EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
ASSOCIATED BANC-CORP
AND
FIRST FEDERAL CAPITAL CORP
APRIL 27, 2004
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.01. The Merger...............................................
SECTION 1.02. Effective Time...........................................
SECTION 1.03. Effect of the Merger.....................................
SECTION 1.04. Articles of Incorporation and Bylaws.....................
SECTION 1.05. Directors and Officers...................................
SECTION 1.06. Conversion of Securities.................................
SECTION 1.07. Exchange of Certificates.................................
SECTION 1.08. Stock Transfer Books.....................................
SECTION 1.09. Anti-Dilution Adjustment.................................
SECTION 1.10. Treatment of Company Stock Options.......................
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. Organization and Qualification of the Company, Bank,
and the Company Subsidiaries...........................
SECTION 2.02. Articles of Incorporation and Bylaws.....................
SECTION 2.03. Capitalization...........................................
SECTION 2.04. Authority................................................
SECTION 2.05. No Conflict; Required Filings and Consents...............
SECTION 2.06. Compliance; Permits......................................
SECTION 2.07. Banking Reports, SEC Reports, and Financial Statements...
SECTION 2.08. Absence of Certain Changes or Events.....................
SECTION 2.09. Absence of Litigation....................................
SECTION 2.10. Employee Benefit Plans...................................
SECTION 2.11. Employment Contracts; Material Contracts.................
SECTION 2.12. Registration Statement; Proxy Statement..................
SECTION 2.13. Title to Property........................................
SECTION 2.14. Compliance with Environmental Laws.......................
SECTION 2.15. Absence of Agreements....................................
SECTION 2.16. Taxes....................................................
SECTION 2.17. Insurance................................................
SECTION 2.18. Absence of Adverse Agreements............................
SECTION 2.19. Internal Control Over Financial Reporting................
SECTION 2.20. Loans....................................................
SECTION 2.21. Related Party Transactions ..............................
SECTION 2.22. Labor Matters............................................
SECTION 2.23. NASDAQ; Compliance with SOX..............................
SECTION 2.24. Brokers..................................................
SECTION 2.25. Tax Matters..............................................
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SECTION 2.26. Full Disclosure..........................................
SECTION 2.27 Vote Required............................................
SECTION 2.28. Board Approval...........................................
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSOCIATED
SECTION 3.01. Organization and Qualification...........................
SECTION 3.02. Articles of Incorporation and Bylaws.....................
SECTION 3.03. Capitalization of Associated.............................
SECTION 3.04. Authority................................................
SECTION 3.05. No Conflict; Required Filings and Consents...............
SECTION 3.06. Compliance; Permits......................................
SECTION 3.07. SEC Reports, and Financial
Statements.............................................
SECTION 3.08. Absence of Certain Changes or Events.....................
SECTION 3.09. Absence of Litigation....................................
SECTION 3.10. Registration Statement; Proxy Statement..................
SECTION 3.11. Absence of Agreements....................................
SECTION 3.12. Taxes....................................................
SECTION 3.13. Compliance with SOX......................................
SECTION 3.14. Brokers..................................................
SECTION 3.15. Tax Matters..............................................
SECTION 3.16. Full Disclosure..........................................
SECTION 3.17. Absence of Adverse Agreements............................
SECTION 3.18. Employee Benefit Plans...................................
SECTION 3.19. Compliance With Environmental Laws.......................
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Affirmative Covenants....................................
SECTION 4.02. Negative Covenants.......................................
SECTION 4.03. Access and Information...................................
SECTION 4.04. Affiliates and Tax Treatment.............................
SECTION 4.05. Expenses.................................................
SECTION 4.06. Delivery of Shareholder List.............................
SECTION 4.07. Employee Benefits........................................
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ARTICLE V
COVENANTS OF ASSOCIATED
SECTION 5.01. Covenants................................................
SECTION 5.02. Access and Information...................................
SECTION 5.03. Tax Treatment............................................
SECTION 5.04. Charitable Contributions ................................
SECTION 5.05. SEC Filings..............................................
SECTION 5.06. Stock Exchange Listing...................................
SECTION 5.07. Nomination of Director...................................
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement...................................
SECTION 6.02. Meeting of Shareholders..................................
SECTION 6.03. Appropriate Action; Consents; Filings....................
SECTION 6.04. Notification of Certain Matters..........................
SECTION 6.05. Public Announcements.....................................
SECTION 6.06. Environmental Matters....................................
SECTION 6.07. Employee Benefits........................................
SECTION 6.08. Associated Advisory Boards...............................
SECTION 6.09. Certain Benefits of Company Directors....................
SECTION 6.10. Severance Benefits for Company Employees.................
SECTION 6.11. Directors' and Officers' Indemnification and Insurance...
SECTION 6.12. 2004 Accrued Bonuses.....................................
SECTION 6.13. Stay Bonuses.............................................
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.01. Conditions to Obligation of Each Party to Effect the
Merger.................................................
SECTION 7.02. Additional Conditions to Obligations of Associated.......
SECTION 7.03. Additional Conditions to Obligations of the Company......
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination..............................................
SECTION 8.02. Effect of Termination....................................
SECTION 8.03. Amendment................................................
SECTION 8.04. Waiver...................................................
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties, and
Agreements.............................................
SECTION 9.02. Disclosure Schedules.....................................
SECTION 9.03. Notices..................................................
SECTION 9.04. Certain Definitions......................................
SECTION 9.05. Mitigation and Reimbursement ............................
SECTION 9.06. Headings.................................................
SECTION 9.07. Severability.............................................
SECTION 9.08. Entire Agreement.........................................
SECTION 9.09. Assignment...............................................
SECTION 9.10. Parties in Interest......................................
SECTION 9.11. Governing Law............................................
SECTION 9.12. Counterparts.............................................
SECTION 9.13. Enforcement of Agreement.................................
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 27, 2004 (the
"Agreement"), between ASSOCIATED BANC-CORP, a Wisconsin corporation
("Associated") and FIRST FEDERAL CAPITAL CORP, a Wisconsin corporation (the
"Company").
W I T N E S S E T H:
WHEREAS, the Company is a unitary thrift holding company, the wholly
owned subsidiary of which is First Federal Capital Bank (the "Bank"), and its
wholly owned subsidiaries, First Cap Holdings, Inc., First Reinsurance, Inc.,
First Enterprises, Inc., FF Mortgage Reinsurance, Inc., and Turtle Creek
Corporation (such subsidiaries collectively with the Bank and any other direct
or indirect subsidiary of the Company are referred to in this Agreement as the
"Company Subsidiaries"); 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") will merge with and into Associated (the "Merger"); and
WHEREAS, the respective Boards of Directors of the Company and
Associated have determined that the Merger will enhance the ability of the
Company and Associated to better serve their existing depositors and customers
and increase their financial strength; and
WHEREAS, the respective Boards of Directors of the Company and
Associated believe that the Merger will benefit the shareholders and the
employees of the Company and Associated; and
WHEREAS, the respective Boards of Directors of Associated and the
Company have (i) determined that the Merger and the exchange of cash and 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
WHEREAS, Associated and the Company intend to effect a merger that
qualifies as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"); and
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:
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Wisconsin Law, at the
Effective Time (as defined in Section 1.02), the Company shall be merged with
and into 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, in such form
as required by, and executed in accordance with the relevant provisions of,
Wisconsin Law (a) after the satisfaction or, if permissible, waiver of
conditions set forth in Article VII, and (b) as promptly as possible within the
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 and approve the Merger pursuant to Section 6.02; or
(iv) If the transaction contemplated by this Agreement is
being contested in any legal proceeding and Associated or the Company
has elected to contest the same, the date that such legal proceeding
has been brought to a non-appealable conclusion sufficiently favorable,
in the judgment of Associated and the Company, to permit consummation
of the transaction contemplated hereby.
The date and time of the filing of the Articles of Merger with the
Wisconsin Department of Financial Institutions, or on such later date or later
time as specified in the Articles of Merger, is hereinafter referred to as the
"Effective Time." In no event shall the Effective Time occur prior to August 1,
2004. Notwithstanding anything herein to the contrary, with respect to the
calendar quarter in which the Effective Time is to occur, Associated and the
Company will cooperate not to set the Effective Time on a date that is after the
record date for Associated's regular quarterly dividend for such quarter, if
any, and before the record date for the Company's regular quarterly dividend for
such quarter, if any, in order to prevent the Company's shareholders from not
being entitled to receive either dividend for such quarter.
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of Wisconsin
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, except as otherwise
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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, together with one (1) independent
director (as defined by The NASDAQ Stock Market ("NASDAQ")) of the Company
(selected by the nominating committee of the Board of Directors of Associated)
who will be designated a Class B Director with a term expiring at the annual
meeting of Associated's shareholders in 2006 and Xxxx X. Xxxxx who will be
designated a Class C Director with a term expiring at the annual meeting of
Associated's shareholders in 2007, 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) each share of common stock, par value $0.10 per share, of
the Company (the "Company Common Stock") (all issued and outstanding shares of
the Company Common Stock being hereinafter collectively referred to as "Shares")
issued and outstanding immediately prior to the Effective Time (other than any
Shares to be canceled pursuant to Section 1.06(b)) shall, at the election of the
holder of each Share, (i) be converted, in accordance with Section 1.07, into
the right to receive 0.635 (such ratio, as it may be adjusted pursuant to the
terms of this Agreement, the "Exchange Ratio") shares of common stock, par value
$0.01 per share, of Associated ("Associated Common Stock") or (ii) be converted
into the right to receive Cash Consideration (as defined below); provided,
however, that ten percent (10%) of the Company Common Stock to be converted
pursuant to the Merger shall consist of the aggregate of (i) the Company Common
Stock that will be converted to Cash Consideration, and (ii) the Company Common
Stock that will be converted into the right to receive cash in lieu of
Fractional Shares (as defined in Section 1.07(f)) if any pursuant to Section
1.07(f). Cash Consideration shall be the amount of cash equal to the product
obtained by multiplying the Exchange Ratio by the Associated Common Stock
closing price on the date of the Effective Time. As of the Effective Time, all
such Shares shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each Certificate (as defined in
Section 1.07(c)) shall thereafter represent the right to receive a certificate
representing shares of Associated Common Stock into which such Shares are
convertible and/or Cash Consideration. Certificates shall be exchanged for
certificates representing whole shares of Associated Common Stock issued in
consideration therefor and/or for Cash Consideration and cash in lieu of
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Fractional Shares (if any) upon the surrender of such Certificates in accordance
with the provisions of Section 1.07, without interest. No Fractional Shares (if
any) shall be issued, and, in lieu thereof, a cash payment shall be made
pursuant to Section 1.07(f) hereof. Under no circumstances shall the total
Shares converted to Cash Consideration and Shares converted to the right to
receive cash in lieu of Fractional Shares (if any) represent more or less than
ten percent (10%) of the Company Common Stock to be converted pursuant to the
Merger.
(b) each share of Company Common Stock held in the treasury of
the Company and each Share owned by Associated or any direct or indirect wholly
owned Associated Subsidiaries (as defined in Section 3.01) 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) (i) Each Election Form (as defined in Section 1.07(b))
shall permit the holder of Shares (or the beneficial owner through appropriate
and customary documentation and instructions), other than Shares to be cancelled
in accordance with Section 1.06(b), to (A) elect to receive Associated Common
Stock with respect to all or a portion of such holder's Shares (a "Stock
Election") and/or (B) elect to receive cash with respect to all or a portion of
such holder's Company Common Stock (a "Cash Election"). Shares as to which a
Stock Election is made are referred to herein as "Stock Election Shares," and
Shares as to which a Cash Election is made are referred to herein as "Cash
Election Shares." Any Shares with respect to which the holder (or the beneficial
owner, as the case may be) shall not have submitted to the Exchange Agent an
effective, properly completed Election Form on or before 5:00 P.M., Central
Time, on the business day that is two business days prior to the Effective Time
(the "Election Deadline") shall be deemed to be Stock Election Shares. Any such
election shall have been properly made only if the Exchange Agent shall have
actually received a properly completed Election Form by the Election Deadline.
Any Election Form may be revoked or changed by the person submitting such
Election Form prior to the Election Deadline. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made and to disregard immaterial defects in the Election
Forms, and any good faith decisions of the Exchange Agent regarding such matters
shall be binding and conclusive. None of Associated, the Company and the
Exchange Agent shall be under any obligation to notify any person of any defect
in an Election Form.
(ii) If the number of Cash Election Shares is, when
considered together with the number of shares of Company Common Stock to be
converted into cash to be paid in lieu of Fractional Shares, equal to more or
less than ten percent (10%) of the total Shares, Associated and the Company will
reduce or increase the number of Cash Election Shares by the number necessary to
cause the Cash Election Shares to equal ten percent (10%) of the total Shares.
If there is an excess of Cash Election Shares, the number of Cash Election
Shares which may not be so converted into Cash Consideration shall be converted
into Stock Election Shares and exchanged for Associated Common Stock in
accordance with Section 1.06(a), with the reduction in Cash Election Shares to
be made pro rata among the shareholders of the Company making Cash Elections
based upon the number of Shares for which each such shareholder has made a Cash
Election. If there is a deficiency of Cash Election Shares, the number of Stock
Election Shares which may not be so converted into shares of Associated Common
Stock, shall
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be converted into Cash Election Shares and exchanged for Cash Consideration in
accordance with Section 1.06(a), with the reduction in Stock Election Shares to
be made pro rata among the shareholders of the Company making Stock Elections
based on the number of shares for which each such shareholder has made a Stock
Election.
SECTION 1.07. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Associated shall
deposit, or shall cause to be deposited, with an exchange agent 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, Cash
Consideration, certificates representing the shares of Associated Common Stock
and cash to be paid in lieu of Fractional Shares (if any) (such Cash
Consideration, certificates for shares of Associated Common Stock and cash in
lieu of Fractional Shares (if any), together with any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund")
payable or issuable pursuant to Sections 1.06 or 1.07(f) (if any) in exchange
for Shares.
(b) Election Xxxxx.Xx least fourteen (14) days prior to the
Effective Time, the Exchange Agent shall mail or personally deliver to each
holder of record of Shares (or his or her attorney in fact) forms mutually
agreeable to Associated and the Company for the exercise of elections as
described in Section 1.06(c) ("Election Forms").
(c) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, but in no event later than three (3) business days
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 Shares
(the "Certificates"), whose Shares were converted into the right to receive Cash
Consideration and/or 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 (or a lost certificate affidavit in a form reasonably acceptable
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 and/or Cash Consideration and
cash in lieu of Fractional Shares (if any). The foregoing letter of transmittal
and instructions shall be subject to prior approval of the Company. At the
Effective Time and 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
Cash Consideration and/or a certificate representing that number of whole shares
of Associated Common Stock which such holder has the right and cash in lieu of
Fractional Shares (if any), and the Certificate so surrendered shall forthwith
be canceled and Cash Consideration and/or certificate representing shares of
Associated Common Stock and the cash in lieu of Fractional Shares (if any) shall
be sent as promptly as practicable to such holder. In the event of a transfer of
ownership of Shares which is not registered in the transfer records of the
Company, Cash Consideration and/or a certificate representing the proper number
of shares of Associated Common Stock and the cash in lieu of Fractional Shares
(if any) may be issued to a transferee if the Certificate representing such
Shares is presented to the Exchange
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Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. The Exchange Agent shall make reasonable efforts to make available
additional letters of transmittal and instructions to all such persons who
become holders (or beneficial owners) of Company Common Stock. Certificates
surrendered for exchange by any affiliate of the Company shall not be exchanged
for certificates representing shares of Associated Common Stock and/or Cash
Consideration and cash in lieu of Fractional Shares (if any) 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/or Cash Consideration and cash in lieu of Fractional Shares (if
any) as contemplated by Section 1.07(f).
(d) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Associated Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Associated Common Stock represented thereby, and no Cash Consideration
or cash payment in lieu of Fractional Shares (if any) shall be paid to any such
holder pursuant to Section 1.07(f), until the holder of such Certificate shall
surrender such Certificate. All dividends or other distributions declared on or
after the Effective Time with respect to Associated Common Stock and payable to
the holder of record thereof on or after the Effective Time that are payable to
the holder of a Certificate not theretofore surrendered and exchanged for
Associated Common Stock pursuant to this Section 1.07(d) shall be paid or
delivered by Associated to the Exchange Agent, in trust, for the benefit of such
holders. All such dividends and distributions held by the Exchange Agent for
payment or delivery to the holders of unsurrendered Certificates unclaimed on
the date of termination of the Exchange Fund pursuant to Section 1.07(g) shall
be repaid or redelivered by the Exchange Agent to Associated. 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 (if
any) to which such holder is entitled pursuant to Section 1.07(f) 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.
(e) No Further Rights in the Shares. All Cash Consideration
and 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(f)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Shares.
(f) No Fractional Shares. No certificates or scrip
representing fractional shares of Associated Common Stock ("Fractional Shares")
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
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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
Associated Common Stock closing price on the date of the Effective Time.
(g) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the shareholders of the Company for one year
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 Cash
Consideration, Associated Common Stock, any cash in lieu of Fractional Shares
(if any), and any dividends or distributions with respect to Associated Common
Stock.
(h) No Liability. Neither Associated nor 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.
