any terminated employee welfare benefit plan previously maintained,
sponsored or contributed to by the Company, RBC or the Subsidiary which, as of
the Effective Time, has not distributed all of its assets and/or satisfied all
of its obligations.
(c) The Company Disclosure Schedule at Section 2.10 lists all plans
or programs to provide fringe benefits to the Company's, RBC's and the
Subsidiary's employees (other than Pension Plans and Welfare Plans) including,
but not limited to, vacation, sick leave, severance pay, nonqualified deferred
compensation plans and other insurance plans or benefits (the "Fringe Benefit
Plans").
(d) The Company has furnished or otherwise made available to
Associated true and complete copies of the documents governing each of the
Pension Plans and Welfare Plans as in effect at the Effective Time.
(e) The Company has furnished or otherwise made available to
Associated true and complete copies of the documents governing each Fringe
Benefit Plan.
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(f) The Company has no announced or unannounced plan to change any
Pension Plan, Welfare Plan or Fringe Benefit Plan that would materially affect
any Pension Plan, Welfare Plan or Fringe Benefit Plan. As of the Effective Time,
neither the Company, RBC nor the Subsidiary has made any material modification,
within the meaning of ERISA section 102 and the regulations thereunder, to any
existing Pension Plan, Welfare Plan or Fringe Benefit Plan which is not set
forth in the Pension Plan, Welfare Plan or Fringe Benefit Plan documents
provided or otherwise made available to Associated.
(g) For purposes of this section 2.10 the "Company" shall include
the Company, RBC, the Subsidiary and all members of any controlled group of
corporations (within the meaning of Code section 414(b), relevant Treasury
Regulations and Pension Benefit Guaranty Corporation regulations issued pursuant
to ERISA section 4001), any group of trades or businesses under common control
(within the meaning of Code section 414(c), relevant Treasury Regulations and
Pension Benefit Guaranty Corporation regulations issued pursuant to ERISA
section 4001) and any affiliated service group (within the meaning of Code
section 414(m), relevant Treasury Regulations and proposed Treasury Regulations)
of which Company, RBC or the Subsidiary is a member.
(h) Neither the Company, RBC nor the Subsidiary has ever been
obligated to contribute to any multiemployer plan within the meaning of ERISA
section 3(37).
(i) To the knowledge of the Company, the Pension Plans, Welfare
Plans and Fringe Benefit Plans including the trusts and other funding vehicles
related to the Pension Plans, Welfare Plans and Fringe Benefit Plans have been
administered in all respects in compliance with the applicable requirements of
ERISA, the Code, the plan documents and all other applicable rules, regulations
and laws. The Pension Plans, Welfare Plans and Fringe Benefit Plans, including
the trusts or other funding vehicles related to the Pension Plans, Welfare Plans
and Fringe Benefit Plans, meet all applicable requirements, in form and in
operation, for favorable tax treatment under the Code. All required
contributions pursuant to the Pension Plans, Welfare Plans and Fringe Benefit
Plans for all periods prior to the Effective Time have been made or will be made
prior to the Effective Time. There are no pending or, to the knowledge of the
Company, threatened claims, lawsuits or arbitrations which have been asserted or
instituted against the Pension Plans, Welfare Plans or Fringe Benefit Plans or
any fiduciaries thereof with respect to their duties to the Pension Plans,
Welfare Plans or Fringe Benefit Plans, including the assets of any of the trusts
under any Pension Plans, Welfare Plans or Fringe Benefit Plans. No
representations or communications with respect to
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participation, eligibility for benefits, vesting, benefit accrual or coverage
under the Pension Plans, Welfare Plans or Fringe Benefit Plans have been made to
the Company's, RBC's or the Subsidiary's employees other than those which are in
accordance with the terms of such Pension Plans, Welfare Plans or Fringe Benefit
Plans in effect immediately prior to the Effective Time.
(j) There are no outstanding issues with respect to the Pension
Plans, Welfare Plans or Fringe Benefit Plans pending before the Internal Revenue
Service, Department of Labor or the Pension Benefit Guaranty Corporation
("PBGC"). Each Pension Plan has been amended to conform to applicable law,
including Taxpayer Reform Act of 1986, Omnibus Reconciliation Act of 1989,
Unemployment Compensation Amendments of 1992 and Omnibus Reconciliation Act of
1993 and has received a favorable determination letter from the Internal Revenue
Service with respect to these laws. With respect to each Pension Plan, Welfare
Plan and Fringe Benefit Plan, all reporting and disclosure requirements have
been met for all years.
(k) With respect to each Pension Plan, Welfare Plan and Fringe
Benefit Plan, the Company has furnished or otherwise made available to
Associated any written descriptions regarding adopted administrative procedures
that may have established a precedent upon which participants, beneficiaries or
alternate payees may rely.
(l) With respect to any Welfare Plan which is a "group health plan"
as defined in Code section 4980B, the Company, RBC and the Subsidiary have
materially complied with the continuation coverage requirements of Code section
4980B for any periods prior to the Effective Time.
(m) With respect to each Pension Plan, Welfare Plan and Fringe
Benefit Plan, the Company has furnished or otherwise made available to
Associated copies of any investment management agreements, fiduciary insurance
policies, fidelity bonds, rules, regulations or policies of the trustees or any
committee thereunder, all of which are true and complete.
(n) Since December 31, 1974, no fiduciary of the Pension Plans or
Welfare Plans has engaged in any "prohibited transaction" (as defined in ERISA
section 406 or Code section 4975) nor has any fiduciary breached any fiduciary
responsibility, as described in Part 4 of Title I of ERISA with respect to such
Pension Plans or Welfare Plans.
(o) The Company has no knowledge of the occurrence of any event with
respect to any Pension Plan which could result in a liability of the
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Company, RBC or the Subsidiary or any member of the Company's controlled group
to the PBGC, other than the timely payment of premiums pursuant to section 4007
of ERISA. All required PBGC premiums have been paid for the periods through the
Effective Time.
(p) No Welfare Plan or Fringe Benefit Plan provides any form of
post-retirement health benefits to retired employees of the Company, RBC or the
Subsidiary, other than benefits required to be provided pursuant to Code section
4980B.
SECTION 2.11. Employment Contracts; Material Contracts. As of the date of
this Agreement, neither the Company, RBC nor the Subsidiary is a party to or
bound by (a) any employment or consulting contract, (b) any contract or
commitment for capital expenditures in excess of $20,000.00 for any one (1)
project, or (c) contracts or commitments for the purchase of materials or
supplies or for the performance of services over a period of more than 60 days
from the date of this Agreement requiring a payment or aggregate payments in
excess of $20,000 per annum.
SECTION 2.12. Registration Statement. None of the information supplied or
to be supplied by the Company for inclusion in (a) the Registration Statement
(as defined in Section 6.01), (b) the Prospectus (as defined in Section 6.01),
or (c) any other document to be filed with the Securities and Exchange
Commission (the "SEC") or other regulatory authority in connection with the
transactions contemplated hereby, at the respective times such documents are
filed and, in the case of the Registration Statement, when it becomes effective
and at the Effective Time, and with respect to the Prospectus, when mailed and
at the time of the Meeting (as provided in Section 6.02), shall be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading.
SECTION 2.13. Title to Property. The Company Disclosure Schedule at
Section 2.13 correctly identifies all real property owned and leased by the
Company, RBC and the Subsidiary. The Company, RBC and the Subsidiary have good
and defensible title to all of their properties and assets, real and personal,
tangible and intangible free and clear of all mortgage liens, and free and clear
of all other liens, charges and encumbrances except liens for taxes not yet due
and payable, pledges to secure deposits and such minor imperfections of title,
if any, as to not materially detract from the value of or interfere with the
present use of the property affected thereby or which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company, RBC and the
Subsidiary, taken as a whole; and all leases pursuant to which the Company, RBC
or the Subsidiary
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leases from others real or personal property including, without limitation,
leases for branch offices, are in good standing, valid and effective in
accordance with their respective terms, and there is not or there has not
occurred, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would constitute
a material default and in respect of which the Company, RBC or the Subsidiary
has not taken adequate steps to prevent such a default from occurring). The
Company's, RBC's and the Subsidiary's buildings and equipment in regular use
have been reasonably maintained and are in good and serviceable condition,
reasonable wear and tear excepted. None of the buildings, structures or
appurtenances owned or leased by the Company, RBC or the Subsidiary for their
operation or maintenance as now operated or maintained, contravenes any zoning
ordinances or other administrative regulations (whether or not permitted because
of prior non-conforming use) or violates any restrictive covenant or any
provision of law, the effect of which would materially interfere with or prevent
the continued use of such properties for the purposes for which they are now
being used or would materially and adversely affect the value thereof.
SECTION 2.14. Compliance with Environmental Laws.
(a) The term "Company's Property" shall mean any real property and
improvements currently owned, leased, used, operated or occupied by the Company,
RBC or the Subsidiary. The term "Company's Property" shall also include any real
property or improvements acquired by foreclosure, properties which the Bank has
a present right to acquire upon foreclosure and which are owned by customers of
the Bank who have received written notification of default and properties held
or operated in a fiduciary or managerial capacity;
(b) The term "Environmental Claims" shall mean any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any applicable Environmental Law or
Environmental Permit;
(c) The term "Environmental Laws" shall mean all federal, state and
local laws including statutes, regulations and other governmental restrictions
and requirements relating to the discharge of air pollutants, water pollutants
or process wastewater or the disposal of solid or hazardous substances/waste or
otherwise relating to the environment or hazardous substances or employee health
and safety.
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(d) The term "Environmental Permits" shall mean all permits,
approvals, identification numbers, licenses and other authorizations required
under any applicable Environmental Law.
(e) The term "Hazardous Substances" shall mean all hazardous and
toxic substances, wastes and materials; any pollutants or contaminants
(including, without limitation, petroleum products, asbestos and raw materials
which include hazardous constituents); and any other similar substances or
materials which are regulated under applicable Environmental Laws.
(f) The Environmental Permits (if any) are in full force and effect
and constitute all permits, licenses, approvals and consents relating to
Environmental Laws or Hazardous Substances required for the conduct of the
Company's, RBC's and the Subsidiary's businesses and the use of the Company's
Property (as presently conducted and used) in compliance with applicable
Environmental Laws.
(g) The Company, RBC or the Subsidiary has filed all notices,
reports, returns and other filings required to be filed with respect to the
Company's Property under Environmental Laws and the Environmental Permits except
where the failure to do so would not have a Material Adverse Effect on the
Company's, RBC's and the Subsidiary's businesses or financial condition, taken
as a whole. The Company, RBC and/or the Subsidiary has made no environmental
filings after January 1, 1997.
(h) To the knowledge of the Company, the business of the Company,
RBC and the Subsidiary and the Company's Property have been and are being
operated by the Company, RBC and Subsidiary in accordance with all applicable
Environmental Laws and Environmental Permits. Neither the Company, RBC nor the
Subsidiary has received any written notice nor does the Company, RBC or the
Subsidiary have knowledge that the Company's Property is not in material
compliance with all Environmental Laws and Environmental Permits. No proceeding
for the suspension, revocation or cancellation of any Environmental Permit is
pending or, to the knowledge of the Company, threatened.
(i) There are no actions pending, or to the knowledge of the
Company, threatened against the Company, RBC or the Subsidiary (naming the
Company, RBC or the Subsidiary), which in any case assert or allege (i) the
Company, RBC or the Subsidiary violated any Environmental Law or Environmental
Permit or are in default with respect to any Environmental Permit or any order,
writ, judgment, variance, award or decree of any government authority; (ii) the
Company, RBC or the Subsidiary is required to clean up or take
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remedial or other response action due to the presence, disposal, discharge or
other release of any Hazardous Substance on the Company's Property or elsewhere;
or (iii) the Company, RBC or the Subsidiary is required to contribute to the
cost of any past, present or future cleanup or remedial or other response action
which arises out of or is related to the generation, transportation, disposal,
discharge or other release or any Hazardous Substance by the Company, RBC, the
Subsidiary or others. The Company, RBC, the Subsidiary and the Company's
Property are not subject to any deed or well notice/restriction, use condition,
notice, claim, lien, judgment, stipulation, order, decree or agreement arising
under Environmental Laws or the Environmental Permits.
(j) With respect to the period during which the Company, RBC or the
Subsidiary occupied the Company's Property, (i) no Hazardous Substances have
been treated, recycled or disposed of by the Company, RBC or the Subsidiary
(intentionally or unintentionally) on, under or at the Company's Property; (ii)
there has been no release or threatened release by the Company, RBC or the
Subsidiary of any Hazardous Substance on or from the Company's Property; (iii)
to the knowledge of the Company, there have been no activities on the Company's
Property which would subject Associated, RBC, the Subsidiary or any subsequent
occupier of the Company's Property to claims, use restrictions prohibiting or
restricting present use, damages, penalties, injunctive relief or cleanup costs
under any Environmental Laws or common law theory of liability.
SECTION 2.15. Absence of Agreements. Neither the Company, RBC nor the
Subsidiary is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter which restricts materially the conduct of its business
(including any contract containing covenants which limit the ability of the
Company, RBC or the Subsidiary to compete in any line of business or with any
person or which involve any restriction of the geographical area in which, or
method by which, the Company, RBC or the Subsidiary may carry on its business),
or in any manner relates to its capital adequacy, its credit policies or its
management nor has the Company, RBC or the Subsidiary been advised that any
federal, state or governmental agency is contemplating issuing or requesting (or
is considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission.
SECTION 2.16. Taxes. The Company, RBC and the Subsidiary have timely filed
all Tax Returns (as defined below) required to be filed by them, and the
Company, RBC and the Subsidiary have timely paid and discharged all Taxes
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(as defined below) due in connection with or with respect to the filing of such
Tax Returns and have timely paid all other Taxes as are due, except such as are
being contested in good faith by appropriate proceedings and with respect to
which the Company is maintaining reserves adequate for their payment. To the
knowledge of the Company, the liability for Taxes set forth on each such Tax
Return adequately reflects the Taxes required to be reflected on such Tax
Return. For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
charges, fees levies, and other governmental assessments and impositions of any
kind, payable to any federal, state, local or foreign governmental entity or
taxing authority or agency, including, without limitation, (a) income,
franchise, profits, gross receipts, estimated, ad valorem, value added, sales,
use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes, (b) customs
duties, imposts, charges, levies or other similar assessments of any kind, and
(c) interest, penalties and additions to tax imposed with respect thereto, and
"Tax Returns" shall mean returns, reports, and information statements with
respect to Taxes required to be filed with the United States Internal Revenue
Service (the "IRS") or any other governmental entity or taxing authority or
agency, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns. Neither the IRS nor any other governmental
entity or taxing authority or agency is now asserting, either through audits,
administrative proceedings, court proceedings or otherwise, or, to the knowledge
of the Company, threatening to assert against the Company, RBC or the Subsidiary
any deficiency or claim for additional Taxes. Neither the Company, RBC nor the
Subsidiary has granted any waiver of any statute of limitations with respect to,
or any extension of a period for the assessment of, any Tax. There are no tax
liens on any assets of the Company, RBC or the Subsidiary except liens for
current Taxes not yet due. Neither the Company, RBC nor the Subsidiary has
received a ruling or entered into an agreement with the IRS or any other
governmental entity or taxing authority or agency that would have a Material
Adverse Effect on the Company, RBC and the Subsidiary, taken as a whole, after
the Effective Time. The accruals and reserves for taxes reflected in the Company
Balance Sheet are adequate to cover all Taxes accruable by the Company, RBC and
the Subsidiary on a consolidated basis through the date thereof (including Taxes
being contested) in accordance with generally accepted accounting principles.
Except as may be set forth in the Company Disclosure Schedule at Section 2.16,
no agreements relating to allocating or sharing of Taxes exist between the
Company, RBC and/or the Subsidiary.
SECTION 2.17. Insurance. Complete and correct copies of all material
policies of fire, product or other liability, workers' compensation, directors
and
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officers, financial institutions bond, errors and omissions and all other
similar forms of insurance owned or held by the Company, RBC and the Subsidiary
have been delivered or made available to Associated. Subject to expirations and
renewals of insurance policies in the ordinary course of business, all such
policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date as of which this
representation is being made have been paid (other than retrospective premiums
which may be payable with respect to workers' compensation insurance policies),
and no notice of cancellation or termination has been received with respect to
any such policy. Such policies are and shall remain valid, outstanding and
enforceable policies, and will not be terminated prior to the Effective Time. To
the knowledge of the Company, the insurance policies to which the Company, RBC
or the Subsidiary are parties are sufficient for compliance with all material
requirements of law and all material agreements to which the Company, RBC and
the Subsidiary are parties and will be maintained by the Company, RBC and the
Subsidiary until the Effective Time. Neither the Company, RBC nor the Subsidiary
has been refused any insurance with respect to any material assets or
operations, nor has coverage been limited in any respect material to their
operations by any insurance carrier to which they have applied for any such
insurance or with which they have carried insurance during the last five (5)
years.
SECTION 2.18. Absence of Adverse Agreements. Neither the Company, RBC nor
the Subsidiary is a party to any agreement or instrument or any judgment, order
or decree or any rule or regulation of any court or other governmental agency or
authority which materially and adversely affects or could reasonably be expected
to materially and adversely affect in the future the financial condition,
results or operations, assets, business or prospects of the Company, RBC and the
Subsidiary, taken as a whole, except for such judgments, orders, decrees, rules
or regulations affecting financial institutions and their holding companies
generally.
SECTION 2.19. Internal Controls and Records. The Company, RBC and the
Subsidiary maintain books of account which accurately and validly reflect, in
all material respects, all loans, mortgages, collateral and other business
transactions and maintain accounting controls sufficient to ensure that all such
transactions are (a) in all material respects, executed in accordance with its
management's general or specific authorization, and (b) recorded in conformity
with generally accepted accounting principles. There is no amendment to any
lending agreement, collateral document or security which is not fully reflected
in the books and records of the Company, RBC and the Subsidiary.
SECTION 2.20. Loans. Except as disclosed in the Company Disclosure
Schedule at Section 2.20, (a) as of the date of this Agreement, the Bank is not
a
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party to any written or oral loan agreement, note or borrowing arrangement which
has been classified as "substandard," "doubtful," "loss," "other loans
especially mentioned" or any comparable classifications by the Company, RBC or
the Bank or banking regulators; (b) neither the Company, RBC nor the Subsidiary
is a party to any written or oral loan agreement, note, or borrowing
arrangement, including any loan guaranty, with any director or executive officer
of the Company, RBC or the Subsidiary, or any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing;
and (c) neither the Company, RBC nor the Subsidiary is a party to any written or
oral loan agreement, note or borrowing arrangement in violation of any law,
regulation or rule of any governmental authority, which violation could have a
Material Adverse Effect on the Company, RBC and the Subsidiary, taken as a
whole.
SECTION 2.21. Labor Matters. Except as will not cause a Material Adverse
Effect to the Company, RBC and the Subsidiary, taken as a whole, (a) the
Company, RBC and the Subsidiary are in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice; (b) there is no unfair labor practice complaint against the Company,
RBC or the Subsidiary pending before the National Labor Relations Board; (c)
there is no labor strike, dispute, slowdown, representation campaign or work
stoppage actually pending or threatened against or affecting the Company, RBC or
the Subsidiary; (d) no grievance or arbitration proceeding arising out of or
under collective bargaining agreements is pending and no claim therefor has been
asserted against the Company, RBC or the Subsidiary; and (e) neither the
Company, RBC nor the Subsidiary is experiencing any material work stoppage.
SECTION 2.22. Brokers. Except as set forth in the Company's Disclosure
Schedule at Section 2.22, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company, RBC or the Subsidiary.
SECTION 2.23. Accounting and Tax Matters.
(a) To the knowledge of the Company, neither the Company nor any of
its affiliates has taken or agreed to take any action that would prevent
Associated from accounting for the business combinations to be effected by the
Merger as a pooling-of-interests or would prevent the Merger from qualifying as
a reorganization under Section 368(a)(1)(A) of the Code.
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(b) To the knowledge of the Company, there is no plan or intention
on the part of shareholders of the Company who will receive Associated Common
Stock to sell or otherwise dispose of an amount of Associated Common Stock to be
received in the Merger which would reduce their ownership of Associated Common
Stock to a number of shares having in the aggregate a value at the time of the
Merger of less than fifty percent (50%) of the total value of the Company's
Common Stock outstanding immediately prior to the Merger.
SECTION 2.24. Year 2000 Compliance. The Company has furnished or made
available to Associated true and correct copies of the Bank's Year 2000 Policy;
Year 2000 Testing Plan for Mission Critical Systems; Year 2000 Business
Resumption Contingency Plan; Year 2000 Remediated Systems Contingency Plan; Year
2000 Customer Risk Summary Evaluation; minutes of the meetings of the Bank's
Year 2000 Committee; and reports to the Bank's Board of Directors regarding Year
2000 testing.
SECTION 2.25. Full Disclosure. No statement contained in this Agreement,
including the Company Disclosure Schedule, or any certificate furnished or to be
furnished by or at the direction of the Company to Associated in, or pursuant to
the provisions of, this Agreement contains or shall contain any untrue statement
of a material fact or omits or shall omit to state any material fact necessary,
in light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
SECTION 2.26. Votes Required. The affirmative vote of the holders of a
majority of the voting power of all of the outstanding shares of Company Common
Stock is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSOCIATED
Except as set forth in the Disclosure Schedule attached hereto (the
"Associated Disclosure Schedule"), Associated hereby represents and warrants to
the Company that:
SECTION 3.01. Organization and Qualification. Associated is a bank holding
company duly organized and validly existing under the laws of the State of
Wisconsin. Associated is registered with the Federal Reserve Board as a bank
holding company under the BHCA. Associated and each of its subsidiaries has the
requisite corporate power and authority and is in possession of all franchises,
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grants, authorizations, licenses, permits, easements, consents, certificates,
approvals and orders (the "Associated Approvals") necessary to own, lease and
operate its properties and to carry on its business as it is now being
conducted, including appropriate authorizations from the Federal Reserve Board,
except where the failure to be so organized and existing or to have such power,
authority and Associated Approvals would not, individually or in the aggregate,
have a Material Adverse Effect on Associated and its subsidiaries, taken as a
whole. Associated has not received any notice of proceedings relating to the
revocation or modification of any such Associated Approvals. Associated is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of 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.
SECTION 3.02. Articles of Incorporation and Bylaws. Associated has
heretofore furnished to the Company a complete and correct copy of its Articles
of Incorporation and the Bylaws, as amended or restated. Such Articles of
Incorporation and Bylaws are in full force and effect. Associated is not in
violation of any of the provisions of its Articles of Incorporation or Bylaws.