(i) Withholding Rights. Associated shall be entitled to deduct
and withhold from any cash consideration payable pursuant to this Agreement to
any holder of Shares or any holder of Company Stock Options pursuant to Section
1.10 such amounts as Associated is required by law to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local, or foreign tax law. To the extent that amounts are so withheld by
Associated, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares or Company Stock
Options, as applicable, 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 Cash Consideration
and/or shares of Associated Common Stock in accordance with this Article I.
SECTION 1.09. Anti-Dilution Adjustment. If, subsequent to the date
hereof and prior to the Effective Time, Associated shall pay a stock dividend or
make a distribution on Associated Common Stock in shares of Associated Common
Stock or any security convertible into Associated Common Stock or shall combine
or subdivide its stock, then in each such case, from and after the record date
for determining the shareholders entitled to receive such dividend or
distribution or the securities resulting from such combination or subdivision,
an appropriate adjustment (if any) shall be made to the Exchange Ratio 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
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payment by the holder thereof of any consideration other than the surrender for
cancellation of such convertible securities. Notwithstanding the foregoing, this
Section shall not apply to any stock options, warrants, restricted stock sale,
or performance stock issued under option plans of Associated existing as of the
date of this Agreement.
SECTION 1.10. Treatment of Company Stock Options. All rights under any
option to purchase shares of Company Common Stock that remains outstanding and
unexercised, whether vested or unvested, immediately prior to the Effective Time
(the "Company Stock Options") shall become null and void and cease to represent
a right to acquire shares of Company Common Stock as of the Effective Time and
shall at the option of the holder be either (i) converted into options (the "New
Options") to purchase that number of shares of Associated equal to (a) the
number of shares of Company Common Stock subject to the Company Stock Option
immediately prior to the Effective Time, multiplied by (b) the Exchange Ratio
(rounding Fractional Shares down to the nearest whole share), or (ii) converted
to the right to receive cash in an amount (less any applicable withholding tax)
equal to the number of shares of Company Common Stock subject to the Company
Stock Option multiplied by the amount by which the Exchange Ratio times the
Associated Common Stock closing price on the date of the Effective Time exceeds
the exercise price for such Company Stock Option; provided, however that Company
Stock Options issued after April 1, 2004 shall be converted to a right to
receive cash pursuant to (ii) of the first clause of this sentence with no
option to convert to New Options pursuant to (i) of the first clause of this
sentence. The exercise price per share of Associated Common Stock under each
converted New Option shall be equal to the exercise price per share of Company
Common Stock which was purchasable under the Company Stock Option that such New
Option replaces divided by the Exchange Ratio (rounded down to the nearest whole
cent). Each option which is an "incentive stock option" as defined in Section
422 of the Code shall be adjusted as required by Section 424 of the Code and the
regulations promulgated thereunder so as not to constitute a modification,
extension, or renewal of the option within the meaning of Section 424(h) of the
Code. The duration and vesting of each such New Option shall be the same as the
original Company Stock Option it replaces, except to the extent vesting may be
accelerated under the terms of the applicable Company stock option plan by
reason of the transactions contemplated by this Agreement. At or before the
Effective Time, the Company shall cause to be effected any amendments to any
plans, grant agreements, or other documents relating to any of the Company Stock
Options which may be necessary in order to give effect to the provisions of this
Section 1.10 and, if necessary, will use reasonable efforts to obtain the
consent of any holder of Company Stock Options necessary to effect any such
amendments.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Associated that:
SECTION 2.01. Organization and Qualification of the Company, Bank, and
the Company Subsidiaries. The Company is a corporation duly organized and
validly existing under the laws of the State of Wisconsin. The Bank is a duly
organized and validly existing federally chartered savings bank headquartered in
La Crosse, Wisconsin, and a wholly owned subsidiary of the Company. First Cap
Holdings, Inc. ("FCHI") is a duly organized and validly existing Nevada
8
corporation and wholly owned subsidiary of the Bank. First Reinsurance, Inc.
("FRI") is a duly organized and validly existing Arizona corporation and a
wholly owned subsidiary of the Bank. First Enterprises, Inc. ("FEI") is a duly
organized and validly existing Wisconsin corporation and wholly owned subsidiary
of the Bank. FF Mortgage Reinsurance, Inc. ("FFMRI") is a duly organized and
validly existing Vermont corporation and wholly owned subsidiary of FEI. Turtle
Creek Corporation ("TCC") is a duly organized and validly existing Wisconsin
corporation and wholly owned subsidiary of the Bank. Except as set forth in the
Company Disclosure Schedule at Section 2.01, the Bank, FCHI, FRI, FEI, FFMRI,
and TCC are the only direct or indirect subsidiaries of the Company. The Company
and the Company Subsidiaries each have 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 their respective
properties and to carry on their respective business as they are 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 and the Company Subsidiaries when 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 the
business, operations, properties (including intangible properties), condition
(financial or otherwise), prospects, assets, or liabilities (including
contingent liabilities) of a party and its subsidiaries, taken as a whole, or
which would prevent or materially delay consummation of the Merger or otherwise
prevent such party performing its obligations under this Agreement and shall be
deemed to include, without limitation, (a) with respect to the Company or any
Company Subsidiary any changes or effects that result in, or are reasonably
likely to result in (within the period beginning with the Effective Time and
ending twelve (12) months therefrom), a cost, expense, or liability (including
contingent liability), individually or in the aggregate, in an amount of $7.5
million or greater on the Company and the Company Subsidiaries, when taken as a
whole, or an effect, individually or in the aggregate, of $4.0 million or more
on the Company's consolidated earnings on an after-tax basis and (b) with
respect to Associated or any Associated Subsidiary any changes or effects that
result in, or are reasonably likely to result in (within the period beginning
with the Effective Time and ending twelve (12) months therefrom), a cost,
expense, or liability (including contingent liability, individually or in the
aggregate, in an amount of $60 million or greater on Associated and the
Associated Subsidiaries, when taken as a whole, or an effect, individually or in
the aggregate, of $35 million or more on Associated's consolidated earnings on
an after-tax basis; provided, however, that no assessment or proposed assessment
by the Wisconsin Department of Revenue relating to the income or reallocation to
a party of income from a Nevada entity shall be considered a Material Adverse
Effect or included in the computation of any Material Adverse Effect unless,
with respect to the Company or any Company Subsidiary, the Company breaches its
obligations pursuant to Section 4.01(o) or 4.02(o); and provided further,
however, that no changes or events relating to the mortgage servicing revenue
allowance of a party shall be considered a Material Adverse Effect or included
in the computation of any Material Adverse Effect as long as such allowance has
been and will continue to be determined in accordance with GAAP (as defined in
Section 2.07(b) below). The Company has not received any notice of proceedings
relating to the revocation or adverse modification, or proceeding with respect
to any Company Approvals. The Company and each of the Company Subsidiaries are
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
9
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 have a Material Adverse Effect on the Company. The
Company is registered with the Office of Thrift Supervision ("OTS") as a savings
and loan holding company under the Home Owner's Loan Act (the "HOLA"). Except as
set forth in the Disclosure Schedule of the Company attached hereto (the
"Company Disclosure Schedule") at Section 2.01, the Company does not hold any
interest, either directly or indirectly, in any other entity except the Company
Subsidiaries. Except as set forth in the Company Disclosure Schedule at Section
2.01, the Bank holds no interest, either directly or indirectly, in any other
entity except for FCHI, FRI, FEI, FFMRI, and TCC.
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 and each
of the Company Subsidiaries and such Articles of Incorporation and Bylaws of the
Company and each of the Company Subsidiaries are in full force and effect and
neither the Company nor any of the Company Subsidiaries is in violation of any
of the provisions of its Articles of Incorporation or Bylaws.
SECTION 2.03. Capitalization.
(a) Capitalization of the Company. The authorized capital
stock of the Company consists of 100,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock, par value $0.10 per share ("Company
Preferred Stock"). As of the date of this Agreement, (i) 22,487,868 shares of
Company Common Stock are issued and outstanding (net of treasury), all of which
are duly authorized, validly issued, fully paid, and non-assessable, except as
provided in Section 180.0622(2)(b) of Wisconsin Law (such section, including
judicial interpretations thereof and Section 180.40(6), its predecessor statute,
are referred to herein as "Section 180.0622(2)(b) of Wisconsin Law"), (ii) 3,552
shares of Company Common Stock are held in the Company's treasury, and (iii) no
shares of Company Preferred Stock are issued and outstanding. Except as set
forth at Section 2.03 of the Company Disclosure Schedule, 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. Except as
set forth at Section 2.03 of the Company Disclosure Schedule, there are no
obligations, contingent or otherwise, of the Company or the Company Subsidiaries
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 the Bank. The authorized capital stock
of the Bank consists of 1,000,000 shares of common stock, par value $0.10 per
share ("Bank Common Stock"). As of the date of this Agreement, (i) 1,000,000
shares of Bank Common Stock are issued and outstanding, all of which are duly
authorized, validly issued, fully paid and non-assessable, and (ii) the Company
owns all of the issued and outstanding Bank 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 Bank Common Stock or obligating the Bank to issue or sell any shares of
Bank Common Stock, or other equity interests in the Bank. There are no
obligations, contingent or otherwise, of the
10
Company or the Company Subsidiaries 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.
(c) Capitalization of FCHI. The authorized capital stock of
FCHI consists of 25,000 shares of common stock, no par value per share ("FCHI
Common Stock"). As of the date of this Agreement, (i) 1,000 shares of FCHI
Common Stock are issued and outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable, and (ii) the Bank owns all issued
and outstanding FCHI Common Stock. As of the date of this Agreement, there are
no options, warrants, or other rights, agreements, arrangements, or commitments
of any character, other than as set forth at Section 2.03 of the Company
Disclosure Schedule, relating to the issued or unissued FCHI Common Stock or
obligating FCHI to issue or sell any shares of FCHI Common Stock, or other
equity interests in FCHI. There are no obligations, contingent or otherwise, of
the Bank to repurchase, redeem, or otherwise acquire any shares of FCHI 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.
(d) Capitalization of FRI. The authorized capital stock of FRI
consists of 10,000,000 shares of common stock, par value $1.00 per share ("FRI
Common Stock"). As of the date of this Agreement, (i) 100,000 shares of FRI
Common Stock are issued and outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable, and (ii) the Bank owns all issued
and outstanding FRI Common Stock. As of the date of this Agreement, there are no
options, warrants, or other rights, agreements, arrangements, or commitments of
any character, other than as set forth at Section 2.03 of the Company Disclosure
Schedule, relating to the issued or unissued FRI Common Stock or obligating FRI
to issue or sell any shares of FRI Common Stock, or other equity interests in
FRI. There are no obligations, contingent or otherwise, of the Company or the
Company Subsidiaries to repurchase, redeem, or otherwise acquire any shares of
FRI 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.
(e) Capitalization of FEI. The authorized capital stock of FEI
consists of 15,000 shares of common stock, par value $100.00 per share ("FEI
Common Stock"). As of the date of this Agreement, (i) 15,000 shares of FEI
Common Stock are issued and outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable, except as provided in Section
180.0622(2)(b) of Wisconsin Law, and (ii) the Bank owns all issued and
outstanding FEI Common Stock. As of the date of this Agreement, there are no
options, warrants, or other rights, agreements, arrangements, or commitments of
any character, other than as set forth at Section 2.03 of the Company Disclosure
Schedule, relating to the issued or unissued FEI Common Stock or obligating FEI
to issue or sell any shares of FEI Common Stock, or other equity interests in
FEI. There are no obligations, contingent or otherwise, of the Company or the
Company Subsidiaries to repurchase, redeem, or otherwise acquire any shares of
FEI 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.
(f) Capitalization of FFMRI. The authorized capital stock of
FFMRI consists of 100,000 shares of common stock, no par value per share ("FFMRI
Common Stock"). As of the date of this Agreement, (i) 100 shares of FFMRI Common
Stock are issued and outstanding,
11
all of which are duly authorized, validly issued, fully paid and non-assessable,
and (ii) FEI owns all issued and outstanding FFMRI'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, other than as set
forth at Section 2.03 of the Company Disclosure Schedule, relating to the issued
or unissued FFMRI Common Stock or obligating FFMRI to issue or sell any shares
of FFMRI Common Stock, or other equity interests in FFMRI. There are no
obligations, contingent or otherwise, of the Company or the Company Subsidiaries
to repurchase, redeem, or otherwise acquire any shares of FFMRI 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.
(g) Capitalization of TCC. The authorized capital stock of TCC
consists of 9,000 shares of common stock, par value $1.00 per share ("TCC Common
Stock"). As of the date of this Agreement, (i) 500 shares of TCC Common Stock
are issued and outstanding, all of which are duly authorized, validly issued,
fully paid and non-assessable, except as provided in Section 180.0622(2)(b) of
Wisconsin Law, and (ii) the Bank owns all issued and outstanding TCC Common
Stock. As of the date of this Agreement, there are no options, warrants, or
other rights, agreements, arrangements, or commitments of any character, other
than as set forth at Section 2.03 of the Company Disclosure Schedule, relating
to the issued or unissued TCC Common Stock or obligating TCC to issue or sell
any shares of TCC Common Stock, or other equity interests in TCC. There are no
obligations, contingent or otherwise, of the Company or the Company Subsidiaries
to repurchase, redeem, or otherwise acquire any shares of TCC 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 of this Agreement by the Company's shareholders in
accordance with Wisconsin Law and the Company's Articles of Incorporation and
Bylaws. The Company's Board of Directors has unanimously approved and adopted
this Agreement and the transactions contemplated by this Agreement and
unanimously recommended that the Company's shareholders approve this Agreement
and the Merger. 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 against the Company in accordance with its terms.
SECTION 2.05. No Conflict; Required Filings and Consents.
(a) Except as set forth at Section 2.05 of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company shall not, (i)
conflict with or violate the Articles of Incorporation or Bylaws of the Company
or any of the Company Subsidiaries, (ii) conflict with or violate any domestic
(federal, state, or local) or foreign law, statute, ordinance, rule,
12
regulation, order, judgment, or decree (collectively, "Laws") applicable to the
Company or any of the Company Subsidiaries, or by which their respective
properties are bound or affected, or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration, or cancellation of, or result in the creation of a lien or
encumbrance on, any of the properties or assets of the Company or any of the
Company Subsidiaries pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise, or other instrument or obligation
to which the Company or any of the Company Subsidiaries are a party or by which
the Company or any of the Company Subsidiaries or any of their respective
properties are bound or affected, except for any such breaches, defaults, or
other occurrences that would not have a Material Adverse Effect on the Company.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will not,
require, with respect to the Company, any consent, approval, authorization, or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, or any other person except (i) for applicable
requirements, if any, of the Securities Act of 1933, as amended (the "Securities
Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
state securities or blue sky laws ("Blue Sky Laws"), the BHCA, the HOLA, the
banking laws and regulations of the State of Wisconsin (the "BL"), any
applicable antitrust authorities, and the filing and recordation of appropriate
merger or other documents as required by Wisconsin Law and federal banking laws,
or (ii) where the failure to obtain such consents, approvals, authorizations, or
permits, or to make such filings or notifications would not have a Material
Adverse Effect on the Company.
SECTION 2.06. Compliance; Permits. Neither the Company nor any of the
Company Subsidiaries is in conflict with, or in default or violation (except for
any such conflicts, defaults, or violations which would not have a Material
Adverse Effect on the Company) of (a) any Law applicable to the Company or any
of the Company Subsidiaries or by which any of their respective properties are
bound or affected, or (b) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise, or other instrument or obligation
to which the Company or any of the Company Subsidiaries is a party or by which
the Company or any of the Company Subsidiaries or any of their respective
properties are bound or affected.
SECTION 2.07. Banking Reports, SEC Reports, and Financial Statements.
(a) The Company and the Company Subsidiaries have timely filed
all forms, reports, and documents required to be filed with the Federal Reserve
Board, the Wisconsin Department of Financial Institutions, the Federal Deposit
Insurance Corporation, the Office of Thrift Supervision, and any other
applicable federal or state banking authorities (all such reports and statements
are collectively referred to as the "Company Bank Reports"). The Company Bank
Reports, including all Company Bank 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, unless corrected by a subsequent filing made (y)
prior to the date of this Agreement for reports and documents filed before the
date of this Agreement and (z) by the earlier of (A) 15
13
days of the filing date of the report or document being corrected or (B) 15 days
prior to the Effective Time, for reports and documents filed after the date of
this Agreement.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) of the Company and the Company
Subsidiaries contained in the Company Bank Reports, including any Company Bank
Reports filed since the date of this Agreement and prior to or on the Effective
Time, have been prepared in accordance with accounting principles generally
accepted in the United States ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto), and each
fairly presents the consolidated financial position of the Company and the
Company Subsidiaries as of the respective dates thereof and the consolidated
results of their operations and changes in financial position for the periods
indicated, except 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 or effect. With respect to the Company and the Company
Subsidiaries, for purposes of this Section 2.07, any amount or effect in excess
of $1 million shall be deemed material.
(c) The Company has on a timely basis filed all forms,
reports, and documents required to be filed by it with the Securities and
Exchange Commission ("SEC") since January 1, 2001. The Company Disclosure
Schedule at Section 2.07(c) lists and (except to the extent available in full
without redaction on the SEC's web site through the Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX") two days prior to the date of this
Agreement) the Company has delivered to Associated true and complete copies in
the form filed with the SEC of (i) the Company's Annual Reports on Form 10-K for
each fiscal year of the Company ending on or after December 31, 1999; (ii) its
Quarterly Reports on Form 10-Q for each of the first three fiscal quarters in
each of the fiscal years of the Company referred to in clause (i) above; (iii)
all proxy statements relating to the Company's meetings of shareholders (whether
annual or special) held, and all information statements relating to shareholder
consents since the beginning of the first fiscal year referred to in clause (i)
above; (iv) all certifications and statements required by (A) Rule 13a-14 or
15d-14 under the Exchange Act or (B) 18 U.S.C. Section 1350 (Section 906 of the
Xxxxxxxx-Xxxxx Act of 2002 ("SOX")) with respect to any report referred to in
clause (i) or (ii) above; (v) all other forms, reports, registration statements,
and other documents (other than preliminary materials if the corresponding
definitive materials have been provided to Associated pursuant to this Section
2.07(c)) filed by the Company with the SEC since the beginning of the first
fiscal year referred to in clause (i) above (the forms, reports, registration
statements, and other documents referred to in clauses (i), (ii), (iii), (iv),
and (v) above are, collectively, the "Company SEC Reports" and, to the extent
available in full without redaction on the SEC's web site through XXXXX two days
prior to the date of this Agreement, are, collectively, the "Filed Company SEC
Reports"); and (vi) all comment letters received by the Company from the staff
of the SEC since January 1, 2001, and all responses to such comment letters by
or on behalf of the Company. All matters and statements made in the
certifications and statements referred to in clause (iv) above are accurate. The
Company SEC Reports (x) were or will be prepared in accordance with the
requirements of the Securities Act and the Exchange Act, as applicable, and the
rules and regulations thereunder and (y) did not at the time they were filed
with the SEC, or will not at the time they are filed with the SEC, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
14
misleading. No Company Subsidiary is or has been required to file any form,
report, registration statement, or other document with the SEC or any state
authority. The Company maintains disclosure controls and procedures as required
by Rule 13a-15 or 15d-15 under the Exchange Act. The Company Disclosure Schedule
at Section 2.07(c) lists, and the Company has delivered to Associated, true and
complete copies of all written descriptions of and all policies, manuals, and
other documents promulgating such disclosure controls and procedures. Except as
disclosed in Filed Company SEC Reports, each director and executive officer of
the Company has filed with the SEC on a timely basis complete and accurate
versions of all statements required by Section 16(a) of the Exchange Act and the
rules and regulations thereunder since January 1, 2001. As used in this Section
2.07(c), the term "filed" shall be broadly construed to include any manner in
which a document or information is furnished, supplied, or otherwise made
available to the SEC, including, but not limited to, as may be required pursuant
to Item 9 or 12 of Form 8-K.
(d) The consolidated financial statements of the Company and
the Company Subsidiaries included or incorporated by reference in any Company
SEC Reports (including the related notes) complied as to form, as of the
respective dates of filing of such Company SEC Reports with the SEC, in all
material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto (including, without limitation,
Regulation S-X), have been prepared in accordance with GAAP (except, in the case
of unaudited financial statements, to the extent permitted by Regulation S-X for
Quarterly Reports on Form 10-Q) applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial condition of the Company and the Company
Subsidiaries at the dates thereof and the consolidated results of operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to notes and normal year-end audit adjustments that were not, or
with respect to any such financial statements contained in any Company SEC
Reports to be filed subsequent to the date hereof are not expected to be,
material in amount or effect). The Company Disclosure Schedule at Section
2.07(d) lists, and the Company has delivered to Associated copies of the
documentation creating or governing, all "off-balance sheet arrangements" (as
defined in Item 303(a)(4) of Regulation S-K) in effect with respect to the
Company or any of the Company Subsidiaries during any period covered by any of
the Company SEC Reports that was required to be disclosed in any Company SEC
Report. Deloitte & Touche LLP, which has expressed its opinion with respect to
the consolidated financial statements of the Company and the Company
Subsidiaries included in Company SEC Reports (including the related notes) filed
after June 30, 2003, (x) is a registered public accounting firm (as defined in
Section 2(a)(12) of SOX), (y) to the Company's knowledge, after reasonable
inquiry, is and has been throughout the periods covered by such financial
statements "independent" with respect to the Company within the meaning of
Regulation S-X, and (z) to the Company's knowledge, after reasonable inquiry,
is, and has been throughout the periods covered by such financial statements,
with respect to the Company, in compliance with subsections (g) through (l) of
Section 10A of the Exchange Act. Ernst & Young LLP, which expressed its opinion
with respect to the consolidated financial statements of the Company and the
Company Subsidiaries included in Company SEC Reports (including the related
notes) filed prior to June 30, 2003, (y) to the Company's knowledge, after
reasonable inquiry, was throughout the periods covered by such financial
statements "independent" with respect to the Company within the meaning of
Regulation S-X, and (z) to the Company's knowledge, after reasonable inquiry,
was throughout the periods covered by such financial
15
statements, with respect to the Company, in compliance with subsections (g)
through (l) of Section 10A of the Exchange Act. The Company Disclosure Schedule
at Section 2.07(d) lists all non-audit services performed by Deloitte & Touche
LLP or Ernst & Young LLP for the Company or any of the Company Subsidiaries
since January 1, 2003.
(e) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the Company Subsidiaries as of December 31,
2003, including all notes thereto (the "Company Balance Sheet"), neither the
Company nor the Company Subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent, or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP, except (i) for liabilities or obligations incurred in
the ordinary course of business since December 31, 2003, that would not have a
Material Adverse Effect on the Company, or (ii) as otherwise reflected in the
Filed Company SEC Reports.
SECTION 2.08. Absence of Certain Changes or Events. Except as disclosed
in the Filed Company SEC Reports, since December 31, 2003 to the date of this
Agreement, the Company and each of the Company Subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practice and, since December 31, 2003, there has not been (a) any
change in the financial condition, results of operations, or business of the
Company or any of the Company Subsidiaries that would have a Material Adverse
Effect on the Company; (b) any damage, destruction, or loss (whether or not
covered by insurance) with respect to any assets of the Company or any of the
Company Subsidiaries that would have a Material Adverse Effect on the Company;
(c) any change by the Company or any of the Company Subsidiaries in their
respective accounting methods, principles, or practices, except for compliance
with applicable new requirements of the Financial Accounting Standards Board or
GAAP; (d) any revaluation by the Company or any of the Company Subsidiaries of
any of their respective material assets in any material respect; (e) except in
the ordinary course of business, any entry by the Company or any of the Company
Subsidiaries into any commitment or transaction material to the Company; (f)
except as set forth in the Company Disclosure Schedule at Section 2.08(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 any of
the Company Subsidiaries; or (g) any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase, or other employee benefit plan, or any other increase
in compensation payable or to become payable to any officers or key employees of
the Company or any of the Company Subsidiaries.
SECTION 2.09. Absence of Litigation. Except as disclosed in the Filed
Company SEC Reports or as set forth at Section 2.09 of the Company Disclosure
Schedule with respect to any resolution or developments: (a) neither the Company
nor any of the Company Subsidiaries is or has been since January 1, 2001,
subject to any continuing order of, or written agreement or memorandum of
understanding with, or investigation by, any federal or state banking authority,
the SEC, or other governmental entity or the Board of Directors of the Company
or any committee thereof, or any judgment, order, writ, injunction, decree, or
award of any governmental entity or arbitrator, including, without limitation,
cease-and-desist or other orders
16
of any bank regulatory authority or the SEC; (b) there is no claim of any kind,
action, suit, litigation, proceeding, arbitration, investigation, or controversy
affecting the Company or any of the Company Subsidiaries, or any officers,
directors, or employees thereof in their capacity as such, pending or, to the
knowledge of the Company, threatened, except for matters which individually seek
damages not in excess of $100,000 which otherwise will not have, and cannot
reasonably be expected to have, a Material Adverse Effect on the Company; and
(c) there are no uncured material violations, or violations with respect to
which material refunds or restitutions may be required, cited in any compliance
report to the Company or any of the Company Subsidiaries as a result of the
examination by any federal or state banking authority, the SEC, or other
governmental entity.
SECTION 2.10. Employee Benefit Plans.
(a) The following definitions will apply for purposes of
this Agreement:
(i) ADA. Americans with Disabilities Act.
(ii) ADEA. Age Discrimination in Employment Act.
(iii) COBRA. Part 6 of Subtitle B of Title I of ERISA
and section 4980B of the Code.
(iv) Code. The Internal Revenue Code of 1986, as
amended, and the regulations, rulings, and forms issued thereunder.
(v) DOL. The United States Department of Labor.
(vi) EGTRRA. The Economic Growth and Tax Relief
Reconciliation Act of 2001.
(vii) Employee Benefit Plan. Any Pension Plan,
Welfare Plan, or Fringe Benefit Plan, whether written or oral and whether
qualified or non-qualified, and any trust, escrow, or other agreement covering
any present or former directors, officers, employees, or their respective
dependents.
(viii) ERISA. The Employee Retirement Income Security
Act of 1974, as amended, and the rules, regulations, and forms issued
thereunder.
(ix) ERISA Affiliate. Any entity (whether or not
incorporated) which is or was, together with the Company (for purposes of
Section 2.10) or Associated (for purposes of Section 3.18), treated as a single
employer under section 414(b), (c), (m), or (o) of the Code.
(x) Fringe Benefit Plans. Any fringe benefit plan
under Code sections 125, 127, 129, 132, or 137 and any bonus, incentive
compensation, restricted stock, other stock-based incentive, salary
continuation, bonus plan, employment-related change in control benefit, and any
other payment or benefit which is not within the meaning of a Pension Plan or
Welfare Plan. The term "Fringe Benefit Plan" shall also include any terminated
fringe
17
benefit plan previously maintained, sponsored, or contributed to by the Company
(for purposes of Section 2.10) or Associated (for purposes of Section 3.18) or
any ERISA Affiliate which, as of the signing of this Agreement, has not
distributed all of its assets or satisfied all of its Liabilities.
(xi) GUST. Collectively, the Uruguay Round Agreements
Act ("GATT"), the Uniformed Services Employment and Reemployment Rights Act of
1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of
1997, the Internal Revenue Service Restructuring and Reform Act of 1998 and the
Community Renewal Tax Relief Act of 2001.
(xii) HIPAA. The Health Insurance Portability and
Accountability Act of 1996.
(xiii) IRS. The United States Internal Revenue
Service.
(xiv) Liability. Any direct or indirect obligation,
indebtedness, commitment, expense, claim, deficiency, guaranty, endorsement, or
other liability of any kind, whether known or unknown, direct or indirect,
accrued or unaccrued, absolute or contingent, disputed or undisputed, and
whether or not the same is required to be accrued on financial statements.
(xv) Pension Plan. Each "employee pension benefit
plan" as defined in section 3(2) of ERISA. The term "Pension Plan" includes an
"employee pension benefit plan" which is subject to an exemption under ERISA.
The term "Pension Plan" shall also include any terminated "employee pension
benefit plan" previously maintained, sponsored, or contributed to by the Company
(for purposes of Section 2.10) or Associated (for purposes of Section 3.18) or
an ERISA Affiliate which, as of the signing of this Agreement, has not
distributed all of its assets in full satisfaction of accrued benefits or
satisfied all of its Liabilities.
(xvi) Welfare Plan. Each "employee welfare plan" as
defined in ERISA section 3(1), including medical reimbursement benefits provided
under a Fringe Benefit Plan subject to Code section 125 and health reimbursement
arrangements. The term "Welfare Plan" includes an "employee welfare plan" which
is subject to an exemption under ERISA. The term "Welfare Plan" shall include
any terminated "employee welfare plan" previously maintained, sponsored, or
contributed to by the Company (for purposes of Section 2.10) or Associated (for
purposes of Section 3.18) or any ERISA Affiliate which, as of the signing of
this Agreement, has not distributed all of its assets or satisfied all of its
Liabilities.
(b) The Company Disclosure Schedule at Section 2.10 lists all
Employee Benefit Plans maintained, sponsored, or contributed to by the Company
or any ERISA Affiliate or under which the Company or any ERISA Affiliate has any
Liability.
(c) The Company has made available to Associated true and
complete copies of (i) each Employee Benefit Plan and a written summary of any
Employee Benefit Plan not in writing; (ii) the most recent opinion letter
received from the IRS with respect to any Employee Benefit Plan; (iii) the
summary plan description, all summaries of material modifications, employee
booklets, and all other material communications to employees with respect to any
18
Employee Benefit Plan; (iv) any service agreement, including third-party
administration agreements or other contracts related to each Employee Benefit
Plan; (v) the three most recent annual reports on Form 5500 required to be filed
for each Employee Benefit Plan including required attachments; (vi) the three
most recent actuarial reports, if applicable; (vii) all related trust
agreements, annuity contracts, insurance contracts, including stop-loss
insurance contracts or other funding arrangements which relate to any Employee
Benefit Plan, and the most recent periodic accounting of related plan assets;
(viii) a description of the investments in which the assets of each Pension Plan
and funded Welfare Plan are invested, including any agreements with investment
managers, agreements with investment advisors, group annuity contracts, and a
listing of all mutual funds or other investment vehicles; and (ix) in the case
of stock options, phantom stock, restricted stock, stock appreciation rights, or
other equity rights issued under any Employee Benefit Plan, a list of holders,
dates of grant, number of shares, exercise price per share, and dates
exercisable.
(d) Each Pension Plan that is intended to be a qualified plan
under Code section 401(a) has received and maintains a current favorable
determination letter issued by the IRS. There are no existing circumstances or
events that have occurred that could reasonably be expected to adversely affect
the qualified status of any such Pension Plan. Each such qualified Pension Plan
was timely amended for all applicable legislation, including GUST and EGTRRA,
and there are no additional amendments necessary to maintain each such qualified
Pension Plan as a qualified plan under Code section 401(a). Each Pension Plan
has been operated in accordance with the applicable Pension Plan document and
the requirements of ERISA, the Code, and applicable regulations in all respects.
There are no pending or prior applications that have been filed on behalf of a
Pension Plan with the IRS under the Employee Plans Compliance Resolution System
("EPCRS") that have not been fully resolved and corrected as required by the
IRS, and the Company has provided Associated copies of any closing agreement or
other documentation describing the resolution of such prior EPCRS applications.
Except as set forth in Section 2.10(d) of the Company Disclosure Schedule, none
of the Pension Plans that are intended to be qualified retirement plans under
Code section 401(a) hold Company Common Stock or the stock of any ERISA
Affiliates as an investment.
(e) The Company and ERISA Affiliates have maintained and
operated each Employee Benefit Plan in compliance with the applicable plan
documents and all applicable Laws relating to the Employee Benefit Plans
(including, without limitation, the Code, ERISA, HIPAA, USERRA, ADEA, FMLA, and
ADA and the applicable regulations and rulings under each of these laws), except
for any failure to comply which would not result in liability to the Company or
any Company Subsidiary in excess of $250,000, individually or in the aggregate.
The Company and ERISA Affiliates have incurred no Liability to any governmental
agency in connection with any Employee Benefit Plan.
(f) The Company or ERISA Affiliates, as applicable, have made
all contributions required to be made pursuant to the terms of any Employee
Benefit Plan or any collective bargaining agreement to which it is a party or as
otherwise required by applicable Law. Amounts accrued to date as Liabilities in
connection with any Employee Benefit Plan of the Company or any ERISA Affiliate
which have not been paid have been properly recorded on the books of the Company
in accordance with GAAP and, if applicable, Code section 412. With respect to
each Employee Benefit Plan, all insurance premiums have been paid in full and on
a
19
timely basis for all periods ending on or prior to the signing of this
Agreement. No contribution made to an Employee Benefit Plan was subject to an
excise tax under Code section 4972 that has not been satisfied in full. All
contributions and payments by the Company and any ERISA Affiliate in respect of
any Employee Benefit Plan have been or are fully deductible under the Code.
(g) Except as set forth in Section 2.10(g) of the Company
Disclosure Schedule, the Company and ERISA Affiliates do not (at this time or
any prior time) sponsor, maintain, or contribute to any defined benefit plan or
any multi-employer plan within the meaning of ERISA section 3(37).
(h) With respect to any insurance policy providing funding or
benefits under any Employee Benefit Plan, (i) there is no actual or potential
Liability of the Company or ERISA Affiliates in the nature of a retroactive or
retrospective rate adjustment, loss sharing arrangement, or other actual or
contingent liability, nor would there be any such liability if such insurance
policy was terminated at the signing of this Agreement; and (ii) no insurance
company issuing any such policy is in receivership, conservatorship,
liquidation, or similar proceeding and, to the knowledge of the Company, no such
proceedings with respect to any insurer are imminent. If an Employee Benefit
Plan is self-funded and the Company or an ERISA Affiliate is party to a
stop-loss insurance policy with respect to such Employee Benefit Plan, the
Company or ERISA Affiliate has complied with all terms of the stop-loss policy
and has timely paid all premiums owing with respect to such stop-loss policy
through the signing of this Agreement. The transactions contemplated by this
Agreement will not cancel, impair, or reduce amounts payable under any such
stop-loss insurance policy.