SECTION 3.03. Capitalization. The outstanding capital stock of Associated
is, and the shares of Associated Common Stock to be issued pursuant to the
Merger, when so issued, will be, duly authorized, validly issued, fully paid and
non-assessable (except as provided in section 180.0622(2)(b) of Wisconsin Law).
SECTION 3.04. Authority. Associated has the requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Associated and the consummation by Associated
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Associated and no other corporate
proceedings on the part of Associated are necessary to authorize this Agreement
or to consummate the transactions so contemplated hereby. This Agreement has
been duly and validly executed and delivered by Associated and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of Associated enforceable in accordance with its
terms.
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SECTION 3.05. No Conflict; Required Filings and Consents.
(a) To the knowledge of Associated, the execution and delivery of
this Agreement by Associated does not, and the performance of this Agreement by
Associated shall not, (i) conflict with or violate the Articles of Incorporation
or Bylaws of Associated, (ii) conflict with or violate any Laws applicable to
Associated or its subsidiaries or by which its or their properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the properties or
assets of Associated or any subsidiary of Associated pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Associated or any subsidiary of
Associated is a party or by which Associated or any subsidiary of Associated or
any of their properties are bound or affected, except for any such breaches,
defaults or other occurrences that would not, individually or in the aggregate,
have a Material Adverse Effect on Associated and its subsidiaries, taken as a
whole.
(b) To the knowledge of Associated, the execution and delivery of
this Agreement by Associated does not, and the performance of this Agreement by
Associated shall not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws, the BHCA, the BL, the banking
laws and regulations of the State of Wisconsin, the filing and recordation of
appropriate merger or other documents as required by Wisconsin Law and Minnesota
Law, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent Associated
from performing its obligations under this Agreement, and would not have a
Material Adverse Effect on Associated.
SECTION 3.06. Compliance; Permits. To the knowledge of Associated, neither
Associated nor any of its subsidiaries is in conflict with, or in default or
violation of (a) any Law applicable to Associated or any subsidiary of
Associated or by which its or their property is bound or affected, or (b) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Associated or any
subsidiary of Associated is a party or by which Associated or any subsidiary of
Associated or any of its or their properties are bound or affected, except for
any such conflicts, defaults or
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violations which would not, individually or in the aggregate, have a Material
Adverse Effect on Associated and its subsidiaries, taken as a whole.
SECTION 3.07. Securities Reports; Financial Statements.
(a) As of the date of this Agreement, Associated has delivered to
the Company in the form filed with the SEC (i) its Annual Reports on Form 10-K
for the fiscal years ended December 31, 1995, 1996 and 1997, respectively, (ii)
all definitive proxy statements relating to Associated's meetings of
shareholders (whether annual or special) held since December 31, 1995, (iii) all
Reports on Form 8-K filed by Associated with the SEC since December 31, 1995,
(iv) its Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998, (v) all other reports or registration
statements (other than Reports on Form 10-Q and registration statements on Form
S-8) filed by Associated with the SEC since December 31, 1995 and (vi) all
amendments and supplements to all such reports and registration statements filed
by Associated with the SEC since December 31, 1995 (collectively, the
"Associated SEC Reports"). The Associated SEC Reports, including all Associated
SEC Reports filed after the date of this Agreement, (i) were or will be prepared
in all material respects in accordance with the requirements of applicable law
and (ii) did not at the time they were filed, or will not at the time they are
filed, contain any untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Associated SEC Reports,
including any Associated SEC Reports filed since the date of this Agreement and
prior to or on the Effective Time, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presents the consolidated financial position of
Associated and its subsidiaries as of the respective dates thereof and the
consolidated results of its operations and changes in financial position for the
periods indicated, except that any unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
(c) Except as and to the extent set forth on the consolidated
balance sheet of Associated and its subsidiaries as of December 31, 1997,
including all notes thereto (the "Associated Balance Sheet"), neither Associated
nor its subsidiaries have any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected
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on a balance sheet, or in the notes thereto, prepared in accordance with
generally accepted accounting principles, except for liabilities or obligations
incurred in the ordinary course of business since December 31, 1997, that would
not, individually or in the aggregate, have a Material Adverse Effect on
Associated and its subsidiaries, taken as a whole.
(d) Neither Associated nor any of its subsidiaries is a party to or
bound by any contract, arrangement, commitment or understanding which is a
material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC)
to be performed after the date of this Agreement that has not been filed or
incorporated by reference in the Associated SEC Reports filed prior to the date
of this Agreement
SECTION 3.08. Absence of Certain Changes or Events. Except as disclosed in
the Associated SEC Reports filed prior to the date of this Agreement and except
for the restructuring charges described in the Associated Disclosure Schedule at
Section 3.08, since December 31, 1997, to the date of this Agreement, Associated
and its subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since December 31, 1997,
there has not been (a) any change in the financial condition, results of
operations or business of Associated or its subsidiaries having a Material
Adverse Effect on Associated and its subsidiaries, taken as a whole, (b) any
damage, destruction or loss (whether or not covered by insurance) with respect
to any assets of Associated or its subsidiaries having a Material Adverse Effect
on Associated and its subsidiaries, taken as a whole, (c) any change by
Associated in its accounting methods, principles or practices, (d) any
revaluation by Associated of any of its material assets in any material respect,
or (e) to the date of this Agreement, any entry by Associated or any of its
subsidiaries into any commitment or transaction material to Associated and its
subsidiaries, taken as a whole.
SECTION 3.09. Absence of Litigation. Except as disclosed in the Associated
Disclosure Schedule at Section 3.09 or in the Associated SEC Reports filed prior
to the date of this Agreement, (a) neither Associated nor any of its
subsidiaries is subject to any continuing order of, or written agreement or
memorandum of understanding with, or continuing material investigation by, any
federal or state banking authority or other governmental entity or any judgment,
order, writ, injunction, decree or award of any governmental entity or
arbitrator, including, without limitation, cease and desist or other orders of
any bank regulatory authority, (b) there is no claim, action, suit, litigation,
proceeding, arbitration, investigation, or controversy of any kind affecting
Associated or any of Associated's subsidiaries pending or, to the knowledge of
Associated, threatened,
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except for matters which (i) as of the date of this Agreement individually seek
damages not in excess of $100,000 and (ii) otherwise will not have, and cannot
reasonably be expected to have, a Material Adverse Effect on Associated and its
subsidiaries taken as a whole, and (c) there are no uncured material violations,
or violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to Associated or any of Associated's
subsidiaries as a result of an examination by any bank regulatory authority.
SECTION 3.10. Registration Statement. None of the information supplied or
to be supplied by Associated for inclusion in (a) the Registration Statement (as
defined in Section 6.01) (b) the Prospectus (as defined in Section 6.01), or (c)
any other document to be filed with the SEC or other regulatory authority in
connection with the transactions contemplated hereby, at the respective time
such documents are filed and, in the case of the Registration Statement, when it
becomes effective and at the Effective Time, and with respect to the Prospectus,
when mailed and at the time of the Meeting (as provided in Section 6.02), shall
be false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading.
All documents filed with the SEC or other regulatory authority by Associated in
connection with the Merger shall comply as to form in all material respects with
the provisions of applicable law.
SECTION 3.11. Absence of Agreements. Neither Associated nor any of its
subsidiaries is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extraordinary
supervisory letter which restricts materially the conduct of its or their
business (including any contract containing covenants which limit the ability of
Associated or any subsidiary of Associated to compete in any line of business or
with any person or which involve any restriction of the geographical area in
which, or any method by which, Associated or any subsidiary of Associated may
carry on its business (other than as may be required by Law or applicable
regulatory authorities)), or in any manner relates to its or their capital
adequacy, credit policies or management, except for those the existence of which
has been disclosed to the Company pursuant to Sections 3.07 and 3.08, nor has
Associated or any of its subsidiaries been advised that any federal, state or
governmental agency is contemplating issuing or requesting (or is considering
the appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission, except as may be disclosed by Associated in the
Associated Disclosure Schedule at Section 3.11.
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SECTION 3.12. Taxes. Associated and its subsidiaries have timely filed all
Tax Returns required to be filed by them, and Associated and its subsidiaries
have timely paid and discharged all Taxes due in connection with or with respect
to the filing of such Tax Returns and have timely paid all other Taxes as are
due, except such as are being contested in good faith by appropriate proceedings
and with respect to which Associated is maintaining reserves adequate for their
payment. To the knowledge of Associated, the liability for Taxes set forth on
each such Tax Return adequately reflects the Taxes required to be reflected on
such Tax Return. For purposes of this Section 3.12, references to Associated and
its subsidiaries include former subsidiaries of Associated for the periods
during which any such corporations were owned, directly or indirectly, by
Associated. Neither the IRS nor any other governmental entity or taxing
authority or agency is now asserting, either through audits or administrative
proceedings, court proceedings or otherwise, or, to the knowledge of Associated,
threatening to assert against Associated or any of its subsidiaries any
deficiency or claim for additional Taxes. Neither Associated nor any of its
subsidiaries has granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any Tax. There are no
tax liens on any assets of Associated or any of its subsidiaries except liens
for current Taxes not yet due. Neither Associated nor any of its subsidiaries
has received a ruling or entered into an agreement with the IRS or any other
governmental entity or taxing authority or agency that would have a Material
Adverse Effect on Associated and its subsidiaries, taken as a whole, after the
Effective Time. The accruals and reserves for taxes reflected in the Associated
Balance Sheet are adequate to cover all Taxes accruable through the date thereof
(including Taxes being contested) in accordance with generally accepted
accounting principles.
SECTION 3.13. Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Associated.
SECTION 3.14. Accounting and Tax Matters. To the knowledge of Associated,
neither Associated nor any of its affiliates has taken or agreed to take any
action that would prevent Associated from accounting for the business
combinations to be effected by the Merger as a pooling-of-interests or would
prevent the Merger from qualifying as a reorganization under Section
368(a)(1)(A) of the Code.
SECTION 3.15. Full Disclosure. No statement contained in this Agreement,
including the Associated Disclosure Schedule, or any certificate furnished or to
be furnished by or at the direction of Associated to the Company, in
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or pursuant to the provisions of this Agreement, contains or shall contain any
untrue statement of a material fact or omits or shall omit to state any material
fact necessary, in the light of the circumstances under which it has been made,
in order to make the statements herein or therein not misleading.
SECTION 3.16. Absence of Adverse Agreements. Neither Associated nor any of
its subsidiaries is a party to any agreement or instrument or any judgment,
order or decree or any rule or regulation of any court or other governmental
agency or authority which materially and adversely affects or could reasonably
be expected to materially and adversely affect in the future the financial
condition, results or operations, assets, business or prospects of Associated
and its subsidiaries, taken as a whole, except for such judgments, orders,
decrees, rules or regulations affecting financial institutions and their holding
companies generally.
SECTION 3.17. Year 2000 Compliance. Associated has furnished or made
available to the Company true and correct copies of Associated's Year 2000
Policy; Year 2000 Testing Plan for Mission Critical Systems; Year 2000 Customer
Risk Summary Evaluation; minutes of the meetings of Associated's Year 2000
Committee; and reports to Associated's Board of Directors regarding Year 2000
testing.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Affirmative Covenants. The Company hereby covenants and
agrees with Associated that prior to the earlier of the Effective Time or the
termination of this Agreement, unless the prior written consent of Associated
shall have been obtained and except as otherwise contemplated herein, it will
and it will cause RBC and the Subsidiary to:
(a) operate its business only in the usual, regular and ordinary
course consistent with past practices;
(b) use reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the services
of its officers and key employees and maintain its relationships with customers;
(c) use reasonable efforts to maintain and keep its properties in as
good repair and condition as at present, ordinary wear and tear excepted;
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(d) use reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that now
maintained by it;
(e) perform in all material respects all obligations required to be
performed by it under all material contracts, leases, and documents relating to
or affecting its assets, properties, and business;
(f) comply with and perform in all material respects all obligations
and duties imposed upon it by all applicable laws;
(g) purchase and sell securities and other investments in accordance
with the guidelines set forth in Exhibit 4.01(g);
(h) comply with the capital requirements set forth on Exhibit
4.01(h);
(i) with respect to the Subsidiary, maintain as of December 31, 1998
and thereafter an aggregate loan loss reserve of not less than 1.75% of period
ending loans (excluding overdrafts less than 30 days old);
(j) deliver to Associated promptly after issuance the Company's
audited consolidated financial statements as of December 31, 1998; and
(k) on or before March 31, 1999, cause RBC to purchase all of the
outstanding Bank Common Stock not owned as of the date hereof by RBC.
SECTION 4.02. Negative Covenants. Except as specifically contemplated by
this Agreement or the Company Disclosure Schedule, from the date of this
Agreement until the Effective Time, the Company shall not do, or permit RBC or
the Subsidiary to do, without the prior written consent of Associated, any of
the following:
(a) (i) grant any general increase in compensation to its employees
as a class, or to its officers or directors, except in accordance with past
practice or as required by Law or increases which are not material, (ii) effect
any change in retirement benefits to any class of employees or officers (unless
any such change shall be required by applicable law) which would increase its
retirement benefit liabilities, (iii) adopt, enter into, amend or modify any
employee benefit plan or make any adjustments pursuant to any employee benefit
plan, or (iv) enter into or amend any employment, severance or similar
agreements or arrangements with any directors or officers, other than as is
consistent with the
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normal severance policies of the Company, RBC and the Subsidiary in effect on
the date of this Agreement;
(b) declare or pay any dividend on, or make any other distribution
in respect of, its outstanding shares of capital stock other than distributions
from Subsidiary to RBC and from RBC to the Company;
(c) except as contemplated by Section 4.01(k), (i) redeem, purchase
or otherwise acquire any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock, or any options, warrants, conversion or other rights to acquire any
shares of its capital stock or any such securities or obligations; (ii) merge
with or into any other corporation or bank, permit any other corporation or bank
to merge into it or consolidate with any other corporation or bank, or effect
any reorganization or recapitalization; (iii) purchase or otherwise acquire any
assets or stock of any corporation, bank or other business; (iv) liquidate,
sell, dispose of, or encumber any assets or acquire any assets, other than in
the ordinary course of its business consistent with past practice; or (v) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock;
(d) issue, deliver, award, grant or sell, or authorize or propose
the issuance, delivery, award, grant or sale of, any shares of any class of its
capital stock (including shares held in treasury) or any rights, warrants or
options to acquire, any such shares.
(e) initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Competing Transaction (as such term is defined below),
or negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it, RBC or the Subsidiary to take any such action;
provided, however, that (i) the Company may, upon the request of one or more of
its shareholders, register transfers of Shares of Company Common Stock and (ii)
the Company's Board of Directors may provide (or authorize the provision of)
information to, and may engage in (or authorize) such negotiations or
discussions with, any person, directly or through representatives, if [a] the
Board of Directors, after having consulted with independent counsel (which may
be or include Kaplan, Strangis and Kaplan, P.A.), has determined in good faith
that providing such information or engaging in such negotiations or
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discussions is reasonably required in order to properly discharge the directors'
fiduciary duties in accordance with Minnesota Law, [b] prior to furnishing such
information to such person or engaging in such negotiations or discussions, the
Company provides Associated with at least seven days' notice to the effect that
it is furnishing information to, or entering into negotiations or discussions
with, such person, and [c] prior to furnishing such information to such person,
the Company has received from such person an executed confidentiality agreement
in customary form. For purposes of this Agreement, "Competing Transaction" shall
mean any of the following involving the Company, RBC or the Subsidiary: (i) any
merger, consolidation, share exchange or other similar transactions; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of ten
percent or more of assets in a single transaction or series of transactions,
excluding from the calculation of the percentage hereunder any such transactions
undertaken in the ordinary course of business and consistent with past practice;
(iii) any sale of ten percent or more of shares of capital stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire capital stock); (iv) any tender
offer or exchange offer for ten percent or more of outstanding shares of capital
stock; (v) any solicitation of proxies in opposition to approval by the
Company's shareholders of the Merger; (vi) the filing of an acquisition
application (or the giving of acquisition notice) whether in draft or final form
under the BHCA or the Change in Bank Control Act with respect to the Company,
RBC or the Subsidiary; (vii) any person shall have acquired beneficial ownership
or the right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 10% or more of the then
outstanding shares of capital stock of the Company; or (viii) any public
announcement of a proposal, plan or intention to do any of the foregoing.
(f) propose or adopt any amendments to the corporate charter or
Bylaws in any way materially adverse to Associated;
(g) except in their fiduciary capacities for the account of
customers, purchase any shares of Associated Common Stock;
(h) change any of its methods of accounting in effect at December
31, 1998, 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, 1998, except
as may be required by law or generally accepted accounting principles;
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(i) subject to section 4.01(i), change any lending, investment,
liability management or other material policies concerning the business or
operations of the Company, RBC or the Subsidiary in any material respect;
organize any new subsidiaries or enter into any new non-banking line of business
whether or not permissible under applicable federal or state law, or make any
material changes in its operations;
(j) (i) incur or assume any material obligation or liability (except
deposit liabilities and repurchase agreements in the ordinary course of
business), including without limitation any obligation for borrowed money,
whether or not evidenced by a note, bond, debenture or similar instrument and
whether or not being incurred to reduce other existing liabilities, or make any
loan (not including any loan renewal of a loan not then classified as
"substandard," "doubtful," "loss," "other loans especially mentioned" or any
comparable classifications by the Company, RBC, the Subsidiary or banking
regulators) in an amount greater than $1,000,000, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly, contingent
or otherwise) for the obligations of any other person or entity; (iii) mortgage,
license, pledge or grant a security interest in any of its material assets or
allow to exist any material lien thereon; except (A) for liabilities and
obligations (including corporate debt issuances) incurred in the ordinary course
of business consistent with past practices and in amounts not material to the
Company, RBC or the Subsidiary; and (B) as may be required under existing
agreements to which the Company, RBC or the Subsidiary is a party; (iv) acquire
assets (including equipment) in excess of $400,000 in the aggregate (excluding
loans to customers and repurchase agreements permitted in (i) above, investments
permitted under Section 4.01(g) and federal fund sales)); (vi) pay, discharge,
or satisfy any debts or claims not in the ordinary course of business and
consistent with past practices; (vii) settle any claim, action, suit,
litigation, proceeding, arbitration, investigation or controversy of any kind,
for any amount in excess of $100,000 or in any manner which would restrict in
any material respect the operations or business of the Company, RBC or the
Subsidiary; (viii) purchase any new financial product or instrument which
involves entering into a contract with a term of six months or longer (excluding
loans to customers and repurchase agreements permitted in (i) above, investments
permitted under Section 4.01(g), customer deposits and federal fund sales)); or
(ix) take any action or fail to take any action which individually or in the
aggregate can be expected to have a Material Adverse Effect on the Company, RBC
and the Subsidiary, taken as a whole; or (x) incur or pay legal or accounting,
broker or investment banking fees in connection with the transaction
contemplated hereby in excess of an aggregate of $250,000; or
(k) agree in writing or otherwise to do any of the foregoing.
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SECTION 4.03. Access and Information.
(a) Prior to the Effective Time and upon reasonable notice, and
without unreasonable disruption to the business carried on by the Company, RBC
or the Subsidiary, the Company shall (and shall cause its Subsidiary to) afford
to Associated's officers, employees, accountants, legal counsel and other
representatives access, during normal business hours, to all its properties,
books, contracts, commitments and records (other than the portion of Company
board of director minutes or other materials which discuss merger proposals).
Prior to the Effective Time, the Company shall (and shall cause , RBC and the
Subsidiary to) furnish promptly to Associated (i) a copy of each Company Report
filed by it (to the extent permitted by Law) after the date of this Agreement
and prior to the Effective Time pursuant to the requirements of federal or state
securities laws, the BHCA, any other federal or state banking laws or any other
applicable laws promptly after such documents are available, (ii) the monthly
consolidated financial statements of the Company, RBC and the Subsidiary; (iii)
a summary of any action taken by the Board of Directors, or any committee
thereof, of the Company, RBC and the Subsidiary; and (iv) all other information
concerning the business, properties and personnel of the Company, RBC or the
Subsidiary as Associated may reasonably request.
(b) Any information provided to Associated by the Company, RBC or
the Subsidiary, whether prior to or subsequent to the date of this Agreement,
shall be kept confidential by the representatives of Associated (and shall be
used by them only in connection with this Agreement and the transactions
contemplated hereby) except to the extent that (i) it was already known to such
representatives when received, (ii) it hereafter becomes lawfully obtainable
from other sources, or (iii) it is required to be disclosed by Associated in any
document required to be filed with any government authority or agency. Upon any
termination of this Agreement pursuant to Article VIII hereof, Associated agrees
to promptly return all information and documents that it has obtained from the
Company in connection herewith.
SECTION 4.04. Affiliates; Accounting and Tax Treatment. Within thirty (30)
days after the date of this Agreement, (a) the Company shall deliver to
Associated a letter identifying all persons who are then "affiliates" of the
Company, including, without limitation, all directors and executive officers of
the Company for purposes of Rule 145 promulgated under the Securities Act and
(b) the Company shall advise the persons identified in such letter of the resale
restrictions imposed by applicable securities laws and required to cause the
Merger to qualify for pooling-of-interests accounting treatment, and shall use
reasonable
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efforts to obtain from each person identified in such letter a written
agreement, substantially in the form attached hereto as Exhibit 4.04. The
Company shall use reasonable efforts to obtain from any person who becomes an
affiliate of the Company after the Company's delivery of the letter referred to
above, and on or prior to the Effective Time, a written agreement substantially
in the form attached hereto as Exhibit 4.04 as soon as practicable after
attaining such status. The Company will use its reasonable best efforts to cause
the Merger to qualify for pooling-of-interests accounting treatment and as a
reorganization under Section 368(a)(1)(A) of the Code.
SECTION 4.05. Expenses.
(a) Except as provided in Section 8.02, below, and subject to
Section 4.02(j)(x), all Expenses (as defined below) incurred by Associated and
the Company shall be borne solely and entirely by the party which has incurred
the same, except that the parties shall share equally in the expense of printing
and filing the Registration Statement and the Prospectus and all SEC and other
regulatory filing fees incurred in connection herewith. Notwithstanding the
foregoing, the Company's portion of such printing and filing expenses and fees
shall not, under any circumstances, exceed $25,000.
(b) "Expenses" as used in this Agreement shall include all
out-of-pocket expenses (including without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to the party
and its affiliates) incurred by a party or on its behalf in connection with or
related to the authorization, preparation and execution of this Agreement, the
solicitation of shareholder approvals and all other matters related to the
closing of the transactions contemplated hereby.