(i) All reports, notices, and descriptions of the Employee
Benefit Plans (including, without limitation, Form 5500 annual reports, summary
annual reports, summary plan descriptions, summaries of material modifications,
and employee notices) required to be filed or distributed by the Company or any
ERISA Affiliate have been timely filed with the IRS or the DOL, as applicable,
and, as appropriate, have been timely provided to the participants and
beneficiaries in the Employee Benefit Plans. Any Pension Plan which is a
retirement plan exempt from Parts 2, 3, and 4 of Subtitle B of ERISA as an
unfunded retirement plan established for a select group of management or highly
compensated employees has timely filed the one-time notice with the DOL required
pursuant to DOL Regulation section 2520.104-23. There are no pending or prior
applications that have been filed on behalf of an Employee Benefit Plan with the
DOL under the Delinquent Filer Voluntary Compliance program ("DFVC") that have
not been fully resolved and corrected as required by the DOL, and the Company
has provided Associated copies of any closing agreement or other documentation
describing the resolution of such prior DFVC applications.
(j) With respect to each Employee Benefit Plan (i) no
non-exempt prohibited transaction, as defined in ERISA section 406 or Code
section 4975, has occurred, (ii) neither the Company, any ERISA Affiliate, nor
any of their current or former directors, officers, employees, or any other
"fiduciary," within the meaning of ERISA section 3(21), has committed any breach
of fiduciary responsibility imposed by ERISA or any other applicable law, or has
any Liability for failure to comply with ERISA or the Code for any action or
failure to act in connection with the operation, administration, or investment
of the assets of any Employee Benefit Plan. There is
20
no pending, threatened, or anticipated action, audit, suit, grievance,
arbitration, or other manner of litigation or claim relating to any Employee
Benefit Plan (other than routine claims for benefits). Neither the Company,
ERISA Affiliates, nor any of their directors, officers, employees, or any
fiduciary of any Employee Benefit Plan has any knowledge of any facts that could
give rise to arbitration, litigation, or claims with respect to any Employee
Benefit Plan. Each "fiduciary" and every "plan official" (as defined in section
412 of ERISA) of each Employee Benefit Plan is bonded or otherwise insured to
the extent required by section 412 of ERISA. The Company and ERISA Affiliates
are not subject to an excise tax under Code section 4977, 4978, 4979, 4979A,
4980, 4980D, or 4980F that has not been satisfied in full. There have been no
investigations or audits of any Employee Benefit Plan by any governmental
authority that have been concluded that resulted in any Liability to the Company
or ERISA Affiliates that has not been fully discharged, and the Company has
provided Associated copies of any closing letter, closing agreement, or other
documentation describing the resolution of such prior audits or investigations.
(k) Following the adoption, restatement, or amendment of all
Employee Benefit Plans as provided to Associated, the Company, ERISA Affiliates,
and any of their officers or directors have taken no action directly or
indirectly which obligates the Company or ERISA Affiliates to institute or
modify or change any Employee Benefit Plan, any actuarial or other assumption
used to calculate funding obligations with respect to any of the Company's and
ERISA Affiliate's Employee Benefit Plans, or the manner in which contributions
to any of the Employee Benefit Plans are made or the basis on which such
contributions are determined.
(l) No Employee Benefit Plan is funded through a "welfare
benefit fund" as defined in Code section 419(e), and neither the Company nor any
ERISA Affiliate has established or maintained any arrangement that could be
deemed to qualify as a funded welfare plan. The Company and ERISA Affiliates
have not incurred any liability under Code section 4976 that has not been
satisfied in full.
(m) Except as set forth in Section 2.10(m) of the Company
Disclosure Schedule, no Employee Benefit Plan provides medical, life, or other
welfare benefits (whether or not insured), with respect to persons who are not
current employees of the Company or ERISA Affiliates (other than coverage
mandated by COBRA). With respect to any Employee Benefit Plan required to be
disclosed in Section 2.10(m) of the Company Disclosure Schedule, the Company has
disclosed to Associated all documents relating to the Employee Benefit Plan that
have been provided to participants. Further, with respect to any Employee
Benefit Plan required to be disclosed in Section 2.10(m) of the Company
Disclosure Schedule, documents relating to the Employee Benefit Plan that have
been provided to participants have, from the inception of the Employee Benefit
Plan to the present, informed participants that the Company reserves the right
to terminate or amend the Employee Benefit Plan at any time. Each Employee
Welfare Plan that is a "group health plan" within the meaning of Code section
5000 has been operated in compliance with the applicable plan document, COBRA,
ERISA, the administrative simplification provisions of HIPAA, as applicable, the
secondary payor requirements of section 1862(b) of the Social Security Act, and
applicable state law requirements, except for any failure to comply which would
not result in liability to the Company or any Company Subsidiary in excess of
$250,000, individually or in the aggregate. No Employee Welfare Plan or Fringe
Benefit Plan provides benefits for persons who are not eligible for coverage
under the terms of
21
such plans. No claim for medical benefits has been incurred (but not reported)
under any Employee Welfare Plan (subject to the Company's knowledge with respect
to claims incurred after January 27, 2004) with respect to any current or former
employee (or the spouse or dependent of such employee) that is in excess of
$25,000. The Company's financial statements, as of the signing of this
Agreement, will contain adequate accruals for incurred or continuing but unpaid
claims under Employee Benefit Plans not funded by insurance.
(n) Except as disclosed in the Company Disclosure Schedule at
Section 2.10(n), the consummation of the transactions contemplated by this
Agreement will not (i) entitle any present or former director, officer, or
employee of the Company or ERISA Affiliates to severance pay, unemployment
compensation, excess parachute payments (within the meaning of section 280G of
the Code), or any other payment; (ii) accelerate the time of payment or vesting
of benefits under any of the Employee Benefit Plans; or (iii) increase the
amount of compensation or benefits due under any of the Employee Benefit Plans
with respect to any such present or former director, officer, or employee of the
Company or any of the Company Subsidiaries.
SECTION 2.11. Employment Contracts; Material Contracts. Except as set
forth in the Company Disclosure Schedule at Section 2.11 or filed as an exhibit
in the Filed Company SEC Reports, as of the date of this Agreement, neither the
Company nor any of the Company Subsidiaries is a party to or bound by (a) any
employment or consulting contract which provides for a base or guaranteed annual
level of compensation in excess of $100,000 (without regard to any commissions),
(b) any contract or commitment for capital expenditures in excess of Two-Hundred
Fifty Thousand Dollars ($250,000) for any one (1) project, or (c) contracts or
commitments for the purchase of materials or supplies or for the performance of
services that require the Company to make payments in excess of Two-Hundred
Fifty Thousand Dollars ($250,000) in any twelve-month period.
SECTION 2.12. Registration Statement; Proxy Statement. None of the
information supplied or to be supplied by the Company for inclusion in (a) the
Registration Statement (as defined in Section 6.01), (b) the Proxy
Statement/Prospectus (as defined in Section 6.01), or (c) any other document to
be filed with the SEC or other regulatory authority in connection with the
transactions contemplated hereby, at the respective times such documents are
filed and, in the case of the Registration Statement, when it becomes effective
and at the Effective Time, and with respect to the Proxy Statement/Prospectus,
when mailed, shall be false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make the statements
therein not misleading. In the case of the Proxy Statement/Prospectus or any
amendment thereof or supplement thereto, none of such information at the time of
the Company's shareholders meeting pursuant to Section 6.02 (the "Meeting")
shall be false or misleading with respect to any material fact or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the Meeting. The
Company has received from Sandler X'Xxxxx & Partners, L.P. an opinion (the
"Fairness Opinion") to the effect that the consideration the Company's
shareholders will receive pursuant to the Merger is fair to the Company's
shareholders from a financial point of view, and such Fairness Opinion, if
updated by Sandler X'Xxxxx & Partners, L.P. as of the date of mailing of the
Proxy Statement/Prospectus, may be included therein.
22
SECTION 2.13. Title to Property. The Company Disclosure Schedule at
Section 2.13 correctly identifies all real property owned, leased, or used by
the Company or any of the Company Subsidiaries. The Company and each of the
Company Subsidiaries 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,
liens as set forth in the Company Disclosure Schedule at Section 2.13, 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 and the Company Subsidiaries, individually or when taken
as a whole. All leases pursuant to which the Company or any of the Company
Subsidiaries lease from others real or personal property including, without
limitation, leases for branch offices, are in good standing, valid, effective,
binding, and enforceable 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 or
any of the Company Subsidiaries have not taken adequate steps to prevent such a
default from occurring). The Company's and each of the Company Subsidiaries'
buildings and equipment in regular use have been reasonably maintained
and are in good and serviceable condition, reasonable wear and tear excepted.
None of the buildings, structures, or appurtenances owned or leased by the
Company or any of the Company Subsidiaries for their operation or maintenance as
now operated or maintained, contravenes any zoning ordinances or other
administrative regulations (whether or not permitted because of prior
non-conforming use), or violates any restrictive covenant or any provision of
Law, the effect of which would materially interfere with or prevent the
continued use of such properties for the purposes for which they are now being
used or would materially and adversely affect the value thereof.
SECTION 2.14. Compliance with Environmental Laws.
(a) The term "Company's Property" shall mean any real property
and improvements currently owned, leased, used, operated, or occupied by the
Company or any of the Company Subsidiaries. The term "Company's Property" shall
also include any real property or improvements acquired by foreclosure, property
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 for which the Company or any Company Subsidiary has obtained an
environmental evaluation or report, 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
23
of solid or hazardous waste or otherwise relating to the environment or
hazardous substances or employee health and safety.
(d) The term "Environmental Permits" shall mean all permits,
approvals, identification numbers, licenses, and other authorizations required
under any applicable Environmental Law.
(e) The term "Hazardous Substances" shall mean all hazardous
and toxic substances, wastes, and materials; any pollutants or contaminants
(including, without limitation, petroleum products, asbestos, and raw materials,
which include hazardous constituents); and any other similar substances or
materials which are regulated under applicable Environmental Laws.
(f) To the Company's Knowledge, 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 and each of the Company Subsidiaries'
respective businesses and the use of the Company's Property (as presently
conducted and used) in compliance with applicable Environmental Laws.
(g) The Company and each of the Company Subsidiaries have
filed all reports, returns, and other filings required to be filed with respect
to the Company's Property under Environmental Laws and the Environmental Permits
except where the failure to do so would not have a Material Adverse Effect on
the Company. Except as set forth at Section 2.14(g) of the Company Disclosure
Schedule, neither the Company nor any of the Company Subsidiaries has made any
environmental filings after December 31, 2003.
(h) To the Company's knowledge, the business of the Company
and each of the Company Subsidiaries and the Company's Property have been and
are being operated in accordance with all applicable Environmental Laws and
Environmental Permits. Neither the Company nor any of the Company Subsidiaries
has received any written notice nor does the Company or any of the Company
Subsidiaries have knowledge that any of the Company's Property is not in
material compliance with all Environmental Laws and Environmental Permits and no
proceeding for the suspension, revocation, or cancellation of any Environmental
Permit is pending or, to the knowledge of the Company, threatened.
(i) There are no actions pending, or to the knowledge of the
Company, threatened against the Company or any of the Company Subsidiaries which
in any case assert or allege (i) the Company or any of the Company Subsidiaries
violated any Environmental Law or Environmental Permit or is in default with
respect to any Environmental Permit or any order, writ, judgment, variance,
award, or decree of any government authority issued under any Environmental Law;
(ii) the Company or any of the Company Subsidiaries is required to clean up or
take remedial or other response action due to the disposal, discharge, or other
release of any Hazardous Substance on the Company's Property or elsewhere; or
(iii) the Company or any of the Company Subsidiaries are required to contribute
to the cost of any past, present, or future cleanup or remedial or other
response action which arises out of or is related to the disposal, discharge, or
other release of any Hazardous Substance by the Company, the Company
Subsidiaries, or others. None of the Company, any of the Company Subsidiaries,
or any of the
24
Company's Property is subject to any judgment, stipulation, order, decree, or
agreement arising under Environmental Laws.
(j) To the Company's knowledge, with respect to the Company's
Property, (i) no Hazardous Substances have been treated, recycled, or disposed
of by the Company or any of the Company Subsidiaries (intentionally or
unintentionally) on, under, or at the Company's Property; (ii) there has been no
release or threatened release by the Company or any of the Company Subsidiaries
of any Hazardous Substance on or from the Company's Property; and (iii) there
have been no activities on the Company's Property which would subject
Associated, Associated Subsidiaries, or any subsequent occupier of the Company's
Property to damages, penalties, injunctive relief, or cleanup costs under any
Environmental Laws or common law theory of liability.
SECTION 2.15. Absence of Agreements. Neither the Company nor any of the
Company Subsidiaries is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking,
or is subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter which restricts materially the conduct of its
business (including any contract containing covenants which limit the ability of
the Company or any of the Company Subsidiaries to compete in any line of
business or with any person or which involve any restriction of the geographical
area in which, or method by which, the Company or any of the Company
Subsidiaries may carry on their business) or in any manner relates to their
capital adequacy, credit policies, or management, except as set forth at Section
2.15 of the Company Disclosure Schedule, nor has the Company or any of the
Company 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.
SECTION 2.16. Taxes. The Company and each of the Company Subsidiaries
have timely filed all Tax Returns (as defined below) required to be filed by any
of them, and the Company and each of the Company Subsidiaries have timely paid
and discharged all Taxes (as defined below) due in connection with or with
respect to the filing of such Tax Returns and have timely paid all other Taxes
as are due, except such as are being contested in good faith by appropriate
proceedings and with respect to which the Company is maintaining reserves
adequate for their payment. 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,
25
domestic or foreign, including, without limitation, consolidated, combined, and
unitary tax returns. For purposes of this Section 2.16, references to the
Company and the Company Subsidiaries include former subsidiaries of the Company
for the periods during which any such entities were owned, directly or
indirectly, by the Company. Other than as listed at Section 2.16 of the Company
Disclosure Schedule, 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 or any of the Company
Subsidiaries, any deficiency or claim for additional Taxes. Other than as listed
at Section 2.16 of the Company Disclosure Schedule, neither the Company nor any
of the Company 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 the Company or any of the Company
Subsidiaries. Other than as listed at Section 2.16 of the Company Disclosure
Schedule, neither the Company nor any of the Company 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 the Company 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 and the Company Subsidiaries on a consolidated basis through the
date thereof (including Taxes being contested) in accordance with GAAP. No
agreements relating to allocating or sharing of Taxes exist between the Company
and/or any of the Company Subsidiaries.
SECTION 2.17. Insurance. Complete and correct copies of all policies of
fire, product, or other liability, workers' compensation, directors and
officers, financial institutions bond, errors and omissions, and all other
similar forms of insurance owned or held by the Company or any of the Company
Subsidiaries have been delivered to Associated. Subject to expirations and
renewals of insurance policies in the ordinary course of business, all such
policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date as of which this
representation is being made have been paid (other than retrospective premiums
which may be payable with respect to workers' compensation insurance policies),
and no notice of cancellation or termination has been received with respect to
any such policy. Such policies are 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 or any of the Company
Subsidiaries are parties are sufficient for compliance with all material
requirements of Law and all material agreements to which the Company or any of
the Company Subsidiaries are parties and will be maintained by the Company and
the Company Subsidiaries until the Effective Time. Neither the Company nor any
of the Company Subsidiaries 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. All of such claims have been timely filed by the Company and the
Company Subsidiaries and are listed on Section 2.17 of the Company Disclosure
Schedule.
SECTION 2.18. Absence of Adverse Agreements. Except as set forth at
Section 2.18 of the Company Disclosure Schedule, neither the Company nor any of
the Company Subsidiaries is a party to any agreement (written or otherwise) or
instrument or any judgment, order, or decree or any rule or regulation of any
court or other governmental agency or authority which has or could reasonably be
expected to have a Material Adverse Effect on the Company. Except as set forth
at
26
Section 2.18 of the Company Disclosure Schedule, the Company is not subject to
any obligations pursuant to any agreement relating to the Company's acquisition
of Liberty Bancshares, Inc.
SECTION 2.19. Internal Control Over Financial Reporting. The Company
and each of the Company Subsidiaries maintain books of account which accurately
and validly reflect all loans, mortgages, collateral, and other business
transactions and maintain proper and adequate internal control over financial
reporting which provide assurance that (a) receipts and expenditures are made
and access to the Company's or any of the Company Subsidiaries' assets is
permitted only in accordance with management's authorization; (b) the books and
records of the Company and each of the Company Subsidiaries accurately and
fairly reflect in reasonable detail the transactions and dispositions of the
assets of the Company or any of the Company Subsidiaries; (c) the reporting of
the assets of the Company or any of the Company Subsidiaries is compared with
existing assets at regular intervals; (d) transactions are recorded as necessary
to permit preparation of consolidated financial statements of the Company in
accordance with GAAP and to maintain accountability for the assets of the
Company or any of the Company Subsidiaries; (e) unauthorized acquisition, use,
or disposition of the assets of the Company or any of the Company Subsidiaries
is prevented; and (f) accounts, notes, and other transactions are recorded
accurately, and proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis. The Company Disclosure
Schedule at Section 2.19 identifies all significant deficiencies or material
weaknesses in the internal control over financial reporting of the Company or
any of the Company Subsidiaries. The Company has delivered to Associated true
and complete copies of all documents reflecting internal control over financial
reporting of the Company or any of the Company Subsidiaries. There is no
amendment to any lending agreement, collateral document, or security that is not
fully reflected in the books and records of the Company and the Company
Subsidiaries.
SECTION 2.20. Loans. Except as disclosed in the Company Disclosure
Schedule at Section 2.20, the Bank is not a party to any written or oral loan
agreement, note, or borrowing arrangement which has been, or which should be in
accordance with the applicable policies of the Bank or the applicable
requirements of banking regulations, classified as "substandard," "doubtful,"
"loss," "other loans especially mentioned," or any comparable classifications by
the Company or the Bank or banking regulators. Neither the Company nor any of
the Company Subsidiaries is a party to any written or oral loan agreement, note,
or borrowing arrangement, including any loan guaranty, in violation of Section
13(k) of the Exchange Act. The Company Disclosure Schedule at Section 2.20
identifies any loan or extension of credit maintained by the Company or any of
the Company Subsidiaries to which the second sentence of Section 13(k)(1) of the
Exchange Act applies. Neither the Company nor the Company Subsidiaries 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. The reserve for
loan losses of the Company as of December 31, 2003, is adequate to provide for
possible losses, net of recoveries relating to loans previously charged off, on
loans outstanding (including accrued interest receivable) as of December 31,
2003. The Company Disclosure Schedule at Section 2.20 shall further identify all
related interests and transactions related thereto for all directors and
executive officers.
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SECTION 2.21. Related Party Transactions.
(a) Except as disclosed in the Company Disclosure Schedule at
Section 2.21(a), no officer, director, affiliate, or employee of the Company or
any of the Company Subsidiaries (each, a "Company Related Party") (i) has or has
had since January 1, 2001, any direct or indirect interest in any property
(whether real, personal, or mixed and whether tangible or intangible), used in
or pertaining to the business of the Company or any of the Company Subsidiaries;
(ii) has or has had since January 1, 2001, any direct or indirect interest in
any transaction with the Company or any of the Company Subsidiaries (other than
the ownership of up to (but not more than) one percent of any class of
securities of any company if such securities are listed on any national
securities exchange or have been registered under section 12(g) of the Exchange
Act); or (iii) is a party to any contract with, or has any claim or right
against, the Company or any of the Company Subsidiaries. The Company Disclosure
Schedule at Section 2.21(a) contains a true and complete description of any such
transaction or relationship, including, but not limited to, where applicable,
(i) the name of the Company Related Party, (ii) the name of any other person
with a direct or indirect interest in the transaction, (iii) the nature of the
Company Related Party's interest in the transaction, (iv) the amount of the
transaction; (v) the amount of the Company Related Party's interest in the
transaction; and (vi) any interest in the Company or any of the Company
Subsidiaries by any other person with a direct or indirect interest in the
transaction.
(b) To the knowledge of the Company, except as disclosed in
the Company Disclosure Schedule at Section 2.21(b) or the Filed Company SEC
Reports or under the Company's employee stock purchase plan or employee stock
ownership plan, no officer, director, or affiliate of the Company or any of the
Company Subsidiaries has, within six months prior to the date of this Agreement,
directly or indirectly purchased or sold, or had any direct or indirect interest
in any entity which purchased or sold, any shares of Company Common Stock, any
other equity securities of the Company or any of the Company Subsidiaries or any
option, warrant, convertible security, stock appreciation right, or other right
with respect to any shares of Company Common Stock or other equity securities of
the Company or any of the Company Subsidiaries.
(c) To the knowledge of the Company, no transaction required
to be disclosed pursuant to Section 2.21(a) or (b) violated any applicable Law.
SECTION 2.22. Labor Matters. Except as will not cause a Material
Adverse Effect to the Company, (a) the Company and each of the Company
Subsidiaries are in material compliance with all applicable Laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and are not engaged in any unfair labor practice; (b) there is
no unfair labor practice complaint against the Company or any of the Company
Subsidiaries pending before the National Labor Relations Board; (c) there is no
labor strike, dispute, slowdown, representation campaign, or work stoppage
actually pending or threatened against or affecting the Company or any of the
Company Subsidiaries; (d) no grievance or arbitration proceeding arising out of
or under collective bargaining agreements is pending and no claim therefor has
been asserted against the Company or any of the Company Subsidiaries; and
(e) neither the Company nor any of the Company Subsidiaries is experiencing any
material work stoppage.
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SECTION 2.23. NASDAQ; Compliance with SOX. The Company Common Stock is
listed on NASDAQ. The Company is, or will timely be, in compliance with all
current and proposed listing and corporate governance requirements of NASDAQ.
The Company is in compliance with the provisions of SOX applicable to it as of
the date hereof and has implemented such programs and has taken reasonable
steps, upon the advice of the Company's independent auditors and outside
counsel, respectively, to ensure the Company's future compliance (not later than
the relevant statutory and regulatory deadlines therefor) with all provisions of
SOX which shall become applicable to the Company after the date hereof.
SECTION 2.24. Brokers. Except as set forth in the Company Disclosure
Schedule at Section 2.24, no broker, finder, or investment banker is entitled to
any brokerage, finder's, or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of the Company Subsidiaries.
SECTION 2.25. Tax Matters. To the Company's knowledge, after reasonable
inquiry, neither the Company nor any of the Company Subsidiaries 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.
SECTION 2.26. Full Disclosure. To the Company's knowledge, 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 2.27. Vote Required. The affirmative vote of at least a
majority of the votes that holders of the outstanding shares of the Company
Common Stock are entitled to cast is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve the Merger.
SECTION 2.28. Board Approval. The Company's minutes reflect that the
Board of Directors unanimously approved the transaction contemplated herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSOCIATED
Associated hereby represents and warrants to the Company that:
SECTION 3.01. Organization and Qualification. Associated is a
corporation duly organized and validly existing under the laws of the State of
Wisconsin. The Disclosure Schedule of Associated attached hereto (the
"Associated Disclosure Schedule") at Section 3.01 or the Associated SEC Reports
(as defined in Section 3.07(a)) lists each subsidiary, direct and indirect, of
Associated (the "Associated Subsidiaries"). Except as set forth in the
Associated
29
Disclosure Schedule at Section 3.01 or as disclosed in the Associated SEC
Reports, each Associated Subsidiary is wholly owned, directly or indirectly, by
Associated, duly organized, validly existing, and, if applicable, in good
standing under the laws or in the state in which such Associate Subsidiary is
incorporated, organized or formed. Associated is registered with the Federal
Reserve Board as a bank holding company under the BHCA. Associated and the
Associated Subsidiaries each have the requisite corporate power and authority
and is in possession of all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals, and orders (the
"Associated Approvals") necessary to own, lease, and operate their respective
properties and to carry on their business as they are now being conducted,
including appropriate authorizations from the Federal Reserve Board, except
where the failure to be so organized and existing or to have such power,
authority, and Associated Approvals would not, individually or in the aggregate,
have a Material Adverse Effect on Associated. Associated has not received any
notice of proceedings relating to the revocation or modification of any such
Associated Approvals. Associated and each of the Associated Subsidiaries are
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 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 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 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 of Associated. The authorized capital
stock of Associated consists of 100,000,000 shares of Associated Common Stock
(subject to the proposed amendment to Associated's Articles of Incorporation
described at Section 3.03 of the Associated Disclosure Schedule) and 750,000
shares of preferred stock par value $1.00 per share ("Associated Preferred
Stock"). As of the date of this Agreement, (i) 73,465,128 shares of Associated
Common Stock are issued and outstanding (net of treasury), all of which are duly
authorized, validly issued, fully paid and non-assessable, except as provided in
Section 180.0622(2)(b) of Wisconsin Law, (ii) 168,366 shares of Associated
Common Stock are held in Associated's treasury, and (iii) no shares of
Associated Preferred Stock are issued and outstanding. Section 3.03 of the
Associated Disclosure Schedule sets forth, as of the date of this Agreement, the
total number of shares of capital stock of Associated subject to issuance
pursuant to outstanding options, warrants, or other rights, agreements,
arrangements, or commitments of any character relating to the issued or unissued
capital stock of Associated or obligating Associated to issue or sell any shares
of capital stock of, or other equity interests in, Associated. There are no
obligations, contingent or otherwise, of Associated or any Associated Subsidiary
to repurchase, redeem, or otherwise acquire any shares of the capital stock of
Associated or to provide funds to or make any investment (in the form of a loan,
capital contribution, or otherwise) in any other entity. 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. Associated has reserved,
and will at the Effective Time have, a number of authorized but unissued shares
of Associated
30
Common Stock or shares of Associated Common Stock held in treasury sufficient
for the share exchange contemplated by Section 1.06.
SECTION 3.04. Authority. Associated 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 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. Associated's Board of
Directors has approved and adopted this Agreement and the transactions
contemplated by this Agreement. 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 against Associated in accordance
with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) 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 Associated
Subsidiaries or by which their respective properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration, or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Associated or any Associated Subsidiaries pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise, or
other instrument or obligation to which Associated or Associated Subsidiary is a
party or by which Associated or Associated Subsidiary 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.
(b) The execution and delivery of this Agreement by Associated
does not, and the performance of this Agreement by Associated shall not,
require, with respect to Associated, any consent, approval, authorization, or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, or any other person except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, Blue Sky Laws,
the BHCA, the HOLA, the BL, any applicable antitrust authorities, and the filing
and recordation of appropriate merger or other documents as required by
Wisconsin Law and national banking laws, or (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. Neither Associated nor any of the
Associated Subsidiaries is in conflict with, or in default or violation (except
for any such conflicts, defaults, or violations which would not have a Material
Adverse Effect on Associated) of (a) any Law applicable to Associated or any
Associated Subsidiaries or by which its or their property is bound
31
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 Associated Subsidiary is a party or by which Associated or any
Associated Subsidiary or any of its or their properties are bound or affected.
SECTION 3.07. SEC Reports, and Financial Statements.
(a) Except as set forth at Section 3.07 of the Associated
Disclosure Schedule, Associated has on a timely basis filed all forms, reports,
and documents required to be filed by it with the SEC since January 1, 2001. The
Associated Disclosure Schedule at Section 3.07(a) lists and (except to the
extent available in full without redaction on the SEC's web site through XXXXX
two days prior to the date of this Agreement) Associated has delivered to the
Company true and complete copies in the form filed with the SEC of (i)
Associated's Annual Reports on Form 10-K for each fiscal year of Associated
ending after January 1, 2001; (ii) its Quarterly Reports on Form 10-Q for each
of the first three fiscal quarters in each of the fiscal years of Associated
referred to in clause (i) above; (iii) all proxy statements relating to
Associated's meetings of shareholders (whether annual or special) held, and all
information statements relating to shareholder consents since the beginning of
the first fiscal year referred to in clause (i) above; (iv) all certifications
and statements required by (A) Rule 13a-14 or 15d-14 under the Exchange Act or
(B) 18 U.S.C. Section 1350 (Section 906 of SOX) with respect to any report
referred to in clause (i) or (ii) above; (v) all other forms, reports,
registration statements and other documents (other than preliminary materials if
the corresponding definitive materials have been provided to the Company
pursuant to this Section 3.07(a)) filed by Associated with the SEC since the
beginning of the first fiscal year referred to in clause (i) above (the forms,
reports, registration statements and other documents referred to in clauses (i),
(ii), (iii), (iv), and (v) above are, collectively, the "Associated SEC Reports"
and, to the extent available in full without redaction on the SEC's web site
through XXXXX two days prior to the date of this Agreement, are, collectively,
the "Filed Associated SEC Reports"); and (vi) all comment letters received by
Associated from the staff of the SEC since January 1, 2001, and all responses to
such comment letters by or on behalf of Associated. All matters and statements
made in the certifications and statements referred to in clause (iv) above are
accurate. The Associated SEC Reports (x) were or will be prepared in accordance
with the requirements of the Securities Act and the Exchange Act, as applicable,
and the rules and regulations thereunder and (y) did not at the time they were
filed with the SEC, or will not at the time they are filed with the SEC, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Except as set forth at Section 3.07(a) of the Associated Disclosure
Schedule, no Associated Subsidiary is or has been required to file any form,
report, registration statement, or other document with the SEC or any state
authority. Associated maintains disclosure controls and procedures as required
by Rule 13a-15 or 15d-15 under the Exchange Act. As used in this Section
3.07(a), the term "filed" shall be broadly construed to include any manner in
which a document or information is furnished, supplied, or otherwise made
available to the SEC, including, but not limited to, as may be required pursuant
to Item 9 or 12 of Form 8-K.
(b) The consolidated financial statements of Associated and
Associated Subsidiaries included or incorporated by reference in any Associated
SEC Reports (including the related notes) complied as to form, as of the
respective dates of filing of such Associated SEC
32
Reports with the SEC, in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto
(including, without limitation, Regulation S-X), have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, to
the extent permitted by Regulation S-X for Quarterly Reports on Form 10-Q)
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated financial
condition of Associated and Associated Subsidiaries at the dates thereof and the
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to notes and normal year-end
audit adjustments that were not, or with respect to any such financial
statements contained in any Associated SEC Reports to be filed subsequent to the
date hereof are not expected to be, material in amount or effect). The
Associated Disclosure Schedule at Section 3.07(b) lists, and Associated has
delivered to the Company copies of the documentation creating or governing, all
"off-balance sheet arrangements" (as defined in Item 303(a)(4) of Regulation
S-K) in effect with respect to Associated or any Associated Subsidiary during
the period covered by any of the Associated SEC Reports that was required to be
disclosed in any Associated SEC Report. KPMG LLP, which has expressed its
opinion with respect to the consolidated financial statements of Associated and
Associated Subsidiaries included in the Associated SEC Reports (including the
related notes) (x) is a registered public accounting firm (as defined in Section
2(a)(12) of SOX), (y) to Associated's knowledge, after reasonable inquiry, is
and has been throughout the periods covered by such financial statements
"independent" with respect to Associated within the meaning of Regulation S-X,
and (z) with respect to Associated, to Associated's knowledge, after reasonable
inquiry, is in compliance with subsections (g) through (l) of Section 10A of the
Exchange Act.
(c) Except as and to the extent set forth on the consolidated
balance sheet of Associated and Associated Subsidiaries as of December 31, 2003,
including all notes thereto (the "Associated Balance Sheet"), neither Associated
nor any Associated Subsidiaries have any liabilities or obligations of any
nature (whether accrued, absolute, contingent, or otherwise) that would be
required to be reflected on a balance sheet or in the notes thereto prepared in
accordance with GAAP, except (i) for liabilities or obligations incurred in the
ordinary course of business since December 31, 2003, that would not,
individually or in the aggregate, have a Material Adverse Effect on Associated,
or (ii) as otherwise reflected in the Filed Associated SEC Reports.
SECTION 3.08. Absence of Certain Changes or Events. Except as disclosed
in the Filed Associated SEC Reports, since December 31, 2003 to the date of this
Agreement, Associated and each Associated Subsidiary have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practice and, since December 31, 2003, there has not been (a) any
change in the financial condition, results of operations, or business of
Associated or any Associated Subsidiary having a Material Adverse Effect on
Associated; (b) any damage, destruction, or loss (whether or not covered by
insurance) with respect to any assets of Associated or any Associated
Subsidiaries that would have a Material Adverse Effect on Associated; (c) any
change by Associated or any Associated Subsidiaries in their respective
accounting methods, principles, or practices, except for compliance with
applicable new requirements of the Financial Accounting Standards Board or GAAP;
(d) any revaluation by Associated of any of its material assets in any material
respect; or (e) to the date of this
33
Agreement, any entry by Associated or any Associated Subsidiary into any
commitment or transaction material to Associated.
SECTION 3.09. Absence of Litigation. Except as disclosed in the
Associated Disclosure Schedule at Section 3.09 or in the Filed Associated SEC
Reports, there is no claim, action, suit, litigation, proceeding, arbitration,
investigation, or controversy of any kind affecting Associated or any Associated
Subsidiaries pending or, to the knowledge of Associated, threatened, except for
matters which individually seek damages not in excess of $10 million and which
otherwise will not have, and cannot reasonably be expected to have, a Material
Adverse Effect on Associated, and there are no uncured material violations, or
violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to Associated or any Associated
Subsidiary as a result of an examination by any bank regulatory authority.
SECTION 3.10. Registration Statement; Proxy Statement. None of the
information supplied or to be supplied by Associated for inclusion in (a) the
Registration Statement (as defined in Section 6.01), (b) the Proxy
Statement/Prospectus (as defined in Section 6.01), or (c) any other document to
be filed with the SEC or other regulatory authority in connection with the
transactions contemplated hereby, at the respective time such documents are
filed and, in the case of the Registration Statement, when it becomes effective
and at the Effective Time, and with respect to the Proxy Statement/Prospectus,
when mailed, shall be false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make the statements
therein not misleading. In the case of the Proxy Statement/Prospectus or any
amendment thereof or supplement thereto, none of such information at the time of
the Meeting (as provided for in Section 6.02) shall be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Meeting. All documents filed with the SEC or
other regulatory authorities 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
Associated 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 Associated Subsidiaries 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 Associated Subsidiaries
may carry on their business), 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 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 3.12. Taxes. Associated and Associated Subsidiaries have timely
filed all Tax Returns required to be filed by any of them, and Associated and
Associated Subsidiaries have timely paid and discharged all Taxes due in
connection with or with respect to the filing of such
34
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. 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 Associated Subsidiaries include former
subsidiaries of Associated for the periods during which any such entities were
owned, directly or indirectly, by Associated. Other than as listed in Section
3.12 of the Associated Disclosure Schedule, 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 Associated Subsidiaries any deficiency or claim for additional Taxes. Other
than as listed in Section 3.12 of the Associated Disclosure Schedule, neither
Associated nor any Associated 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
Associated Subsidiaries. Other than as listed in Section 3.12 of the Associated
Disclosure Schedule, neither Associated nor any Associated 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 after the Effective Time. The accruals and reserves
for taxes reflected in the Associated Balance Sheet are adequate to cover all
Taxes accruable by Associated and Associated Subsidiaries through the date
thereof (including Taxes being contested) in accordance with GAAP. No agreements
relating to allocating or sharing of Taxes exist among Associated and Associated
Subsidiaries.