SECTION 4.06. Delivery of Shareholder List. The Company shall deliver to
Associated or its designee, from time to time prior to the Effective Time, a
true and complete list setting forth the names and addresses of the shareholders
of the Company, their holdings of stock as of the latest practicable date, and
such other shareholder information as Associated may reasonably request.
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ARTICLE V
COVENANTS OF ASSOCIATED
SECTION 5.01. Affirmative Covenants. Associated hereby covenants and
agrees with the Company that prior to the Effective Time, unless the prior
written consent of the Company shall have been obtained, and except as otherwise
contemplated herein it will:
(a) maintain its corporate existence in good standing and maintain
all books and records in accordance with accounting principles and practices as
utilized in Associated's financial statements applied on consistent basis;
(b) conduct its business in a manner that does not violate any law,
except for possible violations which individually or in the aggregate do not,
and insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on Associated and its subsidiaries, taken as a whole;
and
(c) will, to the best of its reasonable ability and in all material
respects, (i) comply with applicable Blue Sky Laws and regulations, the
Securities Act, and the Exchange Act, (ii) remain qualified under the Exchange
Act and the rules and regulations thereunder, and (iii) maintain the listing of
shares of Associated Common Stock on the Nasdaq Stock Market's National Market.
SECTION 5.02. Access and Information.
(a) After the date of this Agreement and prior to the Effective
Time, upon reasonable notice, Associated shall (and shall cause each of its
subsidiaries to) furnish promptly to the Company (i) a copy of each Associated
SEC Report filed by it or received by it (to the extent permitted by law) after
the date of this Agreement and prior to the Effective Time pursuant to the
requirements of federal or state securities laws, the BHCA, any other federal or
state banking laws or any other applicable laws promptly after such documents
are available, and (ii) all other information concerning the business,
properties and personnel of Associated or its subsidiaries as the Company may
reasonably request.
(b) Any information provided to the Company by Associated whether
prior to or subsequent to the date of this Agreement shall be kept confidential
by the representatives of the Company (and shall be used by them only in
connection with this Agreement and the transactions contemplated hereby)
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except to the extent that (i) it was already known to such representatives when
received, (ii) it hereafter becomes lawfully obtainable from other sources, or
(iii) it is required to be disclosed by the Company in any document required to
be filed with any government authority or agency. Upon any termination of this
Agreement pursuant to Article VIII hereof, the Company agrees to promptly return
all information and documents that it has obtained from Associated in connection
herewith.
SECTION 5.03. Accounting and Tax Treatment. Associated will use its
reasonable best efforts to cause the Merger to qualify for pooling-of-interests
accounting treatment and as a reorganization under Section 368(a)(1)(A) of the
Code.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement. As promptly as practicable after the
execution of this Agreement, Associated shall prepare and file a registration
statement on Form S-4 (the registration statement together with the amendments
thereto are defined as the "Registration Statement" and the prospectus contained
therein are defined as the "Prospectus") with the SEC covering the Associated
Common Stock to be issued in the Merger (subject to the immediately following
sentence), with a view toward permitting the Registration Statement to become
effective as soon as reasonably practicable. Associated does not undertake to
file post-effective amendments to Form S-4 or to file a separate registration
statement to register the sale of Associated Common Stock by affiliates of the
Company pursuant to Rule 145 promulgated under the Securities Act. The Company
will furnish to Associated all information concerning the Company, RBC and the
Subsidiary required to be set forth in the Registration Statement and Associated
will provide the Company and its counsel the opportunity to review and approve
such information as set forth in the Registration Statement and Prospectus.
Associated and the Company will each render to the other its full cooperation in
preparing, filing, prosecuting the filing of, and amending the Registration
Statement such that it comports at all times with the requirements of the
Securities Act and the Exchange Act. Specifically, but without limitation, each
will promptly advise the other if at any time before the Effective Time any
information provided by it for inclusion in the Registration Statement appear to
have been, or shall have become, incorrect or incomplete and will furnish the
information necessary to correct such misstatements or omissions. As promptly as
practicable after the effective date of the Registration Statement, the Company
will mail to its shareholders (a) a notice of the Company's shareholders meeting
described in
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Section 6.02 below and the Prospectus, and (b) as promptly as practicable after
approval thereof by Associated, such other supplementary proxy materials as may
be necessary to make the Prospectus comply with the requirements of the
Securities Act and the Exchange Act. Except as provided above and except with
the prior written consent of Associated, the Company will not mail or otherwise
furnish or publish to shareholders of the Company any proxy solicitation
material or other material relating to the Merger that constitutes a
"prospectus" within the meaning of the Securities Act. Associated shall also
take any reasonable action required to be taken under any applicable Blue Sky
Laws in connection with the issuance of the shares of Associated Common Stock to
be issued as set forth in this Agreement and the Company, RBC and the Subsidiary
shall furnish all information concerning the Company, RBC and the Subsidiary,
and the holders of the Company's Common Stock and other assistance as Associated
may reasonably request in connection with such action.
SECTION 6.02. Meeting of Shareholders. The Company and its officers and
directors shall: (a) cause the Company's shareholders meeting (the "Meeting") to
be duly called and held as soon as practicable to consider and vote upon the
Merger and any related matters in accordance with the applicable provisions of
applicable law, (b) submit this Agreement to the Company's shareholders together
with a recommendation for approval by the Board of Directors of the Company, and
(c) use their best efforts to obtain the approval and adoption of the Merger by
the requisite percentage of the Company's shareholders; provided, however, that
the Company's Board of Directors may fail to make the recommendation, or to seek
to obtain the shareholder approval, or withdraw, modify or change any such
recommendation, if the Board of Directors, after having consulted with
independent counsel (which may be or include Kaplan, Strangis and Kaplan, P.A.),
has determined in good faith that such action is reasonably required in order to
properly discharge the directors' fiduciary duties in accordance with Minnesota
Law.
SECTION 6.03. Appropriate Action; Consents; Filings. The Company and
Associated shall use all reasonable efforts to (a) take, or cause to be taken,
all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under applicable law to consummate and make effective the
transactions contemplated by this Agreement; (b) obtain all consents, licenses,
permits, waivers, approvals, authorizations or orders required under Law
(including, without limitation, all foreign and domestic (federal, state and
local) governmental and regulatory rulings and approvals and parties to
contracts) in connection with the authorization, execution and delivery of this
Agreement and the consummation by them of the transactions contemplated hereby
and thereby, including, without limitation, the Merger; and (c) make all
necessary filings, and thereafter make any
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other required submissions, with respect to this Agreement and the Merger
required under (i) the Securities Act and the Exchange Act and the rules and
regulations thereunder, and any other applicable federal or state securities
laws, (ii) any applicable federal or state banking laws and (iii) any other
applicable law; provided that Associated and the Company shall cooperate with
each other in connection with the making of all such filings, including
providing copies of all such documents to the non-filing party and its advisors
prior to filing and, if requested, to accept all reasonable additions, deletions
or changes suggested in connection therewith. The Company and Associated shall
furnish all information required for any application or other filing to be made
pursuant to the rules and regulations of any applicable law (including all
information required to be included in the Prospectus and the Registration
Statement) in connection with the transactions contemplated by this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall use all reasonable efforts to
take all such necessary action.
SECTION 6.04. Notification of Certain Matters. The Company shall give
prompt notice to Associated, and Associated shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate, and (b) any
failure of the Company or Associated, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.04 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.05. Public Announcements. Associated and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation and with
mutual consent of both parties, except as may be required by law or any listing
agreement with the National Association of Securities Dealers.
SECTION 6.06. Environmental Matters. In the event DPRA Incorporated (the
"Environmental Consultant") discovers or determines (a) that the Company's
Property does not comply in all material respects with all Environmental Laws;
(b) that material capital improvements may reasonably be required to maintain
compliance with all Environmental Laws; (c) that there are material contingent
liabilities affecting the Company's Property arising under Environmental Laws or
under Environmental Permits; or (d) the existence of any environmental condition
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(including, without limitation, a spill, discharge or contamination) the result
of which, in the opinion of the Environmental Consultant, requires reporting,
notification, investigative or remedial action pursuant to any applicable
Environmental Law or may be the basis for the assertion of any third party
claims, including the claims of government entities, Associated shall promptly
provide the Company with written notice thereof. Associated shall obtain from
the Environmental Consultant a written environmental evaluation of the Company's
Property with respect to the foregoing matters as soon as reasonably practicable
after the date hereof.
SECTION 6.07. Employee Benefits. As of the Effective Time, the employees
of the Company, RBC and the Bank (the "Company Employees") shall continue
employment with the Surviving Corporation, in the same positions and at the same
level of wages and/or salary and without having incurred a termination of
employment or separation from service; provided, however, except as may be
specifically required by applicable law or any contract, the Surviving
Corporation shall not be obligated to continue any employment relationship with
any Company Employee for any period of time. To the extent any employee benefit
plan, program or policy of Associated or its subsidiaries is made available to
the employees of the Surviving Corporation: (i) service with the Company (or any
subsidiary of the Company) by any Company Employee prior to the Effective Time
shall be credited in determining such employee's eligibility, vesting and
benefit levels, and (ii) with respect to any welfare benefit plans in which such
employees may become eligible to participate, Associated shall cause such plans
to provide credit for any co-payments or deductibles by such employees and waive
all pre-existing condition exclusions and waiting periods, other than
limitations or waiting periods that have not been satisfied under any welfare
plans maintained by the Company for Company Employees prior to the Effective
Time, effective upon the Effective Time.
SECTION 6.08 Indemnification.
(a) From and after the Effective Time, the Surviving Corporation
shall indemnify, defend and hold harmless the present and former officers and
directors and employees of the Company, RBC and the Bank (collectively, the
"Indemnified Parties") against all losses, expenses, claims, damages,
liabilities or amounts that are paid in settlement of (with the approval of 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
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this Agreement), in each case to the fullest extent that such Indemnified
Parties would have been indemnified by the Company or RBC under Minnesota Law
(subject to limitations, if any, in the Company's or RBC's articles of
incorporation or by-laws) or by the Bank under applicable law (subject to
limitations, if any, in the Bank's articles of incorporation and by-laws), as
the case may be, had the transactions contemplated by this Agreement not been
consummated (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 by Minnesota law (subject to limitations, if any, in the Company's or
RBC's articles of incorporation or by-laws) in the case of the Company and RBC
and applicable law (subject to limitations, if any, in the Bank's articles of
incorporation or by-laws) in the case of the Bank).
(b) Any Indemnified Party wishing to claim indemnification under
this Section 6.08 upon learning of any such Claim, shall notify the Surviving
Corporation (although the failure to so notify the Surviving Corporation shall
not relieve it from any liability that the Surviving Corporation may have under
this Section 6.08, except to the extent such failure prejudices the Surviving
Corporation). The Surviving Corporation shall have the right to assume the
defense thereof and if such right is exercised, 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 the Surviving Corporation
elects not to assume such defense or there is a conflict of interest between the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to the Surviving Corporation and, in such
case, 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) 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 reasonably necessary or desirable
in order to effectively defend against such action or proceeding, (ii) the
Surviving Corporation and the Indemnified Parties will cooperate in the defense
of any such matter and (iii) 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
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manner 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 and the Surviving Corporation,
from all liability in respect of such claim or litigation for which such
Indemnified Party would be entitled to indemnification hereunder.
(c) The Surviving Corporation shall use its reasonable best efforts
to cause to be maintained in effect for not less than one year after the
Effective Time (except to the extent not generally available in the market)
directors' and officers' liability insurance and fiduciary insurance that is
substantially equivalent in coverage to the Company's current insurance;
provided, however, that the Surviving Corporation 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 6.08 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 the Surviving Corporation
and its respective successors and assigns.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.01. Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall, on
or prior to the Effective Time, have been initiated or, to the knowledge of
Associated or the Company, threatened by the SEC. Associated shall have received
all other federal or state securities permits and other authorizations necessary
to issue Associated Common Stock in exchange for the Company Common Stock and to
consummate the Merger.
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(b) Shareholder Approvals. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the shareholders of the
Company.
(c) Regulatory Approvals. The Merger shall have been approved by the
Federal Reserve Board, the Minnesota Department of Commerce Financial
Examination Division, and all other required regulatory agencies, which
approvals shall not contain any condition which is not reasonably satisfactory
to Associated or the Company, all conditions required to be satisfied prior to
the Effective Time imposed by the terms of such approvals shall have been
satisfied and all waiting periods relating to such approvals shall have expired.
(d) Nasdaq Listing. The shares of Associated Common Stock that are
to be issued to the shareholders of the Company 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.
SECTION 7.02. Additional Conditions to Obligations of Associated. The
obligations of Associated to effect the Merger are also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be complete and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects) as of the Effective Time as
though made at the Effective Time with the same force and effect as if made on
and as of the Effective Time (except that where a representation or warranty
that expressly speaks as of a date other than the Effective Date, such
representation or warranty need only be true as of such date). Associated shall
have received a certificate of the President of the Company to that effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
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required by this Agreement to be performed or complied with by it on or prior to
the Effective Time.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made by the Company for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by the Company.
(d) No Challenge. There shall not be pending any action, proceeding
or investigation before any court or administrative agency or by any government
agency or any other person (i) challenging or seeking material damages in
connection with the Merger or the conversion of the Company Common Stock into
Associated Common Stock pursuant to the Merger, or (ii) seeking to restrain,
prohibit or limit the exercise of full rights of ownership or operation by
Associated or its subsidiaries of all or any portion of the business or assets
of the Company, RBC or the Subsidiary, which in either case is reasonably likely
to have a Material Adverse Effect on either the Company, RBC and the Subsidiary,
taken as a whole, or Associated and its subsidiaries, taken as a whole.
(e) Opinion of Counsel. Associated shall have received from Kaplan,
Strangis and Kaplan, P.A. or other independent counsel for the Company
reasonably satisfactory to Associated, an opinion dated the Effective Time, in
form and substance reasonably satisfactory to Associated, covering the matters
set forth in Exhibit 7.02(e) hereto, which opinion shall be based on such
assumptions and containing such qualifications and limitations as are
appropriate and reasonably satisfactory to Associated.
(f) Tax Opinion. Associated shall have received from Reinhart,
Boerner, Van Deuren, Norris & Rieselbach, s.c., an opinion (i) dated on or about
the date that is two business days prior to the date the Notice of Meeting/
Prospectus is first mailed to shareholders of the Company, (ii) which shall not
have been withdrawn or modified in any material respect prior to the Effective
Time, (iii) to the effect that:
[a] the Merger will qualify as a reorganization within the
meaning of section 368(a)(1)(A) of the Code;
[b] the Company and Associated will each be party to a
reorganization within the meaning of Section 368(b) of the Code;
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[c] no gain or loss will be recognized by any shareholder of
the Company upon consummation of the Merger (except with respect to cash
received in lieu of a fractional share interest in Associated Common Stock); and
[d] the aggregate income tax basis of Associated Common Stock
received by the shareholders of the Company pursuant to the Merger will be the
same as the aggregate tax basis of the Company Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
(g) Pooling Opinions. Associated shall have received an opinion from
KPMG LLP to the effect that the Merger qualifies for pooling-of-interests
accounting treatment if consummated in accordance with this Agreement; in
support of the KPMG LLP pooling opinion, KPMG LLP and Associated shall have
received an opinion from McGladrey Pullen to the effect that the Company
qualifies to have the Merger accounted for as a pooling-of-interests if
consummated in accordance with this Agreement.
(h) Affiliate Agreements. Associated shall have received from each
person who is identified in the affiliate letter as an "affiliate" of the
Company a signed affiliate agreement in the form attached hereto as Exhibit
4.04.
(i) Burdensome Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any federal or state governmental entity which, in
connection with the grant of any regulatory approval, imposes any condition or
restriction upon the Company or Associated or their respective subsidiaries (or
the Surviving Corporation or its subsidiaries after the Effective Time),
including, without limitation, any requirement to raise additional capital,
which would so materially adversely impact the economic or business benefits of
the transactions contemplated by this Agreement as to render inadvisable the
consummation of the Merger.
(j) Fractional Shares; Dissenters. The aggregate of (i) the
fractional share interests in Associated Common Stock to be paid in cash
pursuant to Section 1.07 of this Agreement and (ii) the shares of Associated
Common Stock that would be issuable by virtue of the Merger with respect to
shares of the Company's Common Stock outstanding on the record date for the
meeting of the Company's shareholders to consider the Merger that will not be
converted into Associated Common Stock due, directly or indirectly, to the
exercise of dissenter's rights under Minnesota Law, shall not be more than 10%
of the maximum
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aggregate number of shares of Associated Common Stock which could be issued as a
result of the Merger.
(k) Environmental Report. Associated shall have received from the
Environmental Consultant a written environmental evaluation of the Company's
Property evidencing that:
(i) The Company's Property complies in all material respects
with all Environmental Laws;
(ii) No material capital improvements should reasonably be
required to maintain compliance with all Environmental Laws; and
(iii) There are no material contingent liabilities affecting
the Company's Property arising under Environmental Laws or under Environmental
Permits;
(l) Earnings. In the event the Effective Time occurs on or prior to
October 31, 1999, the Company's and the Bank's consolidated after-tax earnings
for the six months ending June 30, 1999 shall be at least $2,200,000 and
$2,700,000, respectively, prior to the impact of the following adjustments,
including the income tax effects thereof (collectively, the "Adjustments"): (i)
the additional amount (if any) of loan loss reserve established as a result of
Section 4.01(i), (ii) all expenses incurred by the Company, RBC or the Bank in
connection with or related to the Amended and Restated Phantom Stock Plan of
RBC, (iii) all expenses incurred by the Company, RBC or the Bank in connection
with or related to the purchase by RBC of all of the outstanding Bank Common
Stock not owned as of the date hereof by RBC in accordance with Section 4.01(k)
and (iv) all expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to the Company
and its affiliates and the printing and filing expenses incurred by the Company,
RBC or the Bank pursuant to Section 4.05) incurred by the Company, RBC or the
Bank in connection with or related to the authorization, preparation and
execution of this Agreement, the solicitation of shareholder approvals and all
other matters related to the closing of the transactions contemplated hereby. In
the event the Effective Time occurs after October 31, 1999, the Company's and
the Bank's consolidated after-tax earnings for the nine months ending September
30, 1999 shall be at least $3,300,000 and $4,000,000, respectively, prior to the
impact of the Adjustments.
(m) Year 2000. Associated shall be reasonably satisfied that the
Company, RBC and the Subsidiary have undertaken a Year 2000 compliance plan
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designed to comply with FFIEC guidelines, which plan shall include an assessment
of the readiness of the Company's, RBC's and Subsidiary's systems (including
systems critical to the provision of services to customers of the Subsidiary)
and shall contain appropriate contingency plans to assure that all mission
critical systems will function properly prior to Year 2000.
(n) Community Reinvestment Act. The Bank shall have provided to
Associated evidence that the Bank has achieved a satisfactory rating and
performance under the Community Reinvestment Act.
(o) Bank. Prior to the Effective Time, the Bank shall be a
wholly-owned subsidiary of RBC.
SECTION 7.03. Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Associated contained in this Agreement shall be complete and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a statement of materiality, such
statement shall be true and correct in all respects) as of the Effective Time as
though made on and as of the Effective Time with the same force and effect as if
made on and as of the Effective Time (except that where a representation or
warranty that expressly speaks as of a date other than the Effective Date, such
representation or warranty need only be true as of such date). The Company shall
have received a certificate of the President of Associated to that effect.
(b) Agreements and Covenants. Associated shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made by Associated for the authorization, execution and delivery of this
Agreement and the consummation by it of the transactions contemplated hereby
shall have been obtained and made by Associated.
(d) 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 challenging or seeking material damages
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in connection with the Merger or the conversion of the Company Common Stock into
the Associated Common Stock pursuant to the Merger.
(e) Opinion of Counsel. The Company shall have received from
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c. or other independent
counsel for Associated reasonably satisfactory to the Company, an opinion dated
the Effective Time, in form and substance reasonably satisfactory to the
Company, covering the matters set forth in Exhibit 7.03, which opinions shall be
based on such assumptions and contain such qualifications and limitations as are
appropriate and reasonably satisfactory to the Company.
(f) Tax Opinion. The Company shall have received from Reinhart,
Boerner, Van Deuren, Norris & Rieselbach, s.c., an opinion (i) dated on or about
the date that is two business days prior to the date the Notice of
Meeting/Prospectus is first mailed to shareholders of the Company, (ii) which
shall not have been withdrawn or modified in any material respect prior to the
Effective Time, (iii) to the effect that:
[a] the Merger will qualify as a reorganization within the
meaning of section 368(a)(1)(A) of the Code;
[b] the Company and Associated will each be party to a
reorganization within the meaning of Section 368(b) of the Code;
[c] no gain or loss will be recognized by any shareholder of
the Company upon consummation of the Merger (except with respect to cash
received in lieu of a fractional share interest in Associated Common Stock); and
[d] the aggregate income tax basis of the Associated Common
Stock received by the shareholders of the Company pursuant to the Merger will be
the same as the aggregate tax basis of the Company Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination.
(a) This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company:
(i) by mutual written consent of Associated and the Company;
(ii) by the Company or Associated (A) if there has been a
breach in any material respect of any representation, warranty, covenant or
agreement on the part of the Company, on the one hand, or Associated, on the
other hand, respectively, set forth in this Agreement, or (B) if any
representation or warranty of the Company, on the one hand, or Associated, on
the other hand, respectively, shall be discovered to have become untrue in any
material respect in either case such that the conditions set forth in Section
7.02(a) or Section 7.03(a) would not be satisfied and such breach or other
condition has not been cured within 20 business days following receipt by the
nonterminating party of notice of such breach or other condition; provided,
however, this Agreement may not be terminated pursuant to this clause (ii) by
the breaching party or party making any representation or warranty which shall
have become untrue in any material respect;
(iii) by either Associated or the Company if any permanent
injunction preventing the consummation of the Merger shall have become final and
nonappealable;
(iv) by either Associated or the Company if the Merger shall
not have been consummated before December 10, 1999, for a reason other than the
failure of the terminating party to comply with its obligations under this
Agreement;
(v) by either Associated or the Company if the Federal Reserve
Board or the Minnesota Department of Commerce Financial Examination Division, or
any other regulatory authority has denied approval of the Merger and neither
Associated nor the Company has, within thirty (30) days after the entry of such
order denying approval, filed a petition seeking review of such order as
provided by applicable law;
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(vi) by Associated, if all of the conditions set forth in
Section 7.02 are not satisfied on or before December 10, 1999;
(vii) by the Company, if all of the conditions set forth in
Section 7.03 are not satisfied on or before December 10, 1999;
(viii) by either Associated or the Company if all of the
conditions set forth in Section 7.01 are not satisfied on or before December 10,
1999;
(ix) by Associated, if at any time prior to the Meeting
described in Section 6.02, the Company's Board of Directors shall have failed to
make its recommendation referred to in Section 6.02, or withdrawn such
recommendation or modified or changed such recommendation in a manner adverse to
the interests of Associated;
(x) by the Company, if the Company shall immediately
thereafter enter into a definitive agreement with a third party providing for an
Acquisition Transaction (as such term is defined below) on terms determined, in
good faith, by the Board of Directors of the Company, after consultation with
independent counsel (which may be or include Kaplan, Strangis and Kaplan, P.A.)
and financial advisors to the Board, to be such that termination of this
Agreement and entry into such third-party agreement is required in order to
discharge properly the directors' duties in accordance with Minnesota Law.
"Acquisition Transaction" means a transaction or series of transactions that,
directly or indirectly, in substance constitutes a disposition of all or
substantially all of the assets or business of the Company, RBC or the
Subsidiary, taken as a whole, whether by means of (i) a merger or consolidation,
share exchange or any similar transaction, (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition or (iii) a purchase or other
acquisition (including by way of a merger or consolidation, share exchange or
otherwise) of securities representing 50% or more of the voting power of the
Company or RBC or 50% or more of the Subsidiary; provided, however, in each of
the situations described in clauses (i), (ii) or (iii), that the Acquisition
Transaction shall represent consideration having an aggregate value (reasonably
determined) to the Company or its shareholders in excess of the consideration to
be received in the Merger;
(xi) by the Company, if the Determination Price is less than
$28.50. If the Company makes an election to terminate this Agreement under this
Section 8.01(a)(xi), the Company shall, on or before the end of the second
business day after the end of the Determination Period (as defined below), give
ten days written notice thereof to Associated. If, during the seven-day period
commencing
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with its receipt of such notice, Associated agrees, by notice in writing to the
Company, that each Share (other than any Shares to be canceled pursuant to
Section 1.06(b) and other than any Dissenting Shares) shall be converted, in
accordance with Section 1.07, into the right to receive that number of shares
(carried out to five decimal places and rounded up if the sixth decimal place is
five or greater) of Associated Common Stock equal to 79,354,686 divided by the
Daily Average Price divided by the number of Shares issued and outstanding
immediately prior to the Effective Time, then no termination shall have occurred
and this Agreement shall remain in full force and effect in accordance with its
terms (except that the exchange ratio for the Shares shall have been so
modified); or
(xii) by Associated, if the Determination Price is greater
than $41.50. If Associated makes an election to terminate this Agreement under
this Section 8(a)(xii), Associated shall, on or before the end of the second
business day after the end of the Determination Period (as defined below), give
ten days written notice thereof to the Company. If, during the seven-day period
commencing with its receipt of such notice, the Company agrees, by notice in
writing to Associated, that each Share (other than any Shares to be canceled
pursuant to Section 1.06(b) and other than any Dissenting Shares) shall be
converted, in accordance with Section 1.07, into the right to receive that
number of shares (carried out to five decimal places and rounded up if the sixth
decimal place is five or greater) of Associated Common Stock equal to 97,306,579
divided by the Daily Average Price divided by the number of Shares issued and
outstanding immediately prior to the Effective Time, then no termination shall
have occurred and this Agreement shall remain in full force and effect in
accordance with its terms (except that the exchange ratio for the Shares shall
have been so modified).
For purposes of this Section 8.01(a), "Determination Price" means the average of
the closing prices of a share of Associated Common Stock as quoted on the NASDAQ
National Market during the ten trading day period (the "Determination Period")
ending (i) on the third business day prior to the day on which the Effective
Time is to occur in accordance with the mutual agreement of the Company and
Associated or, (ii) if the Company and Associated do not agree on the day on
which the Effective Time is to occur, on the third business day prior to the day
on which the thirty (30) day period described in Section 1.02 expires.
(b) In the event of termination and abandonment by any party as
provided above, written notice shall forthwith be given to the other party,
which notice shall specifically describe the basis for such termination.
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SECTION 8.02. Effect of Termination.
(a) If the Merger is not consummated as the result of termination of
this Agreement caused otherwise than by breach of a party hereto, the Company
and Associated each shall pay its own Expenses (as defined in Section 4.05
above) and this Agreement shall immediately terminate, except as set forth in
Section 9.01 hereof, and neither the Company nor Associated shall have any
liability under this Agreement for damages or otherwise.
(b) If termination of this Agreement shall have been caused by
breach of this Agreement by any party hereto, then, in addition to other
remedies at law or equity for breach of this Agreement, the party so found to
have breached this Agreement shall indemnify and reimburse the other party for
its expenses.
(c) Anything to the contrary notwithstanding, (i) if this Agreement
[a] is terminated by Associated pursuant to Section 8.01(ix) or by the Company
pursuant to Section 8.01(x) and [b] prior thereto or within twelve months after
such termination the Company shall have entered into an agreement to engage in
an Acquisition Transaction or (ii) if this Agreement is terminated by Associated
solely due to the failure of the holders of Common Stock to approve the Merger
at a Meeting as provided in Section 6.02, then the Company shall pay Associated
a fee equal to $2,670,000. If such fee becomes payable under the circumstances
described in clause (i) above, it shall be paid to Associated within two
business days after the date of entering into such agreement for an Acquisition
Transaction and if such fee becomes payable under the circumstances described in
clause (ii) above, it shall be paid to Associated within two business days of
termination of this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the shareholders of the Company, no amendment may be made which
would reduce the amount or change the type of consideration into which each
Share shall be converted pursuant to this Agreement upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions
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contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Article VIII, except that the agreements set forth in Article I shall survive
the Effective Time indefinitely and those set forth in Sections 4.03(b), 4.05,
5.02(b), 6.07, 6.08, 8.02 and Article IX hereof shall survive termination
indefinitely.
SECTION 9.02. Disclosure Schedules. The schedules and information set
forth in the Disclosure Schedules specifically refer to the Section (and
paragraph, if applicable) of this Agreement to which such schedule and
information is responsive. The Disclosure Schedules shall not vary, change or
alter the literal meaning of the representations and warranties of the parties
contained in this Agreement, other than creating exceptions thereto which are
directly responsive to the language of the representations and warranties
contained in this Agreement.
SECTION 9.03. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or mailed if delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address) and shall be effective upon
receipt:
(a) If to Associated:
Associated Banc-Corp
112 North Adams Street
P.O. Box 13307
Green Bay, WI 54307-3307
Telecopier: (920) 433-3261
Attention: Brian R. Bodager
Chief Administrative Officer
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With a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street, Suite 2100
Milwaukee, WI 53202
Telecopier: (414) 298-8097
Attention: Richard W. Graber, Esq.
(b) If to Company:
Riverside Acquisition Corp.
2655 Campus Drive
Plymouth, Minnesota 55441-2657
Telecopier: (612) 559-7100
Attention: Gwen Stanley, Senior Vice President
with a copy to:
Kaplan, Strangis and Kaplan, P.A.
5500 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Telecopier: (612) 375-1143
Attention: James C. Melville, Esq.
SECTION 9.04. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person; including, without limitation, any
partnership or joint venture in which the Company (either alone, or through or
together with any other subsidiary) has, directly or indirectly, an interest of
5% or more;
(b) "beneficial owner" with respect to any Shares, means a person
who shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates or associates (as
such term defined in Rule 12b-2 of the Exchange Act) has, directly or
indirectly, [a] the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warranties or options, or
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otherwise, or [b] the right to vote pursuant to any agreement, arrangement or
understanding, (iii) which are beneficially owned, directly or indirectly, by
any other persons with whom such person or any of its affiliates or associates
has any agreement, arrangement or understanding for the purposes of requiring,
holding, voting or disposing of any Shares or (iv) pursuant to Section 13(d) of
the Exchange Act and any rules or regulations promulgated thereunder;
(c) "business day" means any day other than a day on which banks in
Wisconsin are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise; and
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the "Exchange Act).
SECTION 9.05. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.07. Entire Agreement. This Agreement together with the
Disclosure Schedules and Exhibits hereto and the Confidentiality Agreement dated
January 15, 1999 between the Company and Associated constitute the entire
agreement of the parties and supersede all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other person any rights or remedies hereunder.
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SECTION 9.08. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that Associated may assign all or any of
its rights hereunder to any affiliate provided that no such assignment shall
relieve the assigning party of its obligations hereunder and the assignee agrees
to be bound by the terms and conditions of this Agreement including the
requirement of conversion and delivery of shares of Associated Common Stock
pursuant to Section 1.06 hereof.
SECTION 9.09. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors, and
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement, except for the right to receive the
consideration payable pursuant to Article I and the right to indemnification
under Section 6.08.
SECTION 9.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
SECTION 9.11. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Associated and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
ASSOCIATED BANC-CORP
By: /s/ H. B. Conlon
---------------------------------------------
Name: H. B. Conlon
Title: Chairman, and Chief Executive Officer
RIVERSIDE ACQUISITION CORP
By: /s/ David E. Cleveland
---------------------------------------------
Name: David E. Cleveland
Title: President
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EXHIBIT A-1
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This First Amendment to Agreement and Plan of Merger dated as of
June 24, 1999 between ASSOCIATED BANC-CORP., a Wisconsin corporation
("Associated") and RIVERSIDE ACQUISITION CORP., a Minnesota corporation
("Company").
RECITALS
A. Associated and the Company are parties to an Agreement and Plan
of Merger dated March 10, 1999 (the "Agreement").
B. Associated and the Company desire to amend the Agreement in the
manner set forth below.
AGREEMENTS
In consideration of the foregoing and the mutual covenants and
agreements contained herein and in the Agreement, and intending to be legally
bound hereby, Associated and the Company hereby agree as follows:
1. Amendment of Seventh Recital. The seventh recital of the
Agreement is hereby amended to read as follows:
WHEREAS, Associated and the Company intend to effect a merger that
qualifies as a tax free reorganization under the Internal Revenue
Code of 1986, as amended (the "Code").
2. Amendment of Section 2.23. Section 2.23 of the Agreement is
hereby amended to read as follows:
SECTION 2.23. Tax Matters. To the knowledge of the Company, neither
the Company nor any of its affiliates has taken or agreed to take
any action that would prevent the Merger from qualifying as a
reorganization under Section 368(a)(1)(A) of the Code.
3. Amendment of Section 3.14. Section 3.14 of the Agreement is
hereby amended to read as follows:
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SECTION 3.14. Tax Matters. To the knowledge of Associated, neither
Associated nor any of its affiliates has taken or agreed to take any
action that would prevent the Merger from qualifying as a
reorganization under Section 368(a)(1)(A) of the Code.
4. Amendment of Section 4.02(j)(x). Section 4.02(j)(x) of the
Agreement is hereby amended to read as follows:
(x) incur or pay legal or accounting, broker or investment banking
fees in connection with the transaction comtemplated hereby in
excess of an aggregate of $325,000; or
5. Amendment of Section 4.04. Section 4.04 of the Agreement is
hereby amended to read as follows:
SECTION 4.04. Affiliates; Tax Treatment. Within thirty (30) days
after the date of this Agreement, (a) the Company shall deliver to
Associated a letter identifying all persons who are then
"affiliates" of the Company, including, without limitation, all
directors and executive officers of the Company for purposes of Rule
145 promulgated under the Securities Act and (b) the Company shall
advise the persons identified in such letter of the resale
restrictions imposed by applicable securities laws and shall use
reasonable efforts to obtain from each person identified in such
letter a written agreement substantially in the form attached hereto
as Exhibit 4.04, as amended. The Company shall use reasonable
efforts to obtain from any person who becomes an affiliate of the
Company after the Company's delivery of the letter referred to
above, and on or prior to the Effective Time, the written agreement
substantially in the form attached hereto as Exhibit 4.04, as
amended, as soon as practicable after attaining such status. The
Company will use its reasonable best efforts to cause the Merger to
qualify as a reorganization under Section 368(a)(1)(A) of the Code.
6. Amendment of Section 5.03. Section 5.03 of the Agreement is
hereby amended to read as follows:
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SECTION 5.03. Tax Treatment. Associated will use its reasonable best
efforts to cause the Merger to qualify as a reorganization under
Section 368(a)(1)(A) of the Code.
7. Deletion of Section 7.02(g). Section 7.02(g) of the Agreement is
hereby deleted in its entirety.
8. Amendment of Section 7.02(h). Section 7.02(h) of the Agreement is
hereby amended to read as follows:
(h) Affiliate Agreements. Associated shall have received from each
person who is identified in the affiliate letter as an "affiliate"
of the Company a signed affiliate agreement in the form attached
hereto as Exhibit 4.04, as amended.
9. Amendment of Section 8.01(a). The dates referenced in sections
8.01(a)(iv), (vi), (vii) and (viii) of the Agreement are hereby changed from
"December 10, 1999" to "October 25, 1999."
10. Amendment to Exhibit 4.04. Exhibit 4.04 is amended to read in
the form attached.
11. Full Force and Effect. All remaining provisions of the Agreement
remain unchanged and in full force and effect.
12. Counterparts. This First Amendment to Agreement and Plan of
Merger may be executed in counterparts, each of which shall be deemed to be an
original and all of which, taken together, shall constitute one and the same
agreement.
[Signature page follows]
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IN WITNESS WHEREOF, Associated and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
ASSOCIATED BANC-CORP
By: /s/ H. B. Conlon
---------------------------------------------
Name: H. B. Conlon
Title: Chairman, and Chief Executive Officer
RIVERSIDE ACQUISITION CORP
By: /s/ David E. Cleveland
---------------------------------------------
Name: David E. Cleveland
Title: President
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EXHIBIT B
SECTIONS 302A.471 AND 302A.473 OF THE MINNESOTA
BUSINESS CORPORATION ACT - DISSENTERS' APPRAISAL RIGHTS
302A.471. Rights of dissenting shareholders.
Subdivision 1. Actions creating rights. A shareholder of a corporation
may dissent from, and obtain payment for the fair value of the shareholder's
shares in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects
the rights or preferences of the shares of the dissenting shareholder in that
it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption
of the shares, including provision respecting a sinking fund for the redemption
or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares
to acquire shares, securities other than shares, or rights to purchase shares or
securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter,
or to cumulate votes, except as the right may be excluded or limited through the
authorization or issuance of securities of an existing or new class or series
with similar or different voting rights; except that an amendment to the
articles of an issuing public corporation that provides that section 302A.671
does not apply to a control share acquisition does not give rise to the right to
obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the corporation, but not
including a transaction permitted without shareholder approval in section
302A.661, subdivision 1, or a disposition in dissolution described in section
302A.725, subdivision 2, or a disposition pursuant to an order of a court, or a
disposition for cash on terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the shareholders in accordance with
their respective interests within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B,
to which the corporation is a party, except as provided in subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter
322B, to which the corporation is a party as the corporation whose shares will
be acquired by the acquiring corporation, if the shares of the shareholder are
entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a shareholder vote
with respect to which the articles, the bylaws, or a resolution approved by the
board directs that dissenting shareholders may obtain payment for their shares.
Subdivision 2. Beneficial owners. (a) A shareholder shall not assert
dissenters' rights as to less than all of the shares registered in the name of
the shareholder, unless the shareholder dissents with respect to all the shares
that are beneficially owned by another person but registered in the name of the
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder
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dissents. In that event, the rights of the dissenter shall be determined as if
the shares as to which the shareholder has dissented and the other shares were
registered in the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may
assert dissenters' rights with respect to shares held on behalf of the
beneficial owner, and shall be treated as a dissenting shareholder under the
terms of this section and section 302A.473, if the beneficial owner submits to
the corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
Subdivision 3. Rights not to apply. (a) Unless the articles, the
bylaws, or a resolution approved by the board otherwise provide, the right to
obtain payment under this section does not apply to a shareholder of the
surviving corporation in a merger, if the shares of the shareholder are not
entitled to be voted on the merger.
(b) If a date is fixed according to section 302A.445, subdivision 1,
for the determination of shareholders entitled to receive notice of and to vote
on an action described in subdivision 1, only shareholders as of the date fixed,
and beneficial owners as of the date fixed who hold through shareholders, as
provided in subdivision 2, may exercise dissenters' rights.
Subdivision 4. Other rights. The shareholders of a corporation who have
a right under this section to obtain payment for their shares do not have a
right at law or in equity to have a corporate action described in subdivision 1
set aside or rescinded, except when the corporate action is fraudulent with
regard to the complaining shareholder or the corporation.
302A.473. Procedures for asserting dissenters' rights.
Subdivision 1. Definitions. (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action referred to in section 302A.471, subdivision 1 or
the successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective
date of the corporate action referred to in section 302A.471, subdivision 1, up
to and including the date of payment, calculated at the rate provided in section
549.09 for interest on verdicts and judgments.
Subdivision 2. Notice of action. If a corporation calls a shareholder
meeting at which any action described in section 302A.471, subdivision 1 is to
be voted upon, the notice of the meeting shall inform each shareholder of the
right to dissent and shall include a copy of section 302A.471 and this section
and a brief description of the procedure to be followed under these sections.
Subdivision 3. Notice of dissent. If the proposed action must be
approved by the shareholders, a shareholder who is entitled to dissent under
section 302A.471 and who wishes to exercise dissenters' rights must file with
the corporation before the vote on the proposed action a written notice of
intent to demand the fair value of the shares owned by the shareholder and must
not vote the shares in favor of the proposed action.
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Subdivision 4. Notice of procedure; deposit of shares. (a) After the
proposed action has been approved by the board and, if necessary, the
shareholders, the corporation shall send to all shareholders who have complied
with subdivision 3 and to all shareholders entitled to dissent if no shareholder
vote was required, a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date by
which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or
the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief description
of the procedures to be followed under these sections.
(b) in order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares or comply with
any restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all other
rights of a shareholder until the proposed action takes effect.
Subdivision 5. Payment; return of shares. (a) After the corporate
action takes effect, or after the corporation receives a valid demand for
payment, whichever is later, the corporation shall remit to each dissenting
shareholder who has complied with subdivisions 3 and 4 the amount the
corporation estimates to be the fair value of the shares, plus interest,
accompanied by:
(1) The corporation's closing balance sheet and statement of income for
a fiscal year ending not more than 16 months before the effective date of the
corporate action, together with the latest available interim financial
statements;
(2) An estimate by the corporation of the fair value of the shares and
a brief description of the method used to reach the estimate; and
(3) A copy of section 302A.471 and this section, and a brief
description of the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph
(a) from a person who was not a shareholder on the date the action dissented
from was first announced to the public or who is dissenting on behalf of a
person who was not a beneficial owner on that date. If the dissenter has
complied with subdivisions 3 and 4, the corporation shall forward to the
dissenter the materials described in paragraph (a) a statement of the reason for
withholding the remittance, and an offer to pay to the dissenter the amount
listed in the materials if the dissenter agrees to accept that amount in full
satisfaction. The dissenter may decline the offer and demand payment under
subdivision 6. Failure to do so entitles the dissenter only to the amount
offered. If the dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the
deposit of certificates or the imposition of transfer restrictions on
uncertificated shares, it shall return all deposited certificates and
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cancel all transfer restrictions. However, the corporation may again give notice
under subdivision 4 and require deposit or restrict transfer at a later time.
Subdivision 6. Supplemental payment; demand. If a dissenter believes
that the amount remitted under subdivision 5 is less than the fair value of the
shares plus interest, the dissenter may give written notice to the corporation
of the dissenter's own estimate of the fair value of the shares, plus interest,
within 30 days after the corporation mails the remittance under subdivision 5,
and demand payment of the difference. Otherwise, a dissenter is entitled only to
the amount remitted by the corporation.
Subdivision 7. Petition; determination. If the corporation receives a
demand under subdivision 6, it shall, within 60 days after receiving the demand,
either pay to the dissenter the amount demanded or agreed to by the dissenter
after discussion with the corporation or file in court a petition requesting
that the court determine the fair value of the shares, plus interest. The
petition shall be filed in the county in which the registered office of the
corporation is located, except that a surviving foreign corporation that
receives a demand relating to the shares of a constituent domestic corporation
shall file the petition in the county in this state in which the last registered
office of the constituent corporation was located. The petition shall name as
parties all dissenters who have demanded payment under subdivision 6 and who
have not reached agreement with the corporation. The corporation shall, after
filing the petition, serve all parties with a summons and copy of the petition
under the rules of 180 civil procedure. Nonresidents of this state may be served
by registered or certified mail or by publication as provided by law. Except as
otherwise provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under subdivision 5, but
shall not be liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
Subdivision 8. Costs; fees; expenses. (a) The court shall determine the
costs and expenses of a proceeding under subdivision 7, including the reasonable
expenses and compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except that the court
may assess part or all of those costs and expenses against a dissenter whose
action in demanding payment under subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to Comply
substantially with this section, the court may assess all fees and expenses of
any experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an
attorney for the dissenters out of the amount awarded to the dissenters, if any.
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Exhibit C
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS EXCEPT SHARE AND RATIO DATA)
<TABLE>
<CAPTION>
As of and for the three
months ended As of and for the year ended
March 31, December 31,
----------------------- -------------------------------------
1999* 1998* 1998 1997 1996
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Income statement data:
Interest Income $ 6,201 $ 6,000 $ 25,075 $ 21,618 $ 16,363
Interest expense 1,891 2,068 8,284 7,325 5,031
Net Interest Income 4,310 3,932 16,791 14,293 11,332
Provision for loan losses 190 250 974 1,425 991
Other income 807 856 3,302 2,871 2,611
Other expenses 2,754 2,516 12,320 9,496 7,938
Income before income taxes 2,173 2,023 6,798 6,243 5,014
Income tax expense 856 859 2,903 2,644 2,175
Minority interest in consolidated -- (1) (5) (9) (15)
earnings
Net income 1,316 1,162 3,890 3,589 2,824
Per common share data:
Net income per share
Basic and diluted $ 52.65 $ 46.49 $ 155.61 $ 143.57 $ 112.97
Weighted average shares outstanding
Basic and diluted 25,000 25,000 25,000 25,000 25,000
Cash dividends per share -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
March 31, December 31,
----------------------- -------------------------------------
1999* 1998* 1998 1997 1996
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance sheet data:
Total assets $335,550 $316,667 $ 339,455 $ 292,392 $ 248,892
Loans, gross 241,867 203,965 233,276 200,682 159,784
Allowance for loan losses 4,586 3,906 4,400 3,650 2,400
Total deposits 297,807 284,199 302,834 261,400 223,673
Stockholders' equity 24,994 20,860 23,669 19,641 15,853
</TABLE>
* Unaudited
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Management's Discussion and Analysis of Financial Condition and Results of
Operations of Riverside Acquisition Corp. and its subsidiaries (the "Company")
is intended as a review of significant factors affecting the Company's
consolidated results of operations for the three months ended March 31, 1999 and
1998 and for the three-year period ended December 31, 1998 and the Company's
consolidated financial condition as of March 31, 1999 and December 31, 1998 and
1997. This Discussion and Analysis should be read in conjunction with the
Consolidated Financial Statements including the accompanying notes and the
Selected Financial Data presented elsewhere in this Proxy Statement/ Prospectus.