SECTION 3.13. Compliance with SOX. Associated is, or will timely be, in
compliance with all current and proposed listing and corporate governance
requirements of NASDAQ. Associated is in compliance with the provisions of SOX
applicable to it as of the date hereof and has implemented such programs and has
taken reasonable steps, upon the advice of Associated's independent auditors and
outside counsel, respectively, to ensure Associated's future compliance (not
later than the relevant statutory and regulatory deadlines therefore) with all
provisions of SOX which shall become applicable to Associated after the date
hereof.
SECTION 3.14. Brokers. Except as set forth in the Associated Disclosure
Schedule at Section 3.14, no broker, finder, or investment banker is entitled to
any brokerage fee, finder's fee, 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 3.15. 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.
SECTION 3.16. Full Disclosure. To Associated's knowledge, 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 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.
35
SECTION 3.17. Absence of Adverse Agreements. Except as otherwise
disclosed in this Agreement, neither Associated nor any Associated Subsidiary is
a party to any agreement (written or otherwise) or instrument or any judgment,
order, or decree or any rule or regulation of any court or other governmental
agency or authority which has or could reasonably be expected to have a Material
Adverse Effect on Associated.
SECTION 3.18. Employee Benefit Plans.
(a) The Associated Disclosure Schedule at Section 3.18 lists
all Employee Benefit Plans maintained, sponsored, or contributed to by
Associated or any ERISA Affiliate or under which Associated or any ERISA
Affiliate has any Liability.
(b) Associated has made available to the Company true and
complete copies of each Employee Benefit Plan and a written summary of any
Employee Benefit Plan not in writing.
(c) Associated and ERISA Affiliates have maintained and
operated each Employee Benefit Plan in material compliance with the applicable
plan documents and all applicable Laws relating to the Employee Benefit Plans
(including, without limitation, the Code, ERISA, HIPAA, USERRA, ADEA, FMLA, and
ADA and the applicable regulations and rulings under each of these laws).
SECTION 3.19. Compliance with Environmental Laws.
(a) The term "Associated's Property" shall mean any real
property and improvements currently owned, leased, used, operated, or occupied
by Associated or any of Associated's Subsidiaries. The term "Associated's
Property" shall also include any real property or improvements acquired by
foreclosure and properties held or operated in a fiduciary or managerial
capacity.
(b) Associated's and each of Associated Subsidiaries'
respective businesses and the use of Associated's Property (as presently
conducted and used) are in compliance with applicable Environmental Laws, except
where the failure to comply would not have a Material Adverse Effect on
Associated. Associated and each of Associated's Subsidiaries have filed all
reports, returns, and other filings required to be filed with respect to
Associated's Property under Environmental Laws and the Environmental Permits
except where the failure to do so would not have a Material Adverse Effect on
Associated.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Affirmative Covenants. The Company hereby covenants and
agrees with Associated that prior to the Effective Time, unless the prior
written consent of Associated shall have been obtained and except as
specifically set forth in this Agreement, it will and it will cause each of the
Company Subsidiaries to:
36
(a) operate its business only in the usual, regular, and
ordinary course consistent with past practices;
(b) use best 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 best efforts to maintain and keep its properties in as
good repair and condition as at present, ordinary wear and tear excepted;
(d) use best 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) with respect to the Company on a consolidated basis,
maintain as of March 31, 2004, and thereafter, an aggregate loan loss reserve of
not less than 0.54% of period ending loans (excluding overdrafts less than 30
days old) in accordance with GAAP, together with any additions to such reserve
required for new problem loans in accordance with GAAP consistently applied;
(g) purchase and sell securities in accordance with the
guidelines set forth on Exhibit 4.01(g);
(h) comply with the capital requirements set forth in
Exhibit 4.01(h);
(i) with respect to the Company on a consolidated basis,
maintain as of March 31, 2004, and thereafter, a tax reserve of not less than an
amount determined in accordance with GAAP consistently applied;
(j) engage in lending activities, extensions of credit, and
other financing or leasing arrangements in accordance with the guidelines set
forth in Exhibit 4.01(j);
(k) take all reasonable steps to assure that any transactions
in the stock of the Company or the Subsidiaries by "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, shall be
conducted in accordance with all applicable laws, rules, and regulations;
(l) comply in a timely manner with all applicable requirements
of the Securities Act, the Exchange Act, SOX, state securities laws, and the
rules and regulations thereunder, and all applicable listing and corporate
governance requirements of the NASDAQ and maintain the listing of the Company
Common Stock on NASDAQ;
(m) notify Associated prior to the commencement of any
investigation regarding, or upon receipt by the Company of any allegation of,
any possible violation by the
37
Company, any of the Company Subsidiaries, or any director, officer, employee, or
affiliate of the Company or any of the Company Subsidiaries of (i) applicable
law, (ii) the listing standards of NASDAQ, or (iii) any code of conduct or
ethics applicable to any directors, officers, or employees of the Company or any
of the Company Subsidiaries and, after consultation with Associated, take all
reasonable actions in the conduct of any such investigation or the response to
any such allegations; and
(n) notify Associated of the receipt of any complaints (actual
or constructive) or allegations of actual or potential violations by the
Company, any of the Subsidiaries, or any director, officer, employee, or
affiliate of the Company or any of the Subsidiaries of (i) applicable Law, (ii)
the listing standards of NASDAQ, or (iii) any code of conduct or ethics
applicable to any directors; officers, or employees of the Company or any of the
Subsidiaries and, after consultation with Associated, take all reasonable
actions in the conduct of any such investigation or the response to any such
allegations; and
(o) obtain the consent of Associated prior to furnishing any
information to, substantively communicating with or entering into any
discussions or negotiations with, the Wisconsin Department of Revenue relating
to the income or reallocation to the Company or any Company Subsidiary of income
of a Nevada entity.
SECTION 4.02. Negative Covenants. Except as specifically set forth in
this Agreement, from the date of this Agreement until the Effective Time, the
Company shall not do, or permit any of the Company Subsidiaries 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 except as required by law or (iv) enter into or amend any
employment, severance, or similar agreements or arrangements with any directors
or officers, other than as is consistent with the normal severance policies of
the Company and each of the Company Subsidiaries in effect on the date of this
Agreement; anything to the contrary notwithstanding, the Company shall be
required to obtain the consent of Associated prior to effecting any of the
changes identified in (i) through (iv) only to the extent that the activities
result individually in an increase in cost or expense (current or future) in an
amount greater than $15,000 or in the aggregate in an increase in cost or
expense (current or future) in an amount greater than $250,000;
(b) declare or pay any dividend on, or make any other
distribution in respect of, its outstanding shares of capital stock, except that
the Company may declare and pay a regular quarterly cash dividend per share not
exceeding $0.15 per share;
(c) (i) redeem, purchase, or otherwise acquire any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options, warrants,
conversion, or other rights to acquire any shares of its capital stock or
38
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, other than in the ordinary course of its
business, consistent with past practice and not in excess of $250,000
individually or in the aggregate, or except as set forth at Section 4.02(c) of
the Company Disclosure Schedule; (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) (except for the
issuance of shares in connection with the exercise of any option outstanding on
the date of this Agreement in accordance with its terms) or any rights,
warrants, or options to acquire any such shares;
(e) initiate, solicit, or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Transaction (as such term is defined
below), or negotiate with any person in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of its officers, directors, or employees
or any investment banker, financial advisor, attorney, accountant, or other
representative retained by it or any of the Company Subsidiaries to take any
such action, and the Company shall promptly notify Associated orally and in
writing of all of the relevant details relating to all inquiries and proposals
which it may receive relating to any of such matters; provided, however, that
nothing contained in this subsection (e) shall prohibit the Board of Directors
of the Company from furnishing or permitting any of its officers, directors,
employees, investment bankers, financial advisors, attorneys, accountants, or
other representatives to furnish information to any party that requests
information as to the Company or any of the Company Subsidiaries if (i) the
Board of Directors of the Company, after consultation with and based upon the
written advice of independent counsel, determines in good faith that such action
is required for the Board of Directors of the Company to comply with its
fiduciary duties to shareholders imposed by Wisconsin Law; (ii) prior to
furnishing such information to such person, the Company provides Associated with
at least seven days' notice to the effect that it is furnishing information to
such person; and (iii) prior to furnishing such information to such party, the
Company receives from such party an executed confidentiality agreement in
customary form. For purposes of this Agreement, "Competing Transaction" shall
mean any of the following involving the Company or any of the Company
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 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
39
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, the HOLA or the Change in Bank
Control Act with respect to the Company or any of the Company 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 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, 2003, 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, 2003, except as may be required by Law or GAAP;
(i) subject to Section 4.01(j), change any lending,
investment, liability management, or other material policies concerning the
business or operations of the Company or any of the Company Subsidiaries in any
material respect; organize any new Company Subsidiaries or enter into any new
non-banking line of business, whether or not permissible under applicable Law;
or make any material changes in its operations;
(j) (i) incur or assume any material obligation or liability
(except deposit liabilities 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 or any of the Company Subsidiaries, or banking regulators and not
including any loans made in accordance with Section 4.01(j) and 4.01(h)) or
investment (including U.S. Treasury Securities) (excluding investments made in
accordance with Section 4.01(g)) in an amount greater than Two Hundred Fifty
Thousand Dollars ($250,000); (ii) assume, guarantee, endorse, or otherwise
become liable or responsible (whether directly, contingent, or otherwise) for
the obligations of any other person or entity; (iii) mortgage, license, pledge,
or grant a security interest in any of its material assets or allow to exist any
material lien thereon, except (A) for liabilities and obligations (including
corporate debt issuances) incurred in the ordinary course of business consistent
with past practices and in amounts not material to the Company or any of the
Company Subsidiaries and (B) as may be required under existing agreements to
which the Company or any of the Company Subsidiaries is a party; (iv) acquire
assets (including equipment) or securities in excess of Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate (excluding loans to customers and
investments permitted in (i) above); (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,
40
litigation, proceeding, arbitration, investigation, or controversy of any kind,
for any amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) or in
any manner which would restrict in any material respect the operations or
business of the Company or any of the Company Subsidiaries (excluding matters
relating to assessments by the Wisconsin Department of Revenue relating to the
income or reallocation of income of a Nevada entity, which are addressed in
Section 4.01(o) and 4.02(o)); (viii) purchase any new financial product or
instrument which involves entering into a contract with a term of six months or
longer (excluding investments made in accordance with Section 4.01(g)); or (ix)
take any action or fail to take any action which individually or in the
aggregate can be expected to have a Material Adverse Effect on the Company, or
(x) incur or pay legal and accounting fees in connection with the transaction
contemplated hereby in excess of an aggregate of the budget discussed and
investment banking fees in connection with the transaction contemplated hereby
in excess of the amount determined pursuant to the engagement letter dated March
16, 2004 between the Company and Sandler X'Xxxxx & Partners, L.P.;
(k) for any plan year, depending on the applicable plan,
accrue for, contribute to or pay through any Pension Plan, Welfare Plan, or
Fringe Benefit Plan an amount (determined as a percentage of compensation paid
to participants), larger than the amount contributed to such plan for the
previous plan year of such plan (determined as a percentage of compensation paid
to participants) unless (i) such amount does not exceed $500,000 in the
aggregate with respect to all plans during any twelve month period; or (ii) as
required by law; provided, however, that in no event may any change other than
as required by law be made to the terms of any such plan (including, but not
limited to, changes to eligibility or benefit levels);
(l) effect a change, directly or indirectly, or enter into any
agreement directly or indirectly, which would result in a change in any
insurance policy or benefit, including, but not limited to, entering into or
purchasing any new insurance policies (except as allowed in Section
4.02(j)(viii)), disposing of any insurance policies, changing the nature or
scope of any interest in any existing policies, or making additional
contributions to any insurance policy, except as required to keep the policy in
force; provided, however, that nothing contained herein shall prevent the
Company or any of the Company Subsidiaries from renewing or replacing as they
expire any existing coverage relating to their normal operations on
substantially similar terms as current coverage (except for required premium
increases), or from purchasing additional insurance coverages relating to cyber
coverage;
(m) enter into any transaction or relationship described in
Section 2.21(a);
(n) amend, modify, renegotiate, or change any agreement,
contract, commitment, obligation, or other instrument to which the Company or
any of the Company Subsidiaries is a party or is otherwise bound and which is
material to the Company or any of the Company Subsidiaries, individually or when
taken as a whole;
(o) pay any assessment by the Wisconsin Department of Revenue,
or enter into any agreement, substantive discussions, negotiations, settlement
or compromise, relating to the income or reallocation to the Company or any
Company Subsidiary of income of a Nevada entity; or
41
(p) agree in writing or otherwise to do any of the foregoing.
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 or the
Company Subsidiaries, the Company shall (and shall cause the Company
Subsidiaries to) afford to Associated's officers, employees, accountants, legal
counsel, and other representatives access, during normal business hours, to all
its properties, books, contracts, commitments, and records (other than the
portion of Company board of director minutes which discuss this or any other
merger proposals or Competing Transactions). Prior to the Effective Time, the
Company shall (and shall cause the Company Subsidiaries to) furnish promptly to
Associated (i) a copy of each Company Bank 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,
the HOLA, any other federal or state banking laws, or any other applicable laws
promptly after such documents are available; (ii) a copy of each Company SEC
Report filed by it or received by it after the date of this Agreement; and (iii)
the monthly consolidated financial statements of the Company and the Company
Subsidiaries.
(b) Any information provided to Associated by the Company or
any of the Company Subsidiaries, whether prior to or subsequent to the date of
this Agreement, shall be kept confidential by the representatives of Associated
(and shall be used by them only in connection with this Agreement and the
transactions contemplated hereby) except to the extent that (i) it was already
known to such representatives when received, (ii) it hereafter becomes lawfully
obtainable from other sources, or (iii) it is required to be disclosed by
Associated in any document required to be filed with any government authority or
agency, which disclosure shall be treated by Associated as if it were disclosing
its own information and limited to the minimum amount of information required to
be disclosed. 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 and Tax Treatment. Concurrent with 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, acknowledging and agreeing to such
restrictions. 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 best efforts
to cause the Merger to qualify as a reorganization under Section 368(a)(1)(A) of
the Code.
42
SECTION 4.05. Expenses.
(a) Except as provided in Section 8.02, below, 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.
(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.
SECTION 4.07. Employee Benefits. The Company will continue all Employee
Benefit Plans currently sponsored or maintained by the Company as set forth
below. Employees of the Company and the Company Subsidiaries will continue to be
covered under the Employee Benefit Plans from the signing of this Agreement
until such time as Associated shall determine that is on or after the later of
December 31, 2004 or the Effective Time, but no event more than 180 days after
the Effective Time, at which time they will begin participation in Associated's
benefit programs. For purposes of this Section 4.07, the "Company" shall include
the Company, the Company Subsidiaries, and all members of any controlled group
of corporations (within the meaning of Code section 414(b)), any controlled
group of trades or businesses (within the meaning of Code section 414(c)), and
any affiliated service group (within the meaning of Code section 414(m)) of
which the Company or any of the Company Subsidiaries is a member.
(a) Savings Investment Plan (the "401(k) Plan"). The Company
will make all amendments to the 401(k) Plan as required by law. The Company will
continue to permit participant elective deferrals and to make and accrue
matching and profit sharing contributions to the 401(k) Plan until such time as
Associated shall determine that is on or after the later of December 31, 2004 or
the Effective Time, but in no event more than 180 days after the Effective Time
(the "401(k) Plan Benefit Conversion Date"). At Associated's option, the 401(k)
Plan may be merged into the Associated Banc-Corp 401(k) Profit Sharing and
Employee Stock Ownership Plan (the "Associated 401(k) Plan"). Effective the
401(k) Plan Benefit Conversion Date, if the plans are merged, employees
participating in the 401(k) Plan will begin participating in the Associated
401(k) Plan.
(b) Employee Stock Ownership Plan (the "ESOP"). The Company
will make all amendments to the ESOP as required by law. The Company will
continue to make company contributions to the ESOP until such time as Associated
shall determine that is on or after the later of December 31, 2004 or the
Effective Time, but in no event more than 180 days after the Effective Time (the
"ESOP Benefit Conversion Date"). At Associated's option, the ESOP may
43
be merged into the Associated 401(k) Plan. Effective the ESOP Benefit Conversion
Date, if the plans are merged, employees participating in the ESOP will begin
participating in the Associated 401(k) Plan.