CHANGES IN FINANCIAL CONDITION
Total Company assets at year end 1998 were $339,455,000. During 1998, assets
increased by $47,063,000 or 16.1%. Slightly more than two-thirds of the increase
was attributable to the growth in gross loans, which increased by $32,594,000 or
16.2% to $233,276,000 in 1998. The loan growth was primarily due to increased
commercial real estate lending activity. During 1998 commercial real estate
loans increased by $19,879,000 or 29.1% to $88,138,000.
28% of the total asset growth was attributable to growth in the Company's
available for-sale securities holdings. During 1998 total securities increased
by $13,184,000 or 27.1% to $61,884,000 as of December 31, 1998. Holdings of
corporate bonds and notes increased by $17,575,000, of which $11,956,000 was
attributable to increases in holdings of short-term commercial paper which were
acquired to fund anticipated seasonal deposit withdrawals after the 1998
year-end. Holdings of municipal bonds increased by $3,624,000 in 1998. Aggregate
holdings of US Treasuries, US government agency notes and bonds, and US
government agency mortgage-backed securities declined by $8,014,000 in 1998.
During 1998 non-earning assets increased by $5,049,000 to $34,600,000. Cash and
cash equivalents increased by $2,959,000 to $22,110,000 during the period.
Premises and equipment increased by $443,000 which reflected the assets acquired
with the opening of the Plymouth location. Deferred taxes increased by
$1,083,000 which principally reflected the deferred tax component of the
increase in the accrued liability for the Company's phantom stock plan.
The increase in assets was primarily funded by an increase in total deposits.
Total deposits increased from $261,400,000 at December 31, 1997 to $302,834,000
at December 31, 1998, an increase of $41,434,000 or 15.9%. Non-interest bearing
demand deposits increased by $15,372,000 or 14.3% to $122,816,000. The majority
of the increase was in commercial demand deposit accounts. Interest bearing
deposit accounts increased by $26,062,000 or 16.9% to $180,018,000.
Historically, the Company's deposits grow significantly during the last two
months of the year. Of the $302,834,000 on deposit at year-end 1998, management
estimates that approximately $10,000,000 was due to the seasonal upswing of
deposit balances at year-end.
During 1998 other liabilities increased by $1,618,000. Within this category,
short-term borrowings decreased by $994,000 of which $500,000 reflected a
payment on a note from the Company to another financial institution. The largest
component of the increase in other liabilities was an increase of $2,201,000 in
the accrued liability under the Company's phantom stock plan.
Stockholders' equity increased by $4,028,000 to $23,669,000 as of December 31,
1998 as a result of increases of $3,890,000 in net income and $138,000 in
accumulated other comprehensive income. No dividends were declared or paid.
During the period from December 31, 1998 to March 31, 1999, total Company assets
declined by $3,905,000 or 1.2% to $335,550,000. During this period, net loans
increased by $8,406,000, investments declined by $11,058,000, and deposits
declined by $5,028,000. The decline in deposits was anticipated due to
approximately $10,000,000 in expected withdrawals related to the seasonal
upswing of deposits at
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year-end 1998. Management anticipated the decline in deposits and in late 1998
had invested in short-term securities to fund the anticipated cash outflows.
The increase in loan balances was predominantly in commercial and commercial
real estate loans which increased by $5,626,000 or 5.3% and $4,442,000 or 5.0%,
respectively, from December 31, 1998 to March 31, 1999.
The decline in investments of $11,058,000 was from maturing commercial paper and
from principal paydowns on mortgage backed securities.
The decline in deposits during the first quarter of 1999 was primarily from a
decrease in interest bearing deposits of $4,846,000 or 2.7%. NOW and money
market accounts declined by $3,610,000, jumbo certificates of deposits declined
by $3,696,000, and other time deposits increased by $2,006,000.
Stockholders equity increased by $1,325,000 from December 31, 1998 to March 31,
1999. The increase came from $1,316,000 of net income and the remainder from the
change in other comprehensive income. No dividends were declared or paid.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
MARCH 31, 1999 COMPARED WITH THE THREE MONTHS ENDED MARCH 31, 1998
Net income for the three months ended March 31, 1999 totaled $1,316,000, an
increase of $154,000 or 13.3%. over the same three month period in 1998. The
increase resulted primarily from an increase in net interest income and a lower
loan loss provision offset by an increase in operating expenses.
Net interest income increased by $378,000 or 9.6%. The increase was divided
between an increase in interest income of $200,000 and a decrease in interest
expense of $177,000. Although the yield on loans declined by 86 basis points,
the yield on interest bearing liabilities declined by 58 basis points and the
loan to deposit ratio improved from an average of 76.6% to 81.3% and the ratio
of average non-interest bearing deposits to average total deposits improved from
36.9% to 39.5%. The result was only a minor reduction in the net interest margin
from 5.97% to 5.93% for the three month period ending March 31, 1998 and the
three month period ending March 31, 1999, respectively.
The balance in the allowance for loan losses is based on management's evaluation
of the loan portfolio. The adequacy of the allowance for loan losses is based on
an amount that management believes will be adequate to absorb estimated losses
on existing loans that may become uncollectible which includes an evaluation
based on prior loss experience, changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific problem loans, and
current economic conditions that may affect the borrower's ability to pay.
During the three months ended March 31, 1999, net charge-offs totaled $4,000, an
increase of $10,000 over net recoveries of $6,000 during the same period of
1998. Loan loss provisions in the three months ended March 31, 1999 totaled
$190,000 and were made primarily to support loan growth.
Other income for the three months ended March 31, 1999 totaled $807,000 and was
$49,000 less than during the same period of 1998. Income from premiums received
on SBA loan sales were $63,000 less in the first quarter of 1999 as compared to
the same period in 1998.
Operating expenses increased by $238,000 or 9.5% for the first three months of
1999 compared to the same period in 1998. Increases were seen in all three
expense categories as salaries and employee benefits increased by $40,000 or
2.6%, occupancy expenses increased by $71,000 or 18.3%, and other expenses
increased by $128,000 or 21.9%. The significant increase in occupancy expenses
is primarily related to the additional expenses from opening the Plymouth office
in February, 1998.
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Income tax expense declined by $3,000 in the first three months of 1999 as
compared to the same period in 1998. The decline was due to a lower tax rate at
the subsidiary bank level as a result of an increase in non-taxable municipal
bond holdings.
RESULTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1998, 1997, AND 1996
Net income for 1998 totaled $3,890,000, an increase of $301,000 or 8.4% over the
$3,589,000 earned in 1997. Net income in 1997 was $3,589,000 or a 27% increase
($765,000) over $2,824,000 for 1996. Net income per common stock share was
$155.61 per share for 1998 compared to $143.57 per share for 1997 and $112.97
per share for 1996.
The increases in net income for 1998 and 1997 were largely due to the growth in
earnings of the Company's subsidiary bank. Those earnings increased by $953,000
or 18.6% to $6,072,000 in 1998 and increased by $1,187,000 or 30.2% to
$5,119,000 from $3,932,000 in 1996 primarily as a result of asset growth.
Net interest income increased $2,498,000 or 17.5% to $16,791,000 in 1998
compared to $14,293,000 in 1997. The 1997 total represented an increase of
$2,961,000 or 26.1% compared to 1996 net interest income of $11,332,000.
The Company's net interest margin declined to 5.98% in 1998 from 6.13% in 1997
and 6.44% in 1996. Management believes that the Company's net interest margin
compares very favorably to the net interest margins of similarly situated
financial institutions. The favorable net interest margin is largely a result of
the Company's deposit composition. Non-interest bearing deposits constituted
40.6%, 41.1% and 43.8% of total deposits at December 31, 1998, 1997 and 1996,
respectively. The decline in the net interest margin in 1998 is primarily the
result of declining interest rates during the latter part of the year and
competitive pressures to lower loan interest rates. During 1998, approximately
78% of total gross loans were variable rate loans that reprice immediately when
the prime rate changes. The prime rate decreased by 75 basis points between
September and November of 1998. Starting in 1997 and through 1998, the
subsidiary Bank was experiencing competitive pressure to lower loan interest
rates and to provide fixed rate loans. As a result the overall loan yield
declined to 9.38% as of December 1998 compared to 10.15% as of December 1997 and
10.54% as of December 1996. The competitive pressure on loan rates also resulted
in numerous payoffs on loans. The loan-to-deposit ratio averaged 76.2% in 1998
compared to 79.2% in 1997 and 76.1% in 1996. Contributing to the decline in the
net interest margin in 1997 as compared to 1996, were a decrease in loan fees as
a percentage of gross loans from .57% in 1996 to .48% in 1997, a decrease in the
non-interest bearing to total deposit ratio from an average of 40.8% in 1996 to
37.9% in 1997, and an increase in the average yield on interest bearing deposits
from 4.24% in 1996 to 4.50% in 1997. Market pressure to increase deposit rates
was the largest contributing factor to the higher deposit yield. The net
interest margin for the subsidiary Bank for the month of December 1998 was 5.88%
compared to 6.12% for the month of December 1997 and 6.56% for the month of
December 1996.
The allowance for loan losses is based on management's evaluation of the loan
portfolio. The adequacy of the allowance for loan losses is based on an amount
that management believes will be adequate to absorb estimated losses on existing
loans that may become uncollectible. Management's review includes an evaluation
of prior loss experience, changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific problem loans, and
current economic conditions that may affect the borrower's ability to pay.
During 1998, net charge-offs totaled $224,000, an increase of $49,000 over 1997
net charge-offs of $175,000. Net charge-offs in 1997 were $316,000 less than
1996 net charge-offs of $491,000. As a percentage of average gross loans, net
charge-offs represented .11%, .10%, and .36% of average gross loans for 1998,
1997, and 1996, respectively.
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The provisions for loan losses during 1998 aggregated $974,000 compared to
$1,425,000 during 1997. The provisions for loan losses in 1997 were $434,000
higher than 1996 aggregate provisions of $991,000. The loan loss provision
represented .46%, .78% and .73% of average gross loans during 1998, 1997 and
1996, respectively. The higher provisions in 1997 were partially due to an
increase in the amount reserved on SBA loans. Significant increases in gross
loans also contributed to the higher loan loss provisions in 1997 and 1996.
Gross loans increased by $32,594,000 in 1998 compared to increases of
$40,886,000 in 1997 and $38,518,000 in 1996. The allowance for loan losses as a
percentage of gross loans was 1.89% as of December 31, 1998 compared to 1.82% as
of December 31, 1997 and 1.50% as of December 31, 1996. Management believes that
the reserve is adequate to absorb any current or future losses in the loan
portfolio.
In 1998, aggregate non-interest income increased by $431,000 or 15.0% to
$3,302,000 from $2,871,000 in 1997. Non-interest income increased in 1997 by
$259,000 or 9.9% from $2,611,000 in 1996. Non-interest income consists of two
categories - 1) service charges and other fees and 2) other income. Service
charge income and other fees increased by $115,000 or 6.8% in 1998 and by
$100,000 or 6.3% in 1997. Other income increased by $316,000 or 26.7% in 1998
and by $152,000 or 14.8% in 1997. Premiums received on sales of SBA loans was
the biggest contributing factor to the increase in other income.
Operating expenses increased by $2,824,000 or 29.7% to $12,320,000 in 1998
compared to $9,496,000 in 1997. Operating expenses in 1997 increased by
$1,558,000 or 19.6% compared to $7,938,000 in 1996. The efficiency ratio (total
operating expenses as a percentage sum of the net interest income plus
non-interest income) for 1998, 1997, and 1996 was 61.3%, 55.3%, and 56.9%,
respectively.
Operating expenses consist of three categories - 1) salaries and employee
benefits, 2) occupancy and 3) other expenses. Totals by category for 1998, 1997,
and 1996, dollar change and percent increases were:
<TABLE>
<CAPTION>
1998 $ Chg % Chg 1997 $ Chg % Chg 1996
------- ------- ------- ------- ------- ------- -------
(000's) (000's) (000's) (000's) (000's)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Expenses
Salaries and $ 7,989 $ 2,181 37.6% $ 5,808 $ 1,343 30.1% $ 4,465
Employee Benefits
Occupancy 1,770 312 21.4% 1,458 113 8.4% 1,345
Other Expenses 2,561 331 14.8% 2,230 102 4.8% 2,128
------- ------- ------- ------- ------- ------- -------
TOTAL $12,320 $ 2,824 29.7% $ 9,496 $ 1,558 19.6% $ 7,938
</TABLE>
Salaries and employee benefit expenses of the parent company contributed
significantly to the increases each year. Phantom Stock Plan expense, included
in salaries and employee benefits, of $2,201,000, $1,050,000 and $318,000 was
incurred in each of the years ended December 31, 1998, 1997 and 1996,
respectively. Payments under the phantom stock plan will be due and payable upon
completion of the merger and the plan thereafter will be terminated.
Consequently phantom stock plan expenses will not be a recurring item after the
transaction. Salaries and employee benefit expenses, excluding the phantom stock
plan accrual, increased by $1,030,000 or 21.6% in 1998 as compared to 1997.
Increases were primarily due to an increase in the number of full time
equivalent employees when the Company's fifth banking location was opened in
1998. The increase was also attributable to an increase in base compensation and
individual performance incentives. Salaries and employee benefit expenses,
excluding the phantom stock plan accrual, increased by $611,000 or 14.7% in 1997
as compared to 1996.
The increase in occupancy and other expenses in 1998 is largely attributable to
the addition of the Company's fifth banking location.
The income tax provision increased by $259,000 or 9.8% from 1997 to 1998 while
the increase from 1996 to 1997 was $469,000 or 21.6%. The income tax provisions
were reduced by a deferred tax benefit of
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$880,000 in 1998, $420,000 in 1997, and $127,000 in 1996 related to the phantom
stock plan expense accruals.
LIQUIDITY AND CAPITAL RESOURCES
The concept of liquidity comprises the ability of an enterprise to maintain
sufficient cash flow to meet its needs and obligations on a timely basis. Bank
liquidity is generally considered in terms of the nature and mix of the
institution's sources and uses of funds. Bank liquidity is provided from several
asset categories and from certain liability categories. The asset side of the
balance sheet provides liquidity through maturities of investment securities and
repayment of loans. Cash and amounts due from correspondent banks, although
available on a short-term basis for liquidity, are not available for any
extended period of time as the balances are used to meet operating needs and
reserve requirements at the Federal Reserve Bank. Primary asset sources of
liquidity are unpledged investment securities categorized as available for sale
and Federal funds sold. These categories totaled approximately $57,115,000 as of
March 31, 1999, $68,535,000 as of December 31, 1998 and $57,949,000 as of
December 31, 1997.
The liability side of the balance sheet provides liquidity through borrowing
capabilities which includes increasing deposits and/or other liabilities. In
past periods of strong loan demand, the Company has been successful in
generating deposits through special rate promotions on certificates of deposit.
The Company is also able to meet liquidity needs by borrowing on its established
correspondent bank federal fund borrowing lines. As of March 31, 1999, the
Company had available $22,000,000 in federal fund borrowing lines and had
$22,000,000 and $19,500,000 available as of December 31, 1998 and December 31,
1997, respectively.
The Company's only plans for major capital expenditures in 1999 are the
expansion of its operations facility. Expenditures for the expansion are
budgeted at approximately $237,000.
The Company has unusual liquidity demands compared to the commercial banking
industry generally as its primary customer base is comprised of commercial
accounts who often carry balances that exceed the $100,000 FDIC insurance limit.
Management estimates that approximately 40% of total deposits are uninsured.
Commercial customers also have a relatively higher demand for lines of credit.
Undrawn lines of credit totaled $69,535,000, $67,841,000 and $57,122,000 as of
March 31, 1999, December 31, 1998 and December 31, 1997, respectively. Lines of
credit include revolving lines of credit, non-revolving lines of credit,
overdraft protection lines on checking accounts, and available credit on credit
cards. Revolving lines of credit were drawn to approximately 53%, 54% and 51% of
their maximum available balance as of March 31, 1999, December 31, 1998 and
December 31, 1997, respectively. Other contingent liabilities included
$9,020,000, $10,641,000 and $8,605,000 in outstanding letters of credit as of
March 31, 1999, December 31, 1998 and December 31, 1997, respectively.
Management believes that, in the current economic environment, the Bank's
liquidity position is adequate. The Company mitigates its liquidity risk through
careful monitoring of significant balance deposit and loan customers. There are
no known trends, nor any known demands (other than with respect to certain Year
2000 issues), commitments, events or uncertainties that will result or are
reasonably likely to result in a material increase or decrease in the Bank's
liquidity.
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EFFECTS OF INFLATION
The Company's consolidated financial statements and notes thereto have been
prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering the changes in the relative purchasing
power of money over time due to inflation. The impact of inflation is reflected
in the increased cost of the Company's operations. Unlike most industrial
companies, nearly all of the assets and liabilities of the Company are monetary
in nature. As a result, interest rates have a greater impact on the Company's
performance than do the effects of general levels of inflation. Interest rates
do not necessarily move in the same direction or to the same extent as the price
of goods and services.
YEAR 2000
An issue affecting the Company is whether its computer systems and applications
will recognize and process the Year 2000 and beyond. The Company is currently in
various stages of the assessment, remediation and internal testing of the
systems affected by this issue.
Management believes that it is devoting the necessary resources to timely
address all Year 2000 issues over which it has control and all mission critical
systems have been tested for Year 2000 compliance. The Company is also
monitoring the adequacy and progress of its customers, suppliers, and others.
However, there is no assurance that the customers, suppliers and others will
resolve their own Year 2000 compliance issues.
Management has implemented a comprehensive communication strategy with its
customer in order to assure the customers' of the steps the Company has taken to
by Year 2000 compliant. Through this strategy and through one on one contact
with customers, the liquidity risk associated with the Year 2000 issues should
be mitigated.
Costs related to the Year 2000 issues are being expensed during the period in
which they occurred. The financial impact to the Company of implementing the
systems changes necessary to become Year 2000 compliant has not been and is not
anticipated to be material to its business, operations, financial condition,
liquidity and capital resources. However, there are uncertainties as to the
future costs associated with the Year 2000 which may affect the Company's
expectations. Factors that could influence the amount and timing of future costs
include the amount of remediation required to upgrade or replace each of the
affected programs or systems, and the success of the Company's customers and
suppliers.
REGULATORY CAPITAL REQUIREMENTS
The Federal Reserve Board, the Company's primary regulator, has adopted
risk-based capital regulations which require the Company to maintain a risk
based capital/asset ratio of at least 8%. The Company's capital ratios and those
of the Bank exceed the minimum ratios required by their respective regulators.
The FDIC and Department of Commerce for the State of Minnesota examine and
regulate the Bank.
Management is not aware of any pending regulatory requirements or
recommendations that, if enacted, would have a material adverse impact on the
Company's capital, liquidity, or results of operations.
C-7
<PAGE> 141
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
For each period ended shown, the allowance for loan losses has been allocated to
the following categories in amounts deemed reasonably necessary to provide for
the possibility of losses being incurred within each category of loans as of the
dates indicated:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997 December 31, 1996
------------------------------------------------------------------ ---------------------------------
Percent of Percent of Percent of
loans in each loans in each loans in each
Balance at end of Allowance for category to Allowance for category to Allowance for category to
period applicable to: loan losses total loans loan losses total loans loan losses total loans
- ---------------------- ---------------- -------------------------------- ---------------- ---------------- ---------------
(000's) (000's) (000's)
<S> <C> <C> <C> <C> <C> <C>
Commercial loans $2,016 45.3% $1,980 48.9% $1,601 55.1%
Commercial real
estate loans 1,265 37.8 861 34.0 383 27.4
SBA loans 731 7.7 563 6.4 255 7.5
Consumer loans 388 9.2 246 10.7 161 10.0
------ ----- ------ ----- ------ ------
Total $4,400 100.0 $3,650 100.0 $2,400 100.00%
====== ===== ====== ===== ====== ======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
--------------------------------
Percent of
loans in each
Balance at end of Allowance for category to
period applicable to: loan losses total loans
- ---------------------- --------------- ----------------
(000's)
<S> <C> <C>
Commercial loans $1,239 55.5%
Commercial real
estate loans 294 24.1
SBA loans 217 8.0
Consumer loans 150 12.4
------ -----
Total $1,900 100.0%
====== =====
</TABLE>
C-8
<PAGE> 142
SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
As of and for the year ended December 31,
-------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Loan balance at year end $233,276 $200,682 $159,796 $120,911 $ 99,472
-------- -------- -------- -------- --------
Balance of allowance for loan losses at beginning of 3,650 2,400 1,900 1,600 1,300
period
Loans charged off:
Commercial loans 96 166 285 188 72
Commercial real estate loans 21 7 122 16 --
SBA loans 92 126 176 275 5
Consumer and other loans 54 6 28 56 4
-------- -------- -------- -------- --------
Total loans charged off 263 305 611 535 81
-------- -------- -------- -------- --------
Recoveries of loans previously charged off:
Commercial loans 18 23 60 97 33
Commercial real estate loans -- -- 55 -- --
SBA loans 19 11 3 6 3
Consumer and other loans 2 96 2 9 4
-------- -------- -------- -------- --------
Total recoveries 39 130 120 112 40
-------- -------- -------- -------- --------
Net loans charged off 224 175 491 423 41
-------- -------- -------- -------- --------
Additions to allowance for loan losses charged to 974 1,425 991 723 341
-------- -------- -------- -------- --------
operating expense
Balance of allowance for loan losses at end of period $ 4,400 $ 3,650 $ 2,400 $ 1,900 $ 1,600
======== ======== ======== ======== ========
Average loan balances for the year $212,768 $181,619 $135,569 $111,572 $ 93,578
Ratio of net charge-offs during period to average loans 0.11% 0.10% 0.36% 0.38% 0.04%
</TABLE>
LOAN COMPOSITION
The following table summarizes the loan composition at the end of each period:
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Commercial loans $105,610 $ 98,114 $ 87,865 $ 67,118 $ 54,812
Commercial real estate loans 88,138 68,259 43,857 29,147 21,083
SBA loans 18,087 12,834 12,056 9,651 7,429
Consumer and other loans 21,441 21,475 16,018 14,995 16,148
-------- -------- -------- -------- --------
$233,276 $200,682 $159,796 $120,911 $ 99,472
Less: allowance for loan losses 4,400 3,650 2,400 1,900 1,600
-------- -------- -------- -------- --------
Loans, net $228,876 $197,032 $157,396 $119,011 $ 97,872
======== ======== ======== ======== ========
</TABLE>
C-9
<PAGE> 143
LOAN MATURITIES AND SENSITIVITY TO CHANGES IN INTEREST RATES AS OF DECEMBER 31,
1998
The following table summarizes the first available repricing period of the loan
principal balances outstanding, including loans held for sale, as of December
31, 1998:
<TABLE>
<CAPTION>
LOAN REPRICING PERIOD
---------------------
After 1
1 year through After 5
or less 5 years years Total
-------- ------- ------- --------
(Amounts in thousands)
<S> <C> <C> <C> <C>
Fixed rate maturities
Commercial loans including SBA $ 10,896 $ 9,955 $ 227 $ 21,078
Real estate loans including commercial, consumer, and SBA 7,846 11,996 3,903 23,745
Consumer loans and other 2,920 1,149 344 4,413
-------- ------- ------- --------
Subtotal fixed rate loans 21,662 23,100 4,474 49,236
Variable rate loans 183,443 -- -- 183,443
-------- ------- ------- --------
Subtotal fixed and variable rate loans 205,105 23,100 4,474 232,679
Nonaccrual loans 1,275 22 -- 1,297
-------- ------- ------- --------
Total loans $206,380 $23,122 $ 4,474 $233,976
======== ======= ======= ========
</TABLE>
PAST DUE AND NONPERFORMING LOANS AND ASSETS
The following table reflects as of the periods ended the aggregate amounts of
loans past due and nonperforming:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Loans, excluding restructured loans:
Loans contractually past due over 90 days $ 57 $ 3 $ 3 $ 465 $ 137
Nonaccrual loans 1,265 813 465 553 215
Restructured loans not in compliance with terms:
Loans contractually past due 30 - 89 days -- -- -- 1 --
Loans contractually past due over 90 days -- -- -- -- --
Nonaccrual loans 32 39 120 -- --
Other real estate owned 414 -- -- -- --
------ ------ ------ ------ ------
Total $1,768 $ 855 $ 588 $1,019 $ 352
====== ====== ====== ====== ======
</TABLE>
If interest on the nonaccrual loans had been earned, such income would have
approximated $68,000, $48,000, and $61,000 for the years ended December 31,
1998, 1997 and 1996.
Loans are normally placed on non-accrual status when they become contractually
past due 90 days or more as to interest or principal payments. Previously
accrued and uncollected interest on such loans is reversed, and income is
recorded only to the extent that interest payments are substantially received in
cash and a determination has been made that the principal balance of the loan is
collectible. If collectibility of the principal is in doubt, payments received
are applied to loan principal.
C-10
<PAGE> 144
RIVERSIDE ACQUISITION CORP.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL REPORT
DECEMBER 31, 1998 AND 1997
C-11
<PAGE> 145
CONTENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT C-13
- -----------------------------------------------------------------------
<S> <C>
FINANCIAL STATEMENTS
Consolidated balance sheets C-14
Consolidated statements of income C-15
Consolidated statements of stockholders' equity C-16
Consolidated statements of cash flows C-18
Notes to consolidated financial statements C-19 - C-34
- -----------------------------------------------------------------------
</TABLE>
C-12
<PAGE> 146
INDEPENDENT AUDITOR'S REPORT
To the Audit Committee and
the Board of Directors
Riverside Acquisition Corp. and Subsidiary
Minneapolis, Minnesota
We have audited the accompanying consolidated balance sheets of Riverside
Acquisition Corp. and Subsidiary as of December 31, 1998 and 1997, and the
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Riverside
Acquisition Corp. and Subsidiary as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period December 31, 1998, in conformity with generally accepted accounting
principles.
St. Paul, Minnesota
January 21, 1999, except Note 16, as to which
the date is March 10, 1999
C-13
<PAGE> 147
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, December 31
1999 -----------------------------
ASSETS (UNAUDITED) 1998 1997
- ------------------------------------------------------------------ ------------ ------------ ------------
<S> <C> <C> <C>
Cash and cash equivalents (Notes 2 and 10) $ 21,845,594 $ 22,110,341 $ 19,151,459
Certificates of deposit 95,000 95,000 392,000
Available-for-sale securities (Note 3) 50,825,293 61,883,746 48,699,374
Federal funds sold (Note 10) 12,775,000 13,300,000 14,500,000
Loans held for sale (Note 4) 811,875 700,163 2,216,624
Loans, net (Notes 5, 10, and 12) 237,281,484 228,875,895 197,032,372
Premises and equipment, net (Note 6) 2,468,835 2,490,692 2,047,992
Deferred income taxes (Note 8) 3,310,878 3,268,586 2,186,010
Accrued interest receivable and other assets 2,519,298 2,997,604 1,967,145
Cost in excess of net assets acquired, net 3,616,589 3,732,977 4,198,530
============ ============ ============
$335,549,846 $339,455,004 $292,391,506
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits (Notes 3 and 7):
Noninterest-bearing $122,633,761 $122,815,861 $107,443,367
Interest-bearing 175,172,884 180,018,400 153,956,406
------------ ------------ ------------
TOTAL DEPOSITS 297,806,645 302,834,261 261,399,773
Short-term borrowings (Note 9) 6,369,396 6,694,269 7,688,741
Accrued interest payable and other liabilities (Notes 8 and 11) 6,380,152 6,235,899 3,623,544
------------ ------------ ------------
TOTAL LIABILITIES 310,556,193 315,764,429 272,712,058
------------ ------------ ------------
Commitments, Contingencies, and Credit Risk (Note 10)
Minority Interest in Subsidiary -- 21,481 38,777
------------ ------------ ------------
Stockholders' Equity (Note 13)
Common stock, par value $1 per share; 100,000 shares authorized;
25,000 issued and outstanding 25,000 25,000 25,000
Additional paid-in capital 10,393,550 10,393,550 10,393,550
Retained earnings 14,286,274 12,970,038 9,079,868
Accumulated other comprehensive income 288,829 280,506 142,253
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 24,993,653 23,669,094 19,640,671
============ ============ ============
$335,549,846 $339,455,004 $292,391,506
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
C-14
<PAGE> 148
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended March 31
(Unaudited) Years Ended December 31
----------------------------- ----------------------------------------
1999 1998 1998 1997 1996
- ------------------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Interest income:
Loans $ 5,422,346 $ 5,098,818 $ 21,263,717 $ 18,657,696 $ 14,013,082
Certificates of deposit 1,523 3,682 9,855 33,545 13,335
Securities 719,045 683,641 3,059,782 2,512,668 1,869,667
Federal funds sold 57,611 214,172 741,738 413,640 467,015
------------ ------------ ------------ ------------ ------------
6,200,525 6,000,313 25,075,092 21,617,549 16,363,099
------------ ------------ ------------ ------------ ------------
Interest expense:
Deposits 1,772,496 1,923,153 7,737,985 6,436,368 4,501,169
Short-term borrowings 118,192 144,993 546,222 888,260 529,524
------------ ------------ ------------ ------------ ------------
1,890,688 2,068,146 8,284,207 7,324,628 5,030,693
------------ ------------ ------------ ------------ ------------
NET INTEREST INCOME 4,309,837 3,932,167 16,790,885 14,292,921 11,332,406
Provision for loan losses (Note 5) 190,000 250,000 974,479 1,424,921 990,726
------------ ------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 4,119,837 3,682,167 15,816,406 12,868,000 10,341,680
------------ ------------ ------------ ------------ ------------
Other income:
Service charges and other fees 406,903 465,863 1,803,225 1,688,265 1,588,161
Securities gains (losses), net -- -- -- -- (6,776)
Other income 400,050 390,253 1,498,804 1,182,501 1,030,059
------------ ------------ ------------ ------------ ------------
806,953 856,116 3,302,029 2,870,766 2,611,444
------------ ------------ ------------ ------------ ------------
Other expenses:
Salaries and employee benefits (Note 11) 1,584,986 1,545,151 7,989,611 5,808,431 4,464,613
Occupancy expenses 459,209 388,046 1,769,887 1,458,105 1,345,044
Other expenses 709,958 582,405 2,560,697 2,229,453 2,128,426
------------ ------------ ------------ ------------ ------------
2,754,153 2,515,602 12,320,195 9,495,989 7,938,083
------------ ------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAX EXPENSE AND MINORITY
INTEREST IN EARNINGS OF SUBSIDIARY 2,172,637 2,022,681 6,798,240 6,242,777 5,015,041
Income tax expense (Note 8) 856,401 859,371 2,903,211 2,644,289 2,175,414
------------ ------------ ------------ ------------ ------------
INCOME BEFORE MINORITY INTEREST IN EARNINGS OF
SUBSIDIARY 1,316,236 1,163,310 3,895,029 3,598,488 2,839,627
Minority interest in earnings of subsidiary -- (1,164) (4,859) (9,214) (15,358)
------------ ------------ ------------ ------------ ------------
NET INCOME $ 1,316,236 $ 1,162,146 $ 3,890,170 $ 3,589,274 $ 2,824,269
============ ============ ============ ============ ============
Earnings per share, basic and diluted $ 52.65 $ 46.49 $ 155.61 $ 143.57 $ 112.97
============ ============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
C-15
<PAGE> 149
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED) AND YEARS ENDED DECEMBER 31, 1998,
1997, AND 1996
<TABLE>
<CAPTION>
Common Stock
Comprehensive -------------------------
Income Shares Par Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1995 25,000 $ 25,000
Net income $ 2,824,269 -- --
Net change in unrealized gain (loss) on available-
for-sale securities (Note 3) (135,624) -- --
-----------
COMPREHENSIVE INCOME $ 2,688,645
=========== ----------- ---------
Balance, December 31, 1996 25,000 25,000
Net income $ 3,589,274 -- --
Net change in unrealized gain (loss) on available-
for-sale securities (Note 3) 198,209 -- --
-----------
COMPREHENSIVE INCOME $ 3,787,483
=========== ----------- ---------
Balance, December 31, 1997 25,000 25,000
Net Income $ 3,890,170 -- --
Net change in unrealized gain (loss) on
available-for-sale securities (Note 3) 138,253 -- --
-----------
COMPREHENSIVE INCOME $ 4,028,423
=========== ----------- ---------
Balance, December 31, 1998 25,000 25,000
Net income (unaudited) $ 1,316,236 -- --
Net change in unrealized gain (loss) on
available-for-sale securities (Note 3) (unaudited) 8,323 -- --
-----------
COMPREHENSIVE INCOME $ 1,324,559
=========== ----------- ---------
Balance, March 31, 1999 (unaudited) 25,000 $ 25,000
=========== =========
</TABLE>
See Notes to Consolidated Financial Statements.
C-16
<PAGE> 150
<TABLE>
<CAPTION>
Accumulated
Additional Other
Paid-In Retained Comprehensive
Capital Earnings Income (Note 3) Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
$ 10,393,550 $ 2,666,325 $ 79,668 $ 13,164,543
-- 2,824,269 -- 2,824,269
-- -- (135,624) (135,624)
------------ ------------ ------------ ------------
10,393,550 5,490,594 (55,956) 15,853,188
-- 3,589,274 -- 3,589,274
-- -- 198,209 198,209
------------ ------------ ------------ ------------
10,393,550 9,079,868 142,253 19,640,691
-- 3,890,170 -- 3,890,170
-- -- 138,253 138,253
------------ ------------ ------------ ------------
10,393,550 12,970,038 280,506 23,669,094
-- 1,316,236 -- 1,316,236
-- -- 8,323 8,323
============ ============ ============ ============
$ 10,393,550 $ 14,286,274 $ 288,829 $ 24,993,653
============ ============ ============ ============
</TABLE>
C-17
<PAGE> 151
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31
(Unaudited) Years Ended December 31
------------------------------ ------------------------------------------
1999 1998 1998 1997 1996
- ------------------------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities
Net income $ 1,316,236 $ 1,162,146 $ 3,890,170 $ 3,589,274 $ 2,824,269
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Net amortization and accretion of bond (34,691) (18,058) (204,029) (35,545) (80,033)
premiums and discounts
Net (increase) decrease in loans held for sale (111,712) 1,571,628 1,516,461 (1,956,502) 492,340
Provision for loan losses 190,000 250,000 974,479 1,424,921 990,726
Depreciation 176,403 137,489 637,569 583,728 539,072
Amortization 116,388 116,388 465,553 465,553 409,956
Deferred income taxes (42,292) (88,030) (1,174,722) (940,745) (399,586)
Other 140,275 407,476 1,564,490 592,848 616,549
------------ ------------ ------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 1,750,607 3,539,039 7,669,971 3,723,532 5,393,293
------------ ------------ ------------ ------------ ------------
Cash Flows From Investing Activities
Net (increase) decrease in certificates of -- 198,000 297,000 198,000 (495,000)
deposit
Cash flows from securities (Note 14) 11,093,144 (2,866,219) (12,749,974) (10,229,137) (9,785,717)
Net (increase) decrease in federal funds sold 525,000 (6,100,000) 1,200,000 (1,850,000) (2,175,000)
Net (increase) decrease in loans (8,595,589) (3,276,809) (32,818,000) (41,061,496) (39,460,746)
Purchases of premises and equipment (154,546) (688,648) (1,087,392) (751,606) (461,420)
Proceeds from sales of premises and equipment -- -- 7,123 19,066 25,946
------------ ------------ ------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 2,868,009 (12,733,676) (45,151,245) (53,675,173) (52,351,937)
------------ ------------ ------------ ------------ ------------
Cash Flows From Financing Activities
Net increase (decrease) in deposits (5,027,616) 22,799,490 41,434,488 37,726,707 55,652,378
Net increase (decrease) in short-term 144,253 (516,063) (994,332) 966,695 46,425
borrowings
------------ ------------ ------------ ------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (4,883,363) 22,283,427 40,440,156 38,693,402 55,698,803
------------ ------------ ------------ ------------ ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (264,747) 13,088,790 2,958,882 (11,258,239) 8,740,159
Cash and Cash Equivalents
Beginning 22,110,341 19,151,459 19,151,459 30,409,698 21,669,539
============ ============ ============ ============ ============
Ending $ 21,845,594 $ 32,240,249 $ 22,110,341 $ 19,151,459 $ 30,409,698
============ ============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
C-18
<PAGE> 152
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS: Riverside Acquisition Corp. is a one-bank holding company
whose wholly owned subsidiary, Riverside Bancshares Corporation, is the 100
percent owner of Riverside Bank (the Bank). Prior to March 1999, Riverside
Bancshares Corporation was a 99.92 percent owner of Riverside Bank. During March
1999, Riverside Bancshares Corporation purchased the remaining 0.08 percent of
shares of Riverside Bank, which were previously held by a minority shareholder.
The Bank is a commercial bank with operations within the Twin Cities metro area,
which provides retail and commercial loan and deposit services principally to
customers within the seven-county metro area.
BASIS OF FINANCIAL STATEMENT PRESENTATION: The financial statements have been
prepared in conformity with generally accepted accounting principles. In
preparing the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
date of the balance sheet and revenues and expenses for the year. Actual results
could differ from those estimates. A material estimate that is particularly
susceptible to significant change relates to the determination of the allowance
for loan losses.
Effective January 1, 1998, the Bank adopted FASB Statement No. 130, which was
issued in June 1997. Statement No. 130 establishes new rules for the reporting
and display of comprehensive income and its components, but has no effect on the
Bank's net income or total stockholders' equity. Statement No. 130 requires
unrealized gains and losses on the Bank's available-for-sale securities, which
prior to adoption were reported separately in stockholders' equity, to be
included in comprehensive income. Prior-year financial statements have been
reclassified to conform to the requirements of Statement No. 130.
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of Riverside Acquisition Corp. (RAC), its wholly owned
subsidiary, Riverside Bancshares Corporation, and its wholly owned subsidiary,
Riverside Bank (collectively, the Company). All significant intercompany
balances and transactions have been eliminated in consolidation.
CASH, CASH EQUIVALENTS, AND CASH FLOWS: For purposes of reporting cash flows,
cash and cash equivalents includes cash on hand and amounts due from banks. Cash
flows from loans, federal funds sold, deposits, and short-term borrowings are
reported net.
CERTIFICATES OF DEPOSIT: Certificates of deposit at other financial institutions
are stated at cost, which approximates market value.
AVAILABLE-FOR-SALE SECURITIES: Securities classified as available-for-sale are
those debt securities that the Company intends to hold for an indefinite period
of time, but not necessarily to maturity. Any decision to sell a security
classified as available-for-sale would be based on various factors, including
significant movements in interest rates, changes in the maturity mix of the
Company's assets and liabilities, liquidity needs, regulatory capital
considerations, and other similar factors. Securities available for sale are
carried at fair value. Unrealized gains or losses, net of the related deferred
tax effect, are reported as increases or decreases in accumulated other
comprehensive income. Realized gains or losses, determined on the basis of the
cost of specific securities sold, are included in earnings.
C-19
<PAGE> 153
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOANS HELD FOR SALE: Loans held for sale are those loans that the Company has
the intent to sell in the foreseeable future and are carried at the lower of
aggregate cost or market value. The market value calculation includes
consideration of all open positions. Gains and losses on sales of loans are
recognized at trade dates and are determined by the difference between the sales
proceeds and the carrying value of the loans. All sales are made without
recourse. The Company continues to service these loans and recognizes a
servicing fee over the lives of the loans. These servicing rights are also
salable.
LOANS AND ALLOWANCE FOR LOAN LOSSES: Loans are stated at the amount of unpaid
principal, reduced by an allowance for loan losses.
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the allowance for loan losses when
management believes that collectibility of the principal is unlikely. The
allowance is an amount that management believes will be adequate to absorb
estimated losses on existing loans that may become uncollectible, based on
evaluation of the collectibility of loans and prior loan loss experience. This
evaluation also takes into consideration such factors as changes in the nature
and volume of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the borrower's
ability to pay. While management uses the best information available to make its
evaluation, future adjustments to the allowance may be necessary if there are
significant changes in economic conditions.
The Company considers a loan as impaired when it is probable the Company will be
unable to collect all principal and interest payments due in accordance with the
terms of the loan agreement. Impaired loans that have been separately identified
for evaluation are measured based on the present value of expected future cash
flows or, alternatively, the observable market price of the loans or the fair
value of the collateral. However, for those loans that are collateral dependent
(that is, if repayment of those loans is expected to be provided solely by the
underlying collateral) and for which management has determined foreclosure is
probable, the measure of impairment of those loans is based on the fair value of
the collateral.
Interest on loans is recognized over the terms of the loans and is calculated
using the simple-interest method on principal amounts outstanding. For impaired
loans, accrual of interest is discontinued on a loan when management believes,
after considering collection efforts and other factors, that the borrower's
financial condition is such that collection of interest is doubtful. Interest on
these loans is recognized only when actually paid by the borrower if collection
of the principal is likely to occur. Accrual of interest is generally resumed
when the customer is current on all principal and interest
payments and has been paying on a timely basis for a period of time.
PREMISES AND EQUIPMENT: Premises and equipment are stated at cost, less
accumulated depreciation. Depreciation is provided principally by declining
balance methods over the estimated useful lives of the assets.
C-20
<PAGE> 154
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOAN SERVICING: The Company generally retains the right to service certain loans
sold to others. The cost allocated to the servicing rights retained has been
recognized as a separate asset and is being amortized in proportion to and over
the period of estimated net servicing income. Servicing rights are periodically
evaluated for impairment based on the fair value of those rights.
COST IN EXCESS OF NET ASSETS ACQUIRED: Cost in excess of net assets acquired
results from the 1995 acquisition of Riverside Bank and its holding company,
Riverside Bancshares, by RAC and is being amortized over the expected period of
benefit of 12 years.
OTHER REAL ESTATE OWNED: Other real estate owned (OREO) represents properties
acquired through foreclosure or other proceedings. OREO is recorded at the lower
of the carrying amounts of the related loans or fair value of the properties
less estimated costs to sell and is included in other assets. Any write-down to
fair value less estimated costs of disposal at the time of transfer to OREO is
charged to the allowance for loan losses. Property is evaluated regularly to
ensure that the recorded amount is supported by its current fair value less
estimated costs of disposal. Subsequent write-downs are charged to other
expenses.
INCOME TAXES: Deferred taxes are provided on an asset and liability method
whereby deferred tax assets are recognized for deductible temporary differences
and operating loss or tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the amounts of assets and liabilities recorded for income
tax and financial reporting purposes. Deferred tax assets are reduced by a
valuation allowance when management determines that it is more likely than not
that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
EMPLOYEE BENEFIT PLAN: The Company provides a 401(k) plan which covers
substantially all of the Company's employees who are eligible as to age and
length of service. A participant may elect to make contributions of up to 15
percent of the participant's annual compensation.
PHANTOM STOCK PLAN: The Company has a phantom stock plan under which the Company
has granted 1,280 phantom shares of stock to several key employees. The plan
provides for a cash bonus award payable to each covered employee equal to the
number of shares of phantom stock granted to the employee times the cash value
per share. The cash value is either the sales value of one share of common stock
in the event of a sale of the Company prior to December 31, 1999, or the
appraised value per share if no such sale takes place prior to December 31,
1999. The annual expense recorded under the plan is the increase in the fair
market value of one common share of stock times the number of phantom shares of
stock granted.
ACCUMULATED OTHER COMPREHENSIVE INCOME: Accumulated other comprehensive income
is comprised solely of the unrealized gain (loss) on available-for-sale
securities.
C-21
<PAGE> 155
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS: The following methods and assumptions were
used by the Company in estimating the fair value of its financial instruments:
The carrying amounts reported in the consolidated balance sheets for cash and
cash equivalents, federal funds sold, available-for-sale securities, demand
deposits, NOW and money market deposits, savings deposits, short-term borrowing,
variable-rate long-term borrowing, accrued interest receivable, and accrued
interest payable approximate their fair values.
Fair values of variable-rate loans that reprice frequently and that have
experienced no significant change in credit risk are based on carrying values.
Fair values of all other loans are estimated based on discounted cash flows
using interest rates currently being offered for loans with similar terms to
borrowers with similar credit quality.
Fair values of fixed-rate time certificates are estimated using a discounted
cash flow calculation that applies interest rates currently being offered to a
schedule of aggregate expected monthly maturities.
Since the majority of the Company's off-balance sheet instruments consist of
nonfee-producing, variable-rate commitments, the Company has determined they do
not have a distinguishable fair value.
UNAUDITED FINANCIAL INFORMATION: The unaudited information furnished reflects
all adjustments, consisting of normal recurring accruals, which are, in the
opinion of management, necessary to a fair presentation of the financial
position as of March 31, 1999, and the results of operations and cash flows for
the three-month periods ended March 31, 1999 and 1998. The results of the
three-month periods are not necessarily indicative of the results of the Company
which may be expected for the entire year.