(c) Pension Plan (the "Pension Plan"). The Company will make
all amendments to the Pension Plan as required by law. The Company will continue
to make contributions to the Pension Plan and permit benefit accruals to Pension
Plan participants (other than Frozen Participants as defined in the Pension
Plan) until such time as Associated shall determine that is on or after the
later of December 31, 2004 or the Effective Time, but in no event more than 180
days after the Effective Time (the "Pension Plan Benefit Conversion Date"). At
Associated's option, the Pension Plan may be merged into the Associated
Banc-Corp Retirement Account Plan (the "Associated Retirement Plan"). Effective
the Pension Plan Benefit Conversion Date, if the plans are merged, employees
participating in the Pension Plan (including Frozen Participants) will begin
participating in the Associated Retirement Plan.
(d) Work Force Plan (the "Work Force Plan"). Prior to the
Effective Time, the Company will amend the Work Force Plan, a copy of which
plan, as it shall be amended, is attached hereto as Exhibit 4.07(d), and will
continue the Work Force Plan as so amended and comply with the Work Force Plan's
terms. The Company will extend the Work Force Plan for 18 months following the
Effective Time, and will continue to comply with the terms of the Work Force
Plan for 18 months following the Effective Time. Thereafter, the Company's
employees, subject to and in accordance with the terms thereof, shall be
eligible for the Associated Banc-Corp Work Force Management Plan only.
(e) Company Medical Plan and Company Group Dental Plan (the
"Health Plan") and Company Flexible Benefit Plan (the "Flexible Plan"). The
Company will continue to sponsor and maintain the Health Plan and the Flexible
Plan as in existence on the date hereof until, with respect to each such plan,
such time as Associated shall determine that is on or after the later of
December 31, 2004 or the Effective Time, but no event more than 180 days after
the Effective Time (the "Health Plan Benefit Conversion Date" or "Flexible Plan
Benefit Conversion Date," respectively). Thereafter, the Company's eligible
employees will be eligible to participate in Associated's health, dental, and
flexible benefit plans. The Company will continue coverage of existing
participants receiving continuation coverage pursuant to Part 6 of ERISA. The
Company will offer continuation coverage as limited by Part 6 of ERISA to any
Company employees who terminate employment (or experience any other "Qualifying
Event" as defined in ERISA section 603) with the Company, as required by the
agreements identified in Schedule 2.10. Switching from the Health Plan and
Flexible Plan to Associated's health program and flexible benefits plan as of
the Health Plan Benefit Conversion Date and Flexible Plan Benefit Conversion
Date, respectively, will not constitute a "Qualifying Event" as defined in ERISA
section 603.
(f) The Company Equity Incentive Plans (the "Equity Incentive
Plans"). With respect to any Company Stock Options under the Equity Incentive
Plans that are exercised by Equity Incentive Plan participants from the date of
this Agreement to the Effective Time, the Company will report for tax purposes
(including the filing of Internal Revenue Service forms W-2 or similar forms)
the value of the stock at the time of exercise (which value is the fair market
value of a share of Company Common Stock on the date of exercise less the
exercise
44
price of the Company Stock Option) times the number of Company Stock Options
exercised. Under the Equity Incentive Plans, Company Stock Options held by
participants will become fully vested as of the Effective Time, and all Company
Stock Options issued under the Equity Incentive Plans shall be converted
pursuant to Section 1.10. With respect to any restricted stock outstanding under
the Equity Incentive Plans, interests in Company Common Stock held by
participants will become fully vested as of the Effective Time, and all Company
Common Stock issued under the Equity Incentive Plans shall be converted pursuant
to Section 1.06.
(g) Retiree Health Continuation. Associated will provide, in
a manner determined by Associated, retiree health coverage to the (i) former
employees of the Company and the Company Subsidiaries eligible for the same who
are listed on Exhibit 4.07(g)(i) and (ii) current employees of the Company and
the Company Subsidiaries listed on Exhibit 4.07(g)(ii) who as of December 31,
2004 are 55 years of age or older and have 20 years of service or more and whose
employment is terminated by Associated or any of its subsidiaries without cause
within 18 months after the Effective Time, in each case pursuant to the terms of
the Company's retiree health program as in effect at the signing of this
Agreement.
(h) Integration of Benefits. Except as otherwise provided in
this Agreement, the Company agrees that Associated shall have complete and total
discretion with respect to when and how current benefits for Company employees
will be integrated with the employee benefit programs offered by Associated and
what steps shall be taken with respect to the Company's Employee Benefit Plans.
The Company agrees not to increase any benefits under an Employee Benefit Plan
and not to communicate any such increase to participants without the prior
written approval of Associated. The Company agrees to cooperate fully with
respect to continuing all coverage and integrating the Company's Employee
Benefit Plans with Associated's benefit programs.
ARTICLE V
COVENANTS OF ASSOCIATED
SECTION 5.01. 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 specifically
set forth in this Agreement, it will and it will cause each Associated
Subsidiary to:
(a) operate its business only in the usual, regular, and
ordinary course consistent with past practices and 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 a 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 have a Material Adverse Effect on Associated and its subsidiaries, taken as
a whole, 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,
within the period beginning with the Effective Date hereof and ending twelve
(12) months thereafter;
45
(c) use its best efforts to comply in a timely manner with all
applicable requirements of the Securities Act, the Exchange Act, SOX, state
securities laws, and the rules and regulations thereunder, and all applicable
listing and corporate governance requirements of NASDAQ;
(d) notify the Company upon commencement of any investigation
regarding, or upon receipt by Associated of any allegation of, any possible
violation by Associated, any Associated Subsidiary, or any director, officer,
employee, or affiliate of Associated or any Associated Subsidiary of (i)
applicable Law, (ii) the listing standards of NASDAQ, or (iii) any code of
conduct or ethics applicable to any directors, officers, or employees of
Associated or any Associated Subsidiary and take all reasonable actions in the
conduct of any such investigation or the response to any such allegations;
(e) not declare or pay any extraordinary or special cash or
preferred stock dividends or special cash or preferred stock distributions with
respect to the Associated Common Stock;
(f) not propose or adopt any amendments to its Articles of
Incorporation or Bylaws in any way materially adverse to the Company, except as
disclosed in the filed Associated SEC Reports; and
(g) will remain "well-capitalized" under applicable regulatory
capital guidelines.
SECTION 5.02. Access and Information.
(a) Prior to the Effective Time and upon reasonable notice and
without unreasonable disruption to the business carried on by Associated or the
Associated Subsidiaries, Associated shall (and shall cause the Associated
Subsidiaries to) afford to the Company'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 Associated board of director minutes which discuss this Merger).
After the date of this Agreement and prior to the Effective Time, upon
reasonable notice, Associated shall (and shall cause the Associated Subsidiaries
to) furnish promptly to the Company (i) a copy of each Associated Bank 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) a copy of each
Associated SEC Report filed by it or received by it; and (iii) all other
information concerning the business, properties, and personnel of Associated or
Associated Subsidiaries as the Company may reasonably request.
(b) Any information provided to the Company by Associated,
whether prior to or subsequent to the date of this Agreement, shall be kept
confidential by the representatives of the Company (and shall be used by them
only in connection with this Agreement and the transactions contemplated hereby)
except to the extent that (i) it was already known to such representatives when
received, (ii) it hereafter becomes lawfully obtainable from other sources,
46
or (iii) it is required to be disclosed by the Company in any document required
to be filed with any government authority or agency, which disclosure shall be
treated by the Company as if it were disclosing its own information and limited
to the minimum amount of information required to be disclosed. 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. Tax Treatment. Associated will use its best efforts to
cause the Merger to qualify as a reorganization under Section 368(a)(1)(A) of
the Code.
SECTION 5.04. Charitable Contributions. Associated hereby agrees to
maintain a minimum level of charitable giving comparable to that of the Company
(such level to be determined as the average of charitable gifts for the years
2001, 2002, and 2003) in the La Crosse, Wisconsin community for a period of
three (3) years from the Effective Time of the Merger.
SECTION 5.05. SEC Filings. The Surviving Corporation shall make all
filings with the SEC that are described in subsection (c) of Rule 144 under the
Securities Act for a period of two years following the effective time.
SECTION 5.06. Stock Exchange Listing. Prior to the Effective Time, the
Surviving Corporation shall cause the shares of Associated Common Stock to be
issued in the Merger to be approved for listing on NASDAQ if this Agreement and
the Merger are approved by the Company's shareholders.
SECTION 5.07. Nomination of Director. In recognition of the importance
of maintaining representation on the Board of Directors of the Surviving
Corporation from the geographic area served by the Company prior to the Merger,
the Nominating Committee of the Board of Directors of the Surviving Corporation
will nominate for election to a full three-year term at the annual meeting of
Associated's shareholders in 2006 the independent director appointed to the
Board of Directors of the Surviving Corporation pursuant to Section 1.05 unless
the members of the Nominating Committee determine in good faith that they should
not nominate such director consistent with their fiduciary duties under
Wisconsin Law or unless such director is no longer an independent director (as
defined by NASDAQ).
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement. As promptly as practicable after
the execution of this Agreement, Associated, in cooperation with the Company,
shall prepare and file a registration statement on Form S-4 (the registration
statement together with the amendments thereto are defined as the "Registration
Statement" and the prospectus and proxy materials contained therein are defined
as the "Proxy Statement/Prospectus") with the SEC covering the Associated Common
Stock to be issued in the Merger (subject to the immediately following sentence)
and relating to the submission of the Merger to the shareholders of the Company
for their approval, and shall use all reasonable efforts to cause the
Registration Statement to become
47
effective as soon thereafter as practicable. Associated does not undertake to
file post-effective amendments to Form S-4 or to file a separate registration
statement to register the sale of Associated Common Stock by affiliates of the
Company pursuant to Rule 145 promulgated under the Securities Act. The Company
will furnish to Associated all information concerning the Company and the
Subsidiaries required to be set forth in the Registration Statement, and
Associated will provide the Company and its counsel the opportunity to review
and approve such information as set forth in the Registration Statement and
Proxy Statement/Prospectus. Associated shall include in the Registration
Statement and the Proxy Statement/Prospectus all information concerning
Associated and the Associated Subsidiaries required to be set forth therein and
will provide the Company and its counsel the opportunity to review and approve
such information. Associated and the Company will each render to the other its
full cooperation in preparing, filing, prosecuting the filing of, and amending
the Registration Statement such that it comports at all times with the
requirements of the Securities Act and the Exchange Act. Specifically, but
without limitation, each will promptly advise the other if at any time before
the Effective Time any information provided by it for inclusion in the
Registration Statement appears to have been, or shall have become, incorrect or
incomplete and will furnish the information necessary to correct such incorrect
or incomplete information. As promptly as practicable after receipt of
applicable regulatory approvals (although such mailing may occur prior to
expiration of any post-approval waiting period) and the effectiveness of the
Registration Statement, the Company will mail to its shareholders (a) a notice
of the Meeting and the Proxy Statement/Prospectus, and (b) as promptly as
practicable after approval thereof by Associated, such other supplementary proxy
materials as may be necessary to make the Proxy Statement/Prospectus comply with
the requirements of the Securities Act and the Exchange Act. Except as provided
above and except with the prior written consent of Associated, the Company will
not mail or otherwise furnish or publish to shareholders of the Company any
proxy solicitation material or other material relating to the Merger that
constitutes a "prospectus" within the meaning of the Securities Act. Associated
shall also take any 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 and the
Company Subsidiaries shall furnish all information concerning the Company and
the Company Subsidiaries, and the holders of the Company 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, unless the Board of Directors of the Company, after
consultation with and based upon the written advice of independent counsel,
determines in good faith that the Board of Directors is prevented from taking
such actions to comply with its fiduciary duties to its shareholders imposed by
Wisconsin Law: (a) cause a meeting of the Company's shareholders to be duly
called and held as soon as practicable following receipt of applicable
regulatory approvals and the effectiveness of the Registration Statement to
consider and vote upon the Merger and any related matters in accordance with the
applicable provisions of applicable law, unless Associated withholds its consent
as referred to in Section 7.02(o) (b) submit this Agreement to the Company's
shareholders together with a unanimous recommendation for approval by the Board
of Directors of the Company, (c) solicit the approval thereof by the Company's
shareholders by mailing or delivering to each shareholder the Prospectus/Proxy
Statement, and (d) use their best efforts to obtain the approval and adoption of
the Merger by the requisite percentage of the Company's shareholders.
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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 other required submissions, with
respect to this Agreement and the Merger required under (i) the Securities Act
and the Exchange Act and the rules and regulations thereunder, and any other
applicable federal or state securities laws, (ii) any applicable federal or
state banking laws, and (iii) any other applicable Law; provided, that
Associated and the Company shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such documents
to the non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions, or changes suggested in connection
therewith. The Company and Associated shall furnish all information required for
any application or other filing to be made pursuant to the rules and regulations
of any applicable Law (including all information required to be included in the
Proxy Statement/Prospectus and the Registration Statement) in connection with
the transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use all reasonable efforts to take all such necessary
action. The Company will use its best efforts to assist with the execution by
each executive officer of the Company listed on Exhibit 7.02(u), as of the date
of the Effective Time, and delivery to Associated of each of the Executive
Agreements (as defined in Section 7.02(u)) in accordance with the terms set
forth on Exhibit 7.02(u). Subject to the satisfaction of the other conditions in
Section 7.01 and Section 7.02, Associated will execute, as of the date of the
Effective Time, and deliver to the applicable executive officers of the Company
listed on Exhibit 7.02(u) each of the Executive Agreements applicable to such
Executive Officer (as defined in Section 7.02(u)) applicable to such Executive
Officer in accordance with the terms set forth on Exhibit 7.02(u).
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 reasonably 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
49
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.
Associated may elect to engage an environmental consultant
(who shall be mutually agreed upon by Associated and the Company) (the
"Environmental Consultant") to conduct a preliminary environmental assessment
("Phase I") of all or any of the parcels of Company Property. The fees and
expenses of the Environmental Consultant with respect to the Phase I assessments
shall be paid by Associated. The Company shall fully cooperate with Associated
to provide the Environmental Consultant reasonable access to all Company
Property. The Environmental Consultant shall complete and deliver the Phase I
assessment reports no later than sixty (60) days after the date of this
Agreement. If any environmental conditions are reported, indicated or suspected
by the consultant in the Phase I reports which are or may be contrary to the
representations and warranties of the Company set forth herein (the
"Environmental Conditions"), without regard to any knowledge qualifiers, then
the Environmental Consultant may be engaged to estimate the cost of any
environmental investigation that may be reasonably appropriate to address the
Environmental Conditions. Upon completion of the environmental investigation,
the Environmental Consultant shall estimate the cost of any further
environmental investigation, remediation or response activity that may be
reasonably appropriate to address the Environmental Conditions to the point of
closure/no further action. Associated shall be responsible for the cost of any
investigation it elects to conduct beyond the cost of the Phase I assessments.
The Company shall be responsible for the costs of any required remediation or
response activities.
SECTION 6.07. Employee Benefits. As of the Effective Time, the
employees of the Company and each of the Company Subsidiaries (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 Associated
Subsidiaries is made available to the employees of the Surviving Corporation:
(i) service with the Company (or any Company Subsidiaries) by any Company
Employee prior to the Effective Time shall be credited in determining such
employee's eligibility, vesting, and benefit levels (but not benefit accruals),
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 date such employees become eligible for benefits under such Associated
plans.
SECTION 6.08. Associated Advisory Boards. Each director of the Company
as of the Effective Time that is not appointed to the Surviving Corporation's
Board of Directors pursuant to Section 1.05 shall be appointed as of the
Effective Time to one of the advisory boards of
50
Associated, to serve for a period of one year from the Effective Time, in each
case only to the extent that such director is willing to serve on such advisory
board.
SECTION 6.09. Certain Benefits of Company Directors. Following the
Effective Time, Associated shall maintain, fund and continue in effect without
revision adverse to a beneficiary under such plan or program, the Company's
Director Deferred Compensation Plan described on Exhibit 6.09, the Emeritus
Director Program described on Exhibit 6.09 (under which all benefits shall
continue be paid to former directors of the Company and directors of the Company
as of the date of this Agreement as if the retirement date of each such current
director from the Board of Directors of the Company is the later of the
Effective Time or the date on which such director ceases to serve on the
advisory board to which such director is appointed pursuant to Section 6.10),
and the supplemental executive retirement plan benefit for one of the Company's
directors as described on Exhibit 6.09.
SECTION 6.10. Severance Benefits for Company Employees. Associated
agrees to provide severance benefits set forth on Exhibit 4.07(d) to any Company
Employee who is notified within 18 months after the Effective Time that his or
her employment is being terminated. Associated shall provide severance benefits
thereafter to any Company Employee in accordance with Associated's written
severance policy on the same terms as similarly situated employees of Associated
and Associated Subsidiaries. In any event, any such severance pay also shall
include accrued vacation pay, including vacation pay accrued prior to the
Effective Time in accordance with the Company's policy and vacation pay accrued
after the Effective Time in accordance with Associated's policy.
SECTION 6.11. Directors' and Officers' Indemnification and Insurance.