RECLASSIFICATIONS: Certain of the 1996 and 1997 amounts have been reclassified
to conform with the 1998 presentation. These reclassifications had no effect on
net income or stockholders' equity.
EMERGING ACCOUNTING STANDARDS: In June 1998, the Financial Accounting Standards
Board issued Statement No. 133, Accounting for Derivative Instruments and
Hedging Activities, which is required to be adopted in years beginning after
June 15, 1999. The statement permits early adoption as of the beginning of any
fiscal quarter after its issuance. The Company has not determined whether to
adopt the new statement early. The statement will require the Company to
recognize all derivatives on the consolidated balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of derivatives will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings.
Because of the Company's minimal use of derivatives, management does not
anticipate that the adoption of the new statement will have a significant effect
on the Company's earnings or financial position.
C-22
<PAGE> 156
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 2. RESTRICTIONS ON CASH AND CASH EQUIVALENTS
The Company is required to maintain reserve balances, in cash or on deposit with
the Federal Reserve Bank, based upon a percentage of deposits. The total average
required reserve balances as of March 31, 1999, and December 31, 1998 and 1997,
were none (unaudited), $9,226,000, and $7,233,000, respectively.
NOTE 3. AVAILABLE-FOR-SALE SECURITIES
SUMMARY OF SECURITIES:
<TABLE>
<CAPTION>
March 31, 1999
(Unaudited)
-----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 2,527,106 $ 18,479 $ (5,515) $ 2,540,070
U.S. government corporations and
agencies 17,212,644 71,071 (9,876) 17,273,839
Mortgage-backed securities 6,371,031 15,701 (3,631) 6,383,101
Obligations of states and political
subdivisions 16,524,331 374,246 (1,859) 16,896,718
Corporate bonds and notes 7,708,800 27,212 (4,447) 7,731,565
============ ============ ============ ============
$ 50,343,912 $ 506,709 $ (25,328) $ 50,825,293
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
-----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 1,997,439 $ 21,857 $ -- $ 2,019,296
U.S. government corporations and
agencies 17,314,836 100,862 (7,570) 17,408,128
Mortgage-backed securities 7,504,670 10,048 (10,127) 7,504,591
Obligations of states and political
subdivisions 16,818,082 318,128 (11,572) 17,124,638
Corporate bonds and notes 17,780,836 46,257 -- 17,827,093
============ ============ ============ ============
$ 61,415,863 $ 497,152 $ (29,269) $ 61,883,746
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997
-----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 3,495,088 $ 14,024 $ (3,837) $ 3,505,275
U.S. government corporations and
agencies 22,271,736 71,243 (12,570) 22,330,409
Mortgage-backed securities 9,139,770 12,771 (41,822) 9,110,719
Obligations of states and political
subdivisions 13,304,915 205,245 (9,548) 13,500,612
Corporate bonds and notes 250,349 2,010 -- 252,359
============ ============ ============ ============
$ 48,461,858 $ 305,293 $ (67,777) $ 48,699,374
============ ============ ============ ============
</TABLE>
C-23
<PAGE> 157
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3. AVAILABLE-FOR-SALE SECURITIES (CONTINUED)
CONTRACTUAL MATURITIES:
<TABLE>
<CAPTION>
March 31, 1999
(Unaudited) December 31, 1998
------------------------------------ ------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Due in one year or less $ 7,881,676 $ 7,916,493 $ 18,447,167 $ 18,488,498
Due after one year through five years 31,952,458 32,310,349 31,066,127 31,418,167
Due after five years through ten years 4,138,747 4,215,350 4,397,899 4,472,490
---------------------------------------------------------------------------
43,972,881 44,442,192 53,911,193 54,379,155
Mortgage-backed securities 6,371,031 6,383,101 7,504,670 7,504,591
===========================================================================
$ 50,343,912 $ 50,825,293 $ 61,415,863 $61,883,746
===========================================================================
</TABLE>
Anticipated maturities on mortgage-backed securities are not readily
determinable since they may be prepaid without penalty.
Realized gains and losses were not significant to the results of operations for
the three-month periods ended March 31, 1999 and 1998 (unaudited), or for the
years ended December 31, 1998, 1997, and 1996.
PLEDGED SECURITIES: Available-for-sale securities with a carrying value of
$6,485,000 (unaudited), $6,649,000, and $5,250,000 at March 31, 1999, and
December 31, 1998 and 1997, respectively, were pledged to secure public deposits
and for other purposes as required or permitted by law.
CHANGES IN THE UNREALIZED GAIN (LOSS) ON AVAILABLE-FOR-SALE SECURITIES:
<TABLE>
<CAPTION>
Three Months
Ended March 31, Years Ended December 31
1999 --------------------------------------
(Unaudited) 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning $ 280,506 $ 142,253 $ (55,956)
Unrealized gain (loss) during the year 13,498 230,369 331,139
Deferred tax effect related to unrealized
gain (loss) (5,399) (91,892) (132,457)
Minority interest 224 (224) (473)
========================================================
Balance, ending $ 288,829 $280,506 $142,253
========================================================
</TABLE>
C-24
<PAGE> 158
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 4. LOANS HELD FOR SALE
<TABLE>
<CAPTION>
March 31, December 31
1999 ------------------------------
(Unaudited) 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning $ 700,163 $ 2,216,624 $ 260,122
Loans transferred from loan portfolio -- -- 1,638,305
Loans originated 3,929,632 11,843,845 10,687,435
Loans sold (3,817,920) (13,360,306) (10,369,238)
------------ ------------ ------------
Balance, ending $ 811,875 $ 700,163 $ 2,216,624
============ ============ ============
Total loans serviced $ 31,808,389 $ 29,643,132 $ 24,784,153
</TABLE>
The gain recognized on the sale of loans held for sale was $215,000 (unaudited),
$201,000 (unaudited), $712,000, $478,000, and $232,000 for the three months
ended March 31, 1999, and 1998, and the years ended December 31, 1998, 1997, and
1996, respectively.
Loan servicing rights in the amounts of $73,000 (unaudited), $60,000
(unaudited), $182,000, $92,000, and $-0- were capitalized during the three
months ended March 31, 1999 and 1998, and the years ended December 31, 1998,
1997, and 1996, respectively.
Loan servicing rights in the amounts of $285,000 (unaudited), $226,000, and
$84,000 were capitalized as of March 31, 1999, and December 31, 1998 and 1997,
respectively.
The Company recognized amortization expense of loan servicing rights in the
amounts of $14,000 (unaudited), $6,000 (unaudited), $40,000, $8,000, and $-0-
for the three months ended March 31, 1999 and 1998, and the years ended December
31, 1998, 1997, and 1996, respectively.
There were no outstanding commitments to sell loans at March 31, 1999
(unaudited), or December 31, 1998 or 1997.
NOTE 5. LOANS
COMPOSITION OF LOANS:
<TABLE>
<CAPTION>
March 31, December 31
1999 -----------------------------
(Unaudited) 1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial $111,236,557 $105,610,111 $ 98,114,380
Commercial real estate 92,580,332 88,137,851 68,259,170
SBA loans 18,437,997 18,087,360 12,833,914
Consumer and other loans 19,612,495 21,440,573 21,474,908
------------ ------------ ------------
241,867,381 233,275,895 200,682,372
Less allowance for loan losses 4,585,897 4,400,000 3,650,000
------------ ------------ ------------
Loans, net $237,281,484 $228,875,895 $197,032,372
============ ============ ============
</TABLE>
C-25
<PAGE> 159
NOTE 5. LOANS (CONTINUED)
ALLOWANCE FOR LOAN LOSSES:
<TABLE>
<CAPTION>
Three Months Ended March 31
(Unaudited) Years Ended December 31
---------------------------- ----------------------------
1999 1998 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, beginning $ 4,400,000 $ 3,650,000 $ 3,650,000 $ 2,400,000
Provision charged to operations 190,000 250,000 974,479 1,424,921
Loans charged off (9,323) (1,811) (263,410) (305,227)
Recoveries 5,220 8,096 38,931 130,306
----------- ----------- ----------- -----------
Balance, ending $ 4,585,897 $ 3,906,285 $ 4,400,000 $ 3,650,000
=========== =========== =========== ===========
</TABLE>
IMPAIRED LOANS:
<TABLE>
<CAPTION>
March 31, December 31
1999 -------------------------
(Unaudited) 1998 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loans receivable for which there is a related
allowance for credit losses $1,282,297 $ 963,439 $1,881,371
Loans receivable for which there is no related
allowance for credit losses -- -- --
---------- ---------- ----------
Total impaired loans $1,282,297 $ 963,439 $1,881,371
========== ========== ==========
Average balance $1,257,169 $1,210,315 $ 677,491
Related allowance for credit losses 351,168 178,056 243,871
</TABLE>
Cash received and recognized as interest income on impaired loans in 1998, 1997,
and 1996 and during the three months ended March 31, 1999 (unaudited) and 1998
(unaudited), was insignificant.
NOTE 6. PREMISES AND EQUIPMENT
<TABLE>
<CAPTION>
March 31, December 31
1999 -------------------------
(Unaudited) 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Leasehold improvements $1,401,769 $1,400,465 $1,127,423
Equipment 4,464,362 4,311,120 3,559,204
Construction in progress -- -- 83,962
---------- ---------- ----------
5,866,131 5,711,585 4,770,589
Less accumulated depreciation 3,397,296 3,220,893 2,722,597
========== ========== ==========
$2,468,835 $2,490,692 $2,047,992
========== ========== ==========
</TABLE>
C-26
<PAGE> 160
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 7. DEPOSITS
<TABLE>
<CAPTION>
March 31, December 31
1999 -----------------------------
(Unaudited) 1998 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Demand deposits $122,633,761 $122,815,861 $107,443,367
NOW and money market accounts 111,763,697 115,373,756 98,317,671
Savings deposits 4,035,340 3,581,395 3,215,461
Time certificates, $100,000 or more 23,830,166 27,525,880 23,826,339
Other time deposits 35,543,681 33,537,369 28,596,935
------------ ------------ ------------
Total $297,806,645 $302,834,261 $261,399,773
============ ============ ============
</TABLE>
At March 31, 1999 (unaudited), and December 31, 1998, the scheduled annual
maturities of time certificates are as follows:
<TABLE>
<CAPTION>
March 31,
1999 December 31
(Unaudited) 1998
- -------------------------------------------------
<S> <C> <C>
1 year or less $51,684,254 $52,200,187
1 to 2 years 3,916,917 4,902,094
2 to 3 years 3,260,739 3,312,576
3 to 4 years 384,635 521,952
4 to 5 years 121,302 126,440
More than 5 years 6,000 --
=========== ===========
$59,373,847 $61,063,249
=========== ===========
</TABLE>
NOTE 8. INCOME TAXES
The cumulative tax effects of the primary temporary differences are shown in the
following table:
<TABLE>
<CAPTION>
December 31
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Deferred tax assets:
Loan loss allowances $ 1,635,053 $ 1,363,957
Deferred loan fees 123,631 149,132
Deferred compensation 1,641,600 761,308
Other 64,055 10,920
----------- -----------
Total deferred tax assets 3,464,339 2,285,317
----------- -----------
Deferred tax liabilities:
Unrealized gain on available-for-sale securities (187,154) (95,008)
Other (8,599) (4,299)
----------- -----------
Total deferred tax liabilities (195,753) (99,307)
=========== ===========
Net deferred tax assets $ 3,268,586 $ 2,186,010
=========== ===========
</TABLE>
C-27
<PAGE> 161
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 8. INCOME TAXES (CONTINUED)
The provision for income taxes charged to operations consists of the following:
<TABLE>
<CAPTION>
Years Ended December 31
--------------------------------------------------------
1998 1997 1996
-------------- -------------- ---------------
<S> <C> <C> <C>
Current tax expense $ 4,077,933 $ 3,585,034 $ 2,575,000
Deferred tax expense (benefit) (1,174,722) (940,745) (399,586)
-------------- -------------- ---------------
$ 2,903,211 $ 2,644,289 $ 2,175,414
============== =============== ===============
</TABLE>
The income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate of 35 percent to pretax income as
follows:
<TABLE>
<CAPTION>
Years Ended December 31
---------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Computed "expected" federal tax expense $ 2,379,384 $ 2,184,972 $ 1,755,264
Increase (decrease) in income taxes resulting
from:
State income taxes, net of federal tax
benefit 537,138 438,149 408,247
Tax-exempt interest income (net of
disallowed expenses) (205,775) (165,268) (128,790)
Goodwill 171,203 171,054 163,982
Other 21,261 15,382 (23,289)
----------- ----------- -----------
$ 2,903,211 $ 2,644,289 $ 2,175,414
=========== =========== ===========
</TABLE>
NOTE 9. SHORT-TERM BORROWING
<TABLE>
<CAPTION>
March 31, December 31
1999 ------------------------------------
(Unaudited) 1998 1997
- ------------------------------------------ ---------------- ---------------- ----------------
<S> <C> <C> <C>
Demand note payable to bank, secured by
common stock of Riverside Bank $ 4,300,000 $ 4,500,000 $ 5,000,000
Repurchase agreements 2,069,396 2,194,269 2,464,224
Other -- -- 224,517
================ ================ ================
$ 6,369,396 $ 6,694,269 $ 7,688,741
================ ================ ================
</TABLE>
NOTE 10. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK
CONTINGENCIES: In the normal course of business, the Company is involved in
various legal proceedings. In the opinion of management, any liability resulting
from such proceedings would not have a material adverse effect on the
consolidated financial statements.
C-28
<PAGE> 162
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 10. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (CONTINUED)
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK: The Company is party to
financial instruments with off-balance sheet risk in the normal course of
business to meet the financing needs of its customers. These financial
instruments include commitments to extend credit and standby letters of credit.
They involve, to varying degrees, elements of credit risk in excess of amounts
recognized on the consolidated balance sheets.
The Company's exposure to credit loss in the event of nonperformance by the
other parties to the financial instruments for these commitments is represented
by the contractual amounts of the instruments. The Company uses the same credit
policies in making commitments as it does for on-balance sheet instruments.
These commitments were as follows:
<TABLE>
<CAPTION>
March 31, December 31
1999 ------------------------------------
(Unaudited) 1998 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Commitments to extend credit $ 69,535,000 $ 67,841,000 $ 57,122,000
Standby letters of credit 9,020,000 10,641,000 8,605,000
---------------- ---------------- ----------------
$ 78,555,000 $ 78,482,000 $ 65,727,000
================ ================ ================
</TABLE>
COMMITMENTS TO EXTEND CREDIT: Commitments to extend credit are agreements to
lend to a customer as long as there is no violation of any condition established
in the contract. Since many of the commitments are expected to expire without
being drawn upon in full, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. If deemed necessary upon extension of
credit, the amount of collateral obtained is based on management's credit
evaluation of the party. Collateral held varies, but may include accounts
receivable, inventory, property and equipment, liquid collateral, and
income-producing commercial properties.
STANDBY LETTERS OF CREDIT: Standby letters of credit are conditional commitments
issued by the Company to guarantee the performance of a customer to a third
party. Those guarantees are primarily issued to support public and private
borrowing arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to customers.
Collateral held varies as specified above and is required in instances which the
Company deems necessary. At December 31, 1998, approximately 91.7 percent of the
standby letters of credit were collateralized.
C-29
<PAGE> 163
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 10. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (CONTINUED)
LEASE COMMITMENTS: The Company leases its main company building, four branch
locations, and an operations center. The leases expire at various times through
the year 2013. The leases provide that the Company pay either property taxes,
insurance, and maintenance costs or pay its share of the building's operating
costs. The following is a schedule of approximate future minimum rental payments
under these leases:
<TABLE>
<S> <C>
Years ending December 31:
1999 $ 556,000
2000 567,000
2001 482,000
2002 477,000
2003 347,000
Thereafter 1,960,000
--------------
$ 4,389,000
==============
</TABLE>
Total rent expense under these leases, including common space rental charges,
for the three months ended March 31, 1999 and 1998, and the years ended December
31, 1998, 1997, and 1996, was approximately $192,000 (unaudited), $183,000
(unaudited), $779,000, $587,000, and $512,000, respectively.
FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK:
CONCENTRATIONS OVER INSURED LIMITS: The nature of the Company's business
requires that it maintain amounts due from banks which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.
CONCENTRATION BY GEOGRAPHIC LOCATION: The Company makes commercial, residential,
and consumer loans to customers primarily in the Minneapolis-St. Paul
metropolitan area. Although the Company's loan portfolio is diversified, a
substantial portion of the Company's customers' abilities to honor their
contracts is dependent upon the business economy in the Minneapolis-St. Paul
metropolitan and surrounding areas. See also Note 4 for composition by loan
type.
CONCENTRATION BY INDUSTRY: Included in the Company's loan portfolio are
concentrations of loans related to real estate agents, brokers, and real estate
holding companies. A majority of these loans outstanding are collateralized by
commercial real estate. Total loans outstanding to borrowers within this
industry approximated $61,751,000 at December 31, 1998.
C-30
<PAGE> 164
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 10. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (CONTINUED)
CONCENTRATION BY INSTITUTION: The Company has a substantial concentration of
funds on deposit at Firstar Bank Minnesota, N.A., as follows:
<TABLE>
<CAPTION>
March 31,
1999 December 31,
(Unaudited) 1998
------------ --------------
<S> <C> <C>
Federal funds sold $ 12,775,000 $ 13,300,000
Due from bank account, included in cash and cash equivalents 215,223 201,214
------------ --------------
$ 12,990,223 $ 13,501,214
============ ==============
</TABLE>
NOTE 11. EMPLOYEE BENEFIT PLAN AND PHANTOM STOCK PLAN
EMPLOYEE BENEFIT PLAN: Contributions to the 401(k) plan were $57,100
(unaudited), $39,000 (unaudited), $161,700, $159,300, and $139,000 for the three
months ended March 31, 1999 and 1998, and the years ended December 31, 1998,
1997, and 1996, respectively.
PHANTOM STOCK PLAN: As of March 31, 1999, and December 31, 1998 and 1997,
$4,104,000 (unaudited), $4,104,000, and $1,903,000, respectively, was accrued
under the phantom stock plan. Expense of $-0- (unaudited), $163,000 (unaudited),
$2,201,000, $1,050,000, and $318,000 was expensed under this plan for the three
months ended March 31, 1999 and 1998, and the years ended December 31, 1998,
1997, and 1996, respectively.
NOTE 12. LOANS AND OTHER TRANSACTIONS WITH RELATED PARTIES
Shareholders of the Company, and officers and directors, including their
families and companies of which they are principal owners, are considered to be
related parties. These related parties were loan customers of, and had other
transactions with, the Company in the ordinary course of business. In
management's opinion, these loans and transactions were on the same terms as
those for comparable loans and transactions with nonrelated parties.
LOANS: Total loans to related parties were approximately $794,000 (unaudited),
$1,669,000, and $582,000 at March 31, 1999, and December 31, 1998 and 1997,
respectively.
LEASES: The Company also leases its corporate headquarters building from
Riverside Investment Co., which is affiliated through common ownership. Expense
from this lease totaled $29,007 (unaudited), $29,750 (unaudited), $119,000,
$122,200, and $122,900 for the three months ended March 31, 1999 and 1998, and
the years ended December 31, 1998, 1997, and 1996, respectively. This lease is
included in the lease commitments disclosed in Note 10.
C-31
<PAGE> 165
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 13. REGULATORY CAPITAL REQUIREMENTS
The Company is subject to various regulatory capital requirements administered
by the Company's primary federal regulatory agency. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company must meet specific capital guidelines that involve quantitative measures
of assets and certain off-balance sheet items as calculated under regulatory
accounting practices. The Company's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum ratios (set forth in the table below) of
total and Tier I capital, and of Tier I capital to average assets (all as
defined in the regulations). Management believes, as of December 31, 1998, that
the Company meets all capital adequacy requirements to which it is subject.
As of December 31, 1998, the most recent notification from the Company's primary
regulator, the FDIC, categorized the Company as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Company must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table below. There
are no conditions or events since that notification that management believes
have changed the Company's category.
<TABLE>
<CAPTION>
To Be Well Capitalized
For Capital Adequacy Under Prompt Corrective
Actual Purposes Action Provisions
-------------------------- --------------------------- ---------------------------
Amount Ratio Amount Ratio Amount Ratio
------------- -------- -------------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1998:
Total capital (to
risk-weighted
assets):
Consolidated $ 22,994 8.6% $ 21,390 >8.0% $ N/A N/A
=
Riverside Bank, N.A. 29,871 11.3% 21,148 >8.0% 26,435 >10.0%
= =
Tier I capital (to
risk-weighted
assets):
Consolidated 19,655 7.4% 10,624 >4.0% N/A N/A
=
Riverside Bank, N.A. 26,550 10.0% 10,620 >4.0% 15,930 >6.0%
= =
Tier I capital (to average assets):
Consolidated 19,655 6.1% 9,666 >3.0% N/A N/A
=
Riverside Bank, N.A. 26,550 8.3% 12,795 >4.0% 15,994 >5.0%
= =
</TABLE>
C-32
<PAGE> 166
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 14. ADDITIONAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Three Months Ended March 31
(Unaudited) Years Ended December 31
------------------------------- ----------------------------------------------
1999 1998 1998 1997 1996
- ---------------------------- --------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Cash flows from securities:
Available-for-sale
securities:
Maturities $ 17,994,822 $ 5,505,439 $ 30,138,309 $ 10,796,588 $ 10,057,896
Sales 892,719
Purchases (6,901,678) (8,371,658) (42,888,283) (21,025,725) (20,736,332)
--------------- ------------ ------------- ------------- -------------
$ 11,093,144 $ (2,866,219) $ (12,749,974) $ (10,229,137) $ (9,785,717)
=============== ============ ============= ============= =============
Supplemental disclosures of
cash flow information:
Cash payments for interest $ 2,077,665 $ 2,018,004 $ 7,983,563 $ 7,252,240 $ 4,855,364
Cash payments for income
taxes 211,000 256,480 4,120,482 3,928,842 2,666,783
=============== ============ ============= ============= =============
</TABLE>
FAIR VALUES OF FINANCIAL INSTRUMENTS AND INTEREST RATE RISK
The fair values of the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
March 31, 1999
(Unaudited) December 31, 1998 December 31, 1997
------------------------------ ---------------------------- -----------------------------
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
- ---------------------------------------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents $ 21,846,000 $ 21,846,000 $ 22,110,000 $ 22,110,000 $ 19,151,000 $ 19,151,000
Certificates of deposit 95,000 95,000 95,000 95,000 392,000 392,000
Federal funds sold 12,775,000 12,775,000 13,300,000 13,300,000 14,500,000 14,500,000
Securities 50,825,000 50,825,000 61,884,000 61,884,000 48,699,000 48,699,000
loans held for sale 812,000 875,000 700,000 741,000 2,217,000 2,217,000
loans 237,281,000 235,413,000 228,876,000 229,455,000 197,039,000 196,903,000
Accrued interest 1,729,000 1,729,000 1,874,000 1,874,000 1,693,000 1,693,000
receivable
Financial liabilities:
Deposits 297,807,000 297,898,000 302,834,000 303,072,000 261,400,000 261,329,000
Short-term borrowings 6,369,000 6,369,000 6,694,000 6,694,000 7,689,000 7,689,000
Accrued interest payable 742,000 742,000 929,000 929,000 573,000 573,000
</TABLE>
C-33
<PAGE> 167
RIVERSIDE ACQUISITION CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 15. Fair Values of Financial Instruments and Interest Rate Risk (CONTINUED)
INTEREST RATE RISK: The Company assumes interest rate risk (the risk that
general interest rate levels will change) as a result of its normal operations.
As a result, the fair values of the Company's financial instruments will change
when interest rate levels change, and that change may be either favorable or
unfavorable to the Company. Management attempts to match maturities of assets
and liabilities to the extent believed necessary to minimize interest rate risk.
However, borrowers with fixed-rate obligations are more likely to prepay in a
falling-rate environment and less likely to prepay in a rising-rate environment.
Conversely, depositors who are receiving fixed rates are more likely to withdraw
funds before maturity in a rising-rate environment and less likely to do so in a
falling-rate environment. Management monitors rates and maturities of assets and
liabilities and attempts to minimize interest rate risk by adjusting terms of
new loans and deposits and by investing in securities with terms that mitigate
the Company's overall interest rate risk.
NOTE 16. SUBSEQUENT EVENT
The Company entered into a merger agreement on March 10, 1999, which will result
in the merger of the Company with and into Associated Banc-Corp and the
conversion of the outstanding shares of stock into shares of common stock of
Associated Banc-Corp, subject to certain closing conditions. The merger requires
regulatory approval and is anticipated to close in the second half of 1999.
C-34
<PAGE> 168
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated under the Wisconsin Business Corporation
Law (the "WBCL"). Under Section 180.0851 of the WBCL, the Registrant shall
indemnify a director or officer, to the extent such person is successful on the
merits or otherwise in the defense of a proceeding, for all reasonable expenses
incurred in the proceeding, if such person was a party to such proceeding
because he or she was a director or officer of the Registrant. In all other
cases, the Registrant shall indemnify a director or officer against liability
incurred in a proceeding to which such person was a party because he or she was
a director or officer of the Registrant; unless liability was incurred because
he or she breached or failed to perform a duty owed to the Registrant and such
breach or failure to perform constitutes: (i) a willful failure to deal fairly
with the Registrant or its shareholders in connection with a matter in which the
director or officer has a material conflict of interest; (ii) a violation of
criminal law, unless the director or officer had reasonable cause to believe his
or her conduct was lawful or no reasonable cause to believe his or her conduct
was unlawful; (iii) a transaction from which the director or officer derived an
improper personal profit; or (iv) willful misconduct. Section 180.0858 of the
WBCL provides that subject to certain limitations, the mandatory indemnification
provisions do not preclude any additional right to indemnification or allowance
of expenses that a director or officer may have under the Registrant's articles
of incorporation, bylaws, a written agreement between the director or officer
and the Registrant or a resolution of the Board of Directors or adopted by
majority vote of the Registrant's shareholders.
Section 180.0859 of the WBCL provides that it is the public policy of
the State of Wisconsin to require or permit indemnification, allowance of
expenses and insurance to the extent required or permitted under Sections
180.0850 to 180.0858 of the WBCL for any liability incurred in connection with a
proceeding involving a federal or state statute, rule or regulation regulating
the offer, sale or purchase of securities.
The Registrant's Articles of Incorporation contains no provisions in
relation to the indemnification of directors and officers of the Registrant.
Article XI of the Registrant's 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
II-1
<PAGE> 169
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.
All officers, directors, employees and agents of controlled
subsidiaries of the Registrant shall be deemed for purposes of Article XI to be
serving as such officers, directors, employees and agents at the request of the
Registrant. The right to indemnification granted to such officers and directors
by Article XI is not subject to any limitation or restriction imposed by any
provision of the Articles of Incorporation or Bylaws of a controlled subsidiary.
For purposes of Article XI, a "controlled subsidiary" means any corporation at
least 80% of the outstanding voting stock of which is owned by the Registrant or
another controlled subsidiary of the Registrant.
Upon written request by a director, officer, employee or agent who is a
party to a proceeding, the Registrant shall pay or reimburse his or her
reasonable expenses as incurred if the director, officer, employee or agent
provides the Registrant with: (i) a written affirmation of his or her good faith
belief that he or she is entitled to indemnification under Article XI; and (ii)
a written undertaking to repay all amounts advanced without interest to the
extent that it is ultimately determined that indemnification under Article XI is
prohibited. The Registrant shall have the power to purchase and maintain
insurance on behalf of any person who is a director, officer, employee or agent
against any liability asserted against or incurred by the individual in any such
capacity arising out of his or her status as such, regardless of whether the
Registrant is required or authorized to indemnify or allow expenses to the
individual under Article XI.
The right to indemnification under Article XI may be amended only by a
majority vote of the shareholders and any reduction in the right to
indemnification may only be prospective from the date of such vote.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
Exhibit No.
2(a) Agreement and Plan of Merger dated as of March 10,
1999 between the Registrant and Riverside Acquisition
Corp., incorporated by reference to Exhibit A to the
Proxy Statement/Prospectus of the Registrant and
Riverside Acquisition Corp. (the "Proxy
Statement/Prospectus").
II-2
<PAGE> 170
2(b) First Amendment to Agreement and Plan of Merger dated
as of June __, 1999 between the Registrant and
Riverside Acquisition Corp., incorporated by
reference to Exhibit A-1 to the Proxy
Statement/Prospectus.
3(a) Articles of Incorporation, as amended and restated,
incorporated by reference to Exhibit 3(a) of the
Registrant's Annual Report on Form 10-K filed for the
year ended December 31, 1997, SEC File No. 0-5519.
3(b) Bylaws, as amended, incorporated by reference to
Exhibit 3(b) of the Registrant's Annual Report on
Form 10-K filed for the year ended December 31, 1997,
SEC File No. 0-5519.
4 The Registrant has outstanding certain long term
debt. None of such debt exceeds 10% of the total
assets of the Registrant and its consolidated
subsidiaries. Thus, copies of the constituent
instruments defining the rights of the holders of
such debt are not included as exhibits to this
Registration Statement. The Registrant agrees to
furnish copies of such instruments to the Commission
upon request.
5 Opinion of Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, s.c. regarding legality of issuance of
the Registrant's securities.
8 Form of Opinion of Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c. regarding certain federal
income tax matters.
10(a) The 1982 Incentive Stock Option Plan of the
Registrant incorporated by reference to Exhibit 10 to
Annual Report on Form 10-K for fiscal year ended
December 31, 1987.
10(b) The Restated Long-Term Incentive Stock Option Plan of
the Registrant incorporated by reference to Exhibit
10 filed with the Registrant's registration statement
(33-86790) on Form S-8 filed under the Securities Act
of 1933.
10(c) Change of Control Plan of the Registrant effective
April 25, 1994 incorporated by reference to Exhibit
10(d) of the Registrant's Annual Report on Form 10-K
for fiscal year ended December 31, 1994, SEC File No.
0-5519.
10(d) Deferred Compensation Plan and Deferred Compensation
Trust effective as of December 16, 1993, and Deferred
Compensation Agreement of the Registrant dated
December 31, 1994, incorporated by reference to
Exhibit 10(e) of the Registrant's Annual Report on
Form 10-K for fiscal year ended December 31, 1994,
SEC File No. 0-5519.
11 Statement Re Computation of Per Share Earnings
incorporated by reference to Exhibit 11 of the
Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 and Exhibit 11 of
the Registrant's Quarterly Report on Form 10-Q filed
for the quarter ended March 31, 1999, SEC File No.
0-5519.
II-3
<PAGE> 171
21 List of Subsidiaries of the Registrant incorporated
by reference to Exhibit 21 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1998, SEC File No. 0-5519.
23(a) Consent of KPMG LLP.
23(b) Consent of Ernst & Young LLP.
23(c) Consent of McGladrey & Pullen, LLP.
23(d) Consent of Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, s.c. incorporated by reference to Exhibit
5.
24 Powers of Attorney.
(b) No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) or (c) of this Form.
ITEM 22. UNDERTAKINGS.
(a) 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.
(b) 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.
(c) 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.
(d) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 172
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Green Bay,
State of Wisconsin, on this 7th day of July, 1999.
ASSOCIATED BANC-CORP
By: /s/ H.B. Conlon
--------------------------------
Harry B. Conlon,
Chairman 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>
/s/ H.B. Conlon Chairman, Chief Executive Officer
- ---------------------------------- and a Director (Principal July 7, 1999
Harry B. Conlon Executive Officer)
/s/ Joseph B. Selner Chief Financial Officer July 7, 1999
- ---------------------------------- (Principal Financial Officer and
Joseph B. Selner Principal Accounting Officer)
* President, Chief Operating July 7, 1999
- ---------------------------------- Officer and a Director
Robert C. Gallagher
* Vice Chairman and a Director July 7, 1999
- ----------------------------------
John C. Seramur
* Director July 7, 1999
- ----------------------------------
Robert S. Gaiswinkler
* Director July 7, 1999
- ----------------------------------
Ronald R. Harder
* Director July 7, 1999
- ----------------------------------
John S. Holbrook, Jr.
</TABLE>
II-5
<PAGE> 173
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director July 7, 1999
- ----------------------------------
William R. Hutchinson
* Director July 7, 1999
- ----------------------------------
Robert P. Konopacky
* Director July 7, 1999
- ----------------------------------
Dr. George R. Leach
* Director July 7, 1999
- ----------------------------------
John C. Meng
* Director July 7, 1999
- ----------------------------------
J. Douglas Quick
* Director July 7, 1999
- ----------------------------------
John H. Sproule
* Director July 7, 1999
- ----------------------------------
Ralph R. Staven
* Director July 7, 1999
- ----------------------------------
Norman L. Wanta
</TABLE>
*Harry B. Conlon hereby signs this registration statement on July 7,
1999 on behalf of each of the indicated persons for whom he is attorney-in-fact
pursuant to a power of attorney filed herewith.
*By: /s/ H.B. Conlon
----------------------------
Harry B. Conlon
II-6
<PAGE> 1
EXHIBIT 5
July 7, 1999
Associated Banc-Corp
1200 Hansen Road
P.O. Box 13307
Green Bay, WI 54307-3307
Gentlemen: Re: Registration Statement on Form S-4
We have acted as counsel for Associated Banc-Corp, a Wisconsin
corporation (the "Company"), in connection with the issuance by the Company of
shares of Common Stock, par value $.01 per share, of the Company (the "Shares")
to the shareholders of Riverside Acquisition Corp. ("Riverside") pursuant to the
Agreement and Plan of Merger, dated as of March 10, 1999, as amended (the
"Merger Agreement"), by and between the Company and Riverside.
In such capacity, we have examined, among other documents, the
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission on the date hereof or shortly hereafter (the "Registration
Statement"), including the Proxy Statement/Prospectus contained therein, to
effect the registration of the Shares under the Securities Act of 1933, as
amended (the "Act"). In making our examination, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
certified or photostatic copies and the capacity of each party executing a
document to so execute such document.
Based upon the foregoing, and upon such further examination as we have
deemed relevant and necessary, we are of the opinion that the Shares have been
legally and validly authorized under the Articles of Incorporation of the
Company and the laws of the State of Wisconsin and, when issued and delivered to
the shareholders of Riverside pursuant to the Merger Agreement and as provided
under applicable Wisconsin law, the Registration Statement and the Company's
<PAGE> 2
Associated Banc-Corp
July 7, 1999
Page 2
Articles of Incorporation and By-Laws, will be validly issued and outstanding
and fully paid and nonassessable, except as set forth in section 180.0622(2)(b)
of the Wisconsin Business Corporation Law, as interpreted.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose.
We hereby consent to the use of our name beneath the caption "Legal
Matters" in the Proxy Statement/Prospectus forming part of the Registration
Statement and to the filing of a copy of this opinion as an exhibit thereto. In
giving our consent, we do not admit that we are "experts" within the meaning of
section 11 of the Act or within the category of persons whose consent is
required by section 7 of the Act.
Yours very truly,
REINHART, BOERNER, VAN DEUREN,
NORRIS & RIESELBACH, s.c.
BY /s/ James M. Bedore
------------------------------
James M. Bedore
<PAGE> 1
EXHIBIT 8
___________, 1999
The Board of Directors
Associated Banc-Corp
1200 Hansen Road
P.O. Box 13307
Green Bay, WI 54307-3307
Riverside Acquisition Corp.
2655 Campus Drive
Plymouth, Minnesota 55441-2657
Attention: Gwen Stanley, Senior Vice President
Gentlemen: Re: Classification of Merger
You have requested our opinion with respect to certain federal income
tax consequences of the proposed merger (the "Merger") of Riverside Acquisition
Corp., a Minnesota corporation ("Riverside") with and into Associated Banc-Corp,
a Wisconsin corporation ("Associated"), pursuant to the Agreement and Plan of
Merger dated as of March 10, 1999, as amended, between Associated and
Riverside (the "Agreement").
In connection with the proposed Merger, you have informed us of the
following:
1. Pursuant to the laws of the State of Wisconsin and Minnesota,
Riverside will merge with and into Associated. Associated will be the surviving
corporation.
2. Pursuant to the Merger, all of Riverside's assets will be
transferred to Associated and Associated will assume all of Riverside's
liabilities.
3. At the effective time of the Merger, each outstanding share of
Riverside Common Stock shall be exchanged for certificates representing whole
shares of Associated Common Stock (except for shareholders who exercise
dissenters' rights and cash received in lieu of fractional shares of
Associated). The aggregate amount of (i) cash paid to dissenting shareholders,
and (ii) cash paid in
<PAGE> 2
The Board of Directors
________________, 1999
Page 2
lieu of fractional shares, shall not be more than 10% of the aggregate
consideration to be received by such shareholders as of the effective time.
4. As soon as practicable at or after the effective time of the Merger,
the exchange agent will distribute Associated Common Stock, the cash paid to
dissenting shareholders and cash in lieu of fractional shares to holders of
Riverside Common Stock.
5. Associated will continue to conduct one or more of the historic
businesses now being conducted by Riverside, through its wholly owned subsidiary
which is Associated Bank Green Bay, a Wisconsin state chartered bank located in
Green Bay, Wisconsin.
6. Associated and Riverside each have valid business purposes for the
Merger apart from tax considerations.
7. Neither Associated nor any related corporation within the meaning of
Regulation section 1.368-1(e)(iii) has any plan or intention to reacquire any of
the Associated Common Stock issued in the Merger.
8. The fair market value of the Associated Common Stock to be received
by Riverside shareholders with respect to their Riverside Common Stock will be,
in each instance, approximately equal to the fair market value of Riverside
Common Stock surrendered in exchange therefor.
The Regulations require that in substance a substantial part of the
value of the proprietary interests in Riverside be preserved, generally through
stock ownership in Associated, in the reorganization. This is referred to as
continuity of shareholder interest. The Regulations state that whether
continuity of shareholder interest is met is a facts and circumstances test.
Generally, as long as at least 50% of the consideration received in the Merger
by the Riverside shareholders consists of Associated
<PAGE> 3
The Board of Directors
________________ , 1999
Page 3
Common Stock, continuity of shareholder interest should be met. We note that
Associated has announced a stock repurchase program whereby it may redeem a
number of shares not in excess of the number of shares it will issue to the
Riverside stockholders in the Merger. If this redemption were
treated as in connection with the Merger and if Associated were to redeem an
amount of shares from the Riverside shareholders, either directly or indirectly,
in excess of 50% of the consideration received in the Merger as a part of this
stock repurchase program, the Internal Revenue Service could claim that based on
the facts, continuity of shareholder interest has not been met. Due to the
uncertainty of the law regarding continuity of shareholder interest in the area
of stock repurchase programs, the Internal Revenue Service could also claim that
any Riverside shareholders who sell shares while the stock repurchase program is
in effect have indirectly sold their shares to Associated, even if Associated is
not the actual buyer and even if the Riverside shareholders may not know who the
actual buyer is. As a result, the transaction could become taxable to all
Riverside shareholders, including those that do not sell their shares. Our
opinion thus relies on the fact the former Riverside shareholders do not sell
(or be deemed to sell) a sufficient number of shares of their Associated Common
Stock to Associated for at least two years after the Merger (including any time
during such period when the stock repurchase program is in effect) such that
less than 50% of the Merger consideration would be deemed to be in the form of
Associated Common Stock, although such shareholders would be permitted to sell
their shares to a third party which is not related to Associated.
In rendering this tax opinion, Reinhart, Boerner, Van Deuren, Norris &
Rieselbach, s.c. has relied on certain written representations as to factual
matters made by appropriate officers of Associated and Riverside. Such
representations are customary for opinions of this type; however, this tax
opinion cannot be relied upon if any such representation is, or later becomes,
inaccurate.
In connection herewith, we have examined the Agreement, the
Registration Statement on Form S-4 to be filed by Associated on the date hereof
with the Securities and Exchange Commission (which contains the Proxy
Statement/Prospectus) and such other information as we have deemed relevant. As
to questions of fact material to the opinions herein, we have relied upon
certificates from the management of Associated and Riverside. On the basis of
the foregoing, we are of the opinion that for federal income tax purposes:
1. Provided that the Merger of Riverside with and into Associated
qualifies as a statutory merger under applicable law, the Merger will qualify as
a reorganization within the meaning of Section 368(a)(1)(A) of the Code, and
<PAGE> 4
The Board of Directors
________________, 1999
Page 4
Riverside and Associated will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code for purposes of this reorganization.
2. No gain or loss will be recognized by any shareholder of Riverside
upon consummation of the Merger (except with respect to cash received in lieu of
a fractional share interest in Associated Common Stock or consideration received
as a result of the exercise of dissenter's rights.)
3. The aggregate income tax basis of the Associated Common Stock
received by the shareholders of Riverside pursuant to the Merger will be the
same as the aggregate tax basis of the Riverside Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
This opinion does not discuss all of the consequences that may be
relevant to holders of Riverside Common Stock entitled to special treatment
under the Code (such as insurance companies, financial institutions, dealers in
securities, tax-exempt organizations or foreign persons).
No information is provided herein with respect to the application and
effect of state, local and foreign tax laws and the possible effects of changes
in federal laws or other tax laws. This opinion is based upon the existing
provisions of the Code and regulations thereunder (both final and proposed) and
upon current Internal Revenue Service published rulings and existing court
decisions, any of which could be changed at any time. Any such changes may be
retroactive and could significantly modify the statements and opinions expressed
herein. Similarly, any change in the facts and assumptions stated above, upon
which this opinion is based, could modify the conclusion.
This opinion represents our best judgment as to the probable outcome of
the tax issues discussed and is not binding on the Internal Revenue Service.
However, we can give no assurance that the Internal Revenue Service will not
challenge our
<PAGE> 5
The Board of Directors
_______________, 1999
Page 5
"Legal Opinions" in the Proxy Statement/Prospectus contained in such
Registration Statement. In giving such consent, we do not thereby concede that
we are within the category of persons whose consent is required under section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Yours very truly,
REINHART, BOERNER, VAN DEUREN,
NORRIS & RIESELBACH, s.c.
BY
-----------------------------------
John L. Schliesmann
<PAGE> 1
Exhibit 23(a)
Consent of Independent Public Accountants
The Board of Directors
Associated Banc-Corp:
We consent to the use of our reports incorporated herein by reference and to the
reference of our firm under the "Experts" heading in the registration statement.
/s/ KPMG LLP
Chicago, Illinois
June 30, 1999
<PAGE> 1
Exhibit 23(b)
Consent of Independent Auditors
We consent to the use of our report dated January 22, 1998, with respect to the
financial statements of First Financial Corporation incorporated by reference in
the Registration Statement of Associated Banc-Corp on Form S-4 filed on July 1,
1999 for the registration of shares of its common stock in connection with its
merger with Riverside Acquisition Corp.
/s/ ERNST & YOUNG LLP
Milwaukee, Wisconsin
July 1, 1999
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of
our report dated January 21, 1999, except Note 16, as to which the date is
March 10, 1999, relating to the consolidated financial statements of Riverside
Acquisition Corp. and subsidiary. We also consent to the reference to our firm
under the captions "Experts" and "Selected Financial Data" in the prospectus.
/s/ McGladrey & Pullen, LLP
St. Paul, Minnesota
July 1, 1999
<PAGE> 1
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ Robert S. Gaiswinkler
-----------------------------------
Robert S. Gaiswinkler
Director
<PAGE> 2
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ Robert C. Gallagher
-----------------------------------
Robert C. Gallagher
Director
<PAGE> 3
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ Ronald R. Harder
-----------------------------------
Ronald R. Harder
Director
<PAGE> 4
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ John S. Holbrook, Jr.
-----------------------------------
John S. Holbrook, Jr.
Director
<PAGE> 5
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ William R. Hutchinson
-----------------------------------
William R. Hutchinson
Director
<PAGE> 6
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 18th day of May, 1999.
/s/ Robert P. Konopacky
-----------------------------------
Robert P. Konopacky
Director
<PAGE> 7
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ George R. Leach
-----------------------------------
George R. Leach
Director
<PAGE> 8
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 18th day of May, 1999.
/s/ John C. Meng
-----------------------------------
John C. Meng
Director
<PAGE> 9
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 18th day of May, 1999.
/s/ J. Douglas Quick
-----------------------------------
J. Douglas Quick
Director
<PAGE> 10
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ John C. Seramur
-----------------------------------
John C. Seramur
Director
<PAGE> 11
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 18th day of May, 1999.
/s/ John H. Sproule
-----------------------------------
John H. Sproule
Director
<PAGE> 12
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ Ralph R. Staven
-----------------------------------
Ralph R. Staven
Director
<PAGE> 13
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ Norman L. Wanta
-----------------------------------
Norman L. Wanta
Director
<PAGE> 14
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 Harry B. Conlon or Lori A. Flanagan 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 Riverside Acquisition Corp.
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 17th day of May, 1999.
/s/ Joseph B. Selner
-----------------------------------
Joseph B. Selner
Chief Financial Officer