(a) Associated and the Company shall cooperate, using
commercially reasonable efforts, to purchase and maintain in effect, one or more
so called "tail" or "run-off" directors and officers liability insurance
policies with respect to wrongful acts and/or omissions committed or allegedly
committed by any of the officers or directors of the Company prior to the
Effective Time ("D&O Coverage"). Such D&O Coverage shall have a maximum premium
of 250% of last year's annual premium for the Company's existing directors and
officers liability insurance policy (the "Premium Limit"), an aggregate coverage
limit over the term of such policy in an amount as near as possible to the
aggregate annual coverage limit under the Company's existing directors' and
officers' liability insurance policy, with a term of up to six (6) years and
shall also be as near as possible in all other material respects to such
existing policy; provided, however, that if the premium for six years of D&O
Coverage on such terms will exceed the Premium Limit, the Company may, with the
approval of Associated, modify the term or coverage amounts so long as the
premium does not exceed the Premium Limit. Notwithstanding the foregoing, the
Surviving Corporation, if it so elects in its sole discretion, may purchase the
aforesaid coverages for a period longer than six (6) years or at a cost in
excess of the Premium Limit.
(b) In the event Associated or the Surviving Corporation or
any of its successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such
51
case, proper provision shall be made so that the successors and assigns of
Associated or the Surviving Corporation, as the case may be, assume the
obligations set forth in this section.
(c) Associated will indemnify directors and officers of the
Company and Company Subsidiaries to the full extent permissible under the
Company's Articles of Incorporation, Bylaws or Wisconsin Law.
(d) The provisions of this Section 6.11 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
SECTION 6.12. 2004 Accrued Bonus. Associated agrees to pay (or to allow
the Company or the Company Subsidiaries to pay immediately prior to closing) the
amount of any performance bonus accrued by the Company or the Company
Subsidiaries during the 2004 calendar year, in accordance with the Company's
past practices. Such bonus shall be prorated, based on performance through the
end of the last full calendar month immediately preceding the month in which the
Effective Time occurs; provided that if the Effective Time occurs as of the last
day of a month, the month in which the Effective Time occurs shall be included
in the proration. Such bonus shall be paid whether by the Company or the Company
Subsidiaries or Associated, at the time and in the manner dictated by the
Company's past practice and shall be made only in accordance with the terms,
provisions, formulas and targets established prior to the date of this Agreement
that are consistent with the Company's past practice.
SECTION 6.13. Stay Bonuses. Associated and the Company shall cooperate
in good faith to establish and agree upon payment of appropriate stay bonuses
for key personnel of the Company or the Company Subsidiaries (other than those
Company executive officers covered by employment agreements) where the Company
and Associated believe the continued employment of the person or persons in
question through the Effective Time is necessary to maintain the effectiveness
of the Company's and the Company Subsidiaries' continuing operations and/or to
the integration of the businesses of the Company and Associated
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 each 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 pay Cash Consideration and issue Associated Common
Stock in exchange for the Company Common Stock and to consummate the Merger.
52
(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 Wisconsin Department of Financial
Institutions, 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) 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
satisfaction at or prior to the Effective Time of each of 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 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 to the extent such representations and warranties
specifically reference an earlier date); provided, however, that, for purposes
of this clause, such representations and warranties shall be deemed to be true
and correct unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
represent a Material Adverse Effect on the Company; but provided further that
solely for purposes of this clause, any such representations or warranties which
are by their terms qualified or limited by the concept of "Material Adverse
Effect" or any other standard of materiality shall be deemed not to be so
limited or qualified.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations, or orders required to be obtained, and all filings
required to be made by the Company for the authorization, execution, and
delivery of this Agreement and the consummation by it of the transactions
contemplated hereby shall have been obtained and made by the Company.
(d) No Challenge. There shall not be pending any action,
proceeding, or investigation before any court or administrative agency or by any
government agency or any other person (i) challenging or seeking material
damages in connection with the Merger or the
53
exchange of the Company Common Stock for Cash Consideration and/or 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
Associated Subsidiaries of all or any portion of the business or assets of the
Company or any of the Company Subsidiaries, which in either case is reasonably
likely to have a Material Adverse Effect on either the Company or Associated.
(e) Opinion of Counsel. Associated shall have received from
Xxxxxxx Xxxx & Xxxxxxxxx LLP or other independent counsel for the Company
reasonably satisfactory to Associated, an opinion dated as of 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 contain such qualifications and limitations as are
appropriate and reasonably satisfactory to Associated.
(f) Tax Opinion. Associated shall have received from Xxxxxxxx
Xxxxxxx Van Deuren s.c., an opinion (i) dated on or about the date that is two
business days prior to the date the Proxy Statement/Prospectus is first mailed
to shareholders of the Company, (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 (if any) or Cash Consideration paid to such
shareholder); and
[d] the basis of Associated Common Stock received by
the shareholders of the Company pursuant to the Merger will be
the same as that of the Company Common Stock surrendered in
exchange therefor, decreased by the amount of the cash and the
fair market value of the other property received and increased
by the amount treated as a dividend, if any, and by the amount
of gain recognized on the exchange (not including any portion
of the gain that is treated as a dividend).
(g) Affiliate Agreements. Concurrently with the execution and
delivery of this Agreement, Associated shall have received from each person who
is identified in the affiliate letter pursuant to Section 4.04 as an "affiliate"
of the Company, a signed affiliate agreement in the form attached hereto as
Exhibit 4.04.
(h) 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, Company Subsidiaries,
54
Associated or Associated 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.
(i) Fractional Shares. The aggregate of the Fractional Share
interests to be paid in cash pursuant to Section 1.07(f) of this Agreement shall
not be more than 10% of the maximum aggregate number of shares of Associated
Common Stock which could be issued as a result of the Merger.
(j) Voting Agreement. Concurrently with the execution and
delivery of this Agreement, Associated and certain shareholders of the Company
shall have executed and delivered the Voting Agreement in the form of Exhibit
7.02(j).
(k) 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.
(l) No Material Adverse Change. Since the date of this
Agreement (i) no event shall have occurred which has a Material Adverse Effect
on the Company, and (ii) no condition, event, fact, circumstances, or other
occurrence shall have occurred that may reasonably be expected to have or result
in such a Material Adverse Effect on the Company.
(m) SEC Certifications. The Company SEC Reports filed by the
Company after the date of this Agreement shall contain all certifications and
statements required by (i) Rule 13a-14 or 15d-14 under the Exchange Act and (ii)
18 U.S.C. Section 1350 (Section 906 of SOX), in the form required by the SOX,
the Exchange Act, and the rules and regulations thereunder, without any
qualifications, exceptions, or limitations with respect thereto.
(n) Internal Control Over Financial Reporting. Associated's
due diligence review shall not have found (a) any significant deficiencies or
material weaknesses in the design or operation of the Company's internal control
over financial reporting which are reasonably likely to adversely affect the
Company's ability to record, process, summarize, or report financial information
in accordance with GAAP or (b) any failure of the Company's internal control
over financial reporting to provide reasonable assurance regarding the
reliability of financial reporting or the preparation of financial statements in
accordance with GAAP.
(o) Fairness Opinion. The Fairness Opinion shall not have been
amended modified, or withdrawn in any manner without the written consent of
Associated, and the Fairness Opinion, together with a summary thereof in
accordance with the applicable rules of the SEC, shall have been included in the
Proxy Statement/Prospectus in a form reasonably satisfactory to Associated.
(p) Compliance with Securities Laws. None of the Company, any
of the Company Subsidiaries, or any director, officer, or affiliate of the
Company or any of the Company Subsidiaries shall have violated in any material
respect, and no claim of any kind, action, suit, litigation, proceeding,
arbitration, investigation, or controversy shall be pending or threatened
alleging any material violation by the Company, any of the Company Subsidiaries,
or
55
any director, officer, or affiliate of the Company or any of the Company
Subsidiaries of the Securities Act, the Exchange Act, SOX, any state securities
law or any rules or regulations thereunder, or any listing or corporate
governance requirement of NASDAQ, that may reasonably be expected to have or
result in a Material Adverse Effect on the Company.
(q) Compliance with Certain Covenants. The Company shall have
performed or complied in all respects with its covenants in Section 4.01 and
4.02.
(r) Limit on Shares Exchanged. The total amount of shares of
Associated Common Stock to be issued in the Merger, including shares of
Associated Common Stock subject to any New Option or other option, warrant,
convertible security or other right to purchase or acquire shares of Company
Common Stock outstanding immediately prior to the Effective Time, shall not
exceed 20% of the issued and outstanding shares of Associated Common Stock on
the date of this Agreement. As a result, Associated shall not be required to
seek shareholder approval of the Merger.
(s) Environmental Report. Associated shall not have received
from the Environmental Consultant pursuant to Section 6.06, within 120 days
after the date of this Agreement, a written environmental evaluation of the
Company's Property evidencing that:
(i) capital improvements in excess of $3,000,000,
individually or in the aggregate, are reasonably required to maintain compliance
with all Environmental Laws; or
(ii) there are contingent liabilities in excess of
$3,000,000, individually or in the aggregate, affecting the Company's Property
arising under Environmental Laws or under Environmental Permits.
(t) Closing Certificate. Associated shall have received a
certificate of the Chief Executive Officer of the Company, dated as of the date
of the Effective Time, in the form attached hereto as Exhibit 7.02(t).
(u) Executive Agreements. Each executive officer of the
Company listed on Exhibit 7.02(u) shall have entered into an employment or
consulting agreement, a non-competition agreement and a separation agreement and
general release (collectively, the "Executive Agreements"), in each case in
substantially the form attached as Exhibit 7.02(u) hereto for the applicable
executive officer, and each such executive officer shall have terminated as of
the Effective Time all other employment or other compensation arrangements or
agreements except to the extent specifically preserved in the Executive
Agreement for such executive officer; provided, however, that this condition
shall be deemed to be satisfied as to any executive officer who does not enter
into all of the Executive Agreements applicable to that executive officer if,
prior to the Effective Time, the Company terminates that executive officer's
employment in accordance with Section 5 of the executive services and settlement
agreement for such executive officer in the form attached as Exhibit 7.02(u)
hereto.
SECTION 7.03. Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions:
56
(a) Representations and Warranties. Each of the
representations and warranties of Associated contained in this Agreement shall
be complete 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 the
Effective Time (except to the extent such representations and warranties
specifically reference an earlier date); provided, however, that, for purposes
of this clause, such representations and warranties shall be deemed to be true
and correct unless the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
represent a Material Adverse Effect on Associated.
(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 (i) challenging or seeking material
damages in connection with the Merger or the exchange of the Company Common
Stock for Cash Consideration and/or 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 Associated Subsidiaries of all
or any portion of the business or assets of the Company or any of the Company
Subsidiaries, which in either case is reasonably likely to have a Material
Adverse Effect on either the Company or Associated.
(e) Opinion of Counsel. The Company shall have received from
Xxxxxxxx Xxxxxxx Van Deuren 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(e), which opinion 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 Xxxxxxxx
Xxxxxxx Van Deuren s.c., an opinion (i) dated on or about the date that is two
business days prior to the date the Proxy Statement/Prospectus is first mailed
to shareholders of the Company, (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;
57
[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 (if any) or Cash Consideration paid to such
shareholder); and
[d] the basis of the Associated Common Stock received
by the shareholders of the Company pursuant to the Merger will
be the same as the basis of the Company Common Stock
surrendered in exchange therefore, decreased by the amount of
the cash and the fair market value of the other property
received and increased by the amount treated as a dividend, if
any, and by the amount of gain recognized on the exchange (not
including any portion of the gain that is treated as a
dividend).
(g) Burdensome Condition. There shall not be any action taken
or any statute, rule, regulation, or order enacted, entered, enforced, or deemed
applicable to the Merger, by any federal or state governmental entity which, in
connection with the grant of any regulatory approval, imposes any condition or
restriction upon the Company, the Company Subsidiaries, Associated or the
Associated 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.
(h) No Material Adverse Change. Since the date of this
Agreement (i) no event shall have occurred which has a Material Adverse Effect
on Associated, and (ii) no condition, event, fact, circumstances, or other
occurrence shall have occurred that may reasonably be expected to have or result
in such a Material Adverse Effect on Associated.
(i) SEC Certifications. The Associated SEC Reports filed after
the date of this Agreement shall contain all certifications and statements
required by (i) Rule 13a-14 or 15d-14 under the Exchange Act and (ii) 18 U.S.C.
Section 1350 (Section 906 of SOX), in the form required by the SOX, the Exchange
Act, and the rules and regulations thereunder, without any qualifications,
exceptions, or limitations with respect thereto.
(j) Compliance with Securities Laws. None of Associated, any
of the Associated Subsidiaries, or any director, officer, or affiliate of
Associated or any of the Associated Subsidiaries shall have violated in any
material respect, and no claim of any kind, action, suit, litigation,
proceeding, arbitration, investigation, or controversy shall be pending or
threatened alleging any material violation by Associated, any of the Associated
Subsidiaries, or any director, officer, or affiliate of Associated or any of the
Associated Subsidiaries of the Securities Act, the Exchange Act, SOX, any state
securities law or any rules or regulations thereunder, or any listing or
corporate governance requirement of NASDAQ, that may reasonably be expected to
have or result in a Material Adverse Effect on Associated.
(k) Closing Certificate. The Company shall have received a
certificate of the Chief Executive Officer of Associated, dated as of the date
of the Effective Time, in the form attached hereto as Exhibit 7.03(k).
58
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination.
(a) This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company:
(i) by mutual written consent of Associated and the
Company;
(ii) by the Company or Associated (A) if there has
been a breach in any material respect (except that where any
statement in a representation or warranty expressly includes a
standard of materiality, such statement shall have been
breached in any respect) of any representation, warranty,
covenant, or agreement set forth in this Agreement on the part
of the nonterminating party, or (B) if any representation or
warranty of the nonterminating party shall be discovered to
have become untrue in any material respect (except that where
any statement in a representation or warranty expressly
includes a standard of materiality, such statement shall have
become untrue in any respect), in either case which breach or
other condition has not been cured within 15 business days or
which breach by its nature cannot be cured prior to the
Effective Time; provided, however, that neither the Company
nor Associated shall have the right to terminate this
Agreement pursuant to this Section 8.01(a)(iii) unless the
breach of any representation or warranty (but not breaches of
covenants or agreements), together with all other such
breaches, would entitle the party receiving such
representation or warranty not to consummate the transactions
contemplated hereby under Section 7.02(a) (in the case of a
breach of a representation or warranty by the Company) or
Section 7.03(a) (in the case of a breach of a representation
or warranty by Associated); and provided further that this
Agreement may not be terminated pursuant to this clause (iii)
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 31,
2004 (the "Expiration Date") (provided that the Expiration
Date shall be automatically extended to April 30, 2005 if the
Merger shall not have been consummated by December 31, 2004
solely due to either or both of (A) the failure of the SEC to
clear and declare effective the Registration Statement to
permit mailing of the Proxy Statement/Prospectus to the
Company's shareholders a sufficient time prior to December 31,
2004 or (B) the
59
receipt of all required governmental approvals and the
expiration of all related waiting periods shall not have
occurred a sufficient time prior to December 31, 2004), 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, the OTS or the Wisconsin Department of
Financial Institutions has denied approval of the Merger and
neither Associated nor the Company has, within thirty (30)
days after the entry of such order denying approval, filed a
petition seeking review of such order as provided by
applicable Law;
(vi) by Associated, if all of the conditions set
forth in Section 7.02 are not satisfied on or before the
Expiration Date;
(vii) by the Company, if all of the conditions set
forth in Section 7.03 are not satisfied on or before the
Expiration Date;
(viii) by either Associated or the Company if all of
the conditions set forth in Section 7.01 are not satisfied on
or before the Expiration Date, for a reason other than the
failure of the terminating party to comply with its
obligations in this Agreement;
(ix) by Associated if the Company's Board of
Directors (x) withdraws or modifies in a manner adverse to
Associated its recommendation or approval with respect to this
Agreement or the Merger, (y) makes any recommendation with
respect to a Competing Transaction (including making no
recommendation or stating an inability to make a
recommendation), other than a recommendation to reject such
Competing Transaction, or (z) takes any action prohibited by
Section 4.02(e);
(x) by Associated if, prior to the Effective Time, a
Competing Transaction occurs or the Company enters into any
agreement to engage in a Competing Transaction;
(xi) by Associated if the Company fails to take the
actions provided in Section 6.02 (either in breach of such
Section or pursuant to the exception related to its fiduciary
duties provided in such Section); or
(xii) by the Company if both [a] the Associated
Average Price (as defined below) is less than 85% of the
Associated Closing Price, and [b] the number obtained by
dividing the Associated Average Price by the Associated
Closing Price is less than the number obtained by dividing the
Final Index Price (as defined below) by the Initial Index
Price (as defined below) and subtracting .15 from such
quotient. If the Company makes an election to terminate this
Agreement under this Section 8.01(a)(xii), the Company shall,
on or before the end of the second business day after the end
of the Calculation Period (as defined below), give ten days'
written notice thereof to Associated. If, during the seven-
60
day period commencing with its receipt of such notice,
Associated proposes, by notice in writing to the Company, that
the Exchange Ratio shall be adjusted to equal (A) the product
of Associated Closing Price multiplied by the Exchange Ratio
in effect prior to such adjustment, divided by (B) the
Associated Average Price (carried out to five decimal places
and rounded up if the sixth decimal price is five or greater),
the Company may in its sole discretion give Associated notice
of acceptance of such proposal within five (5) business days
of receipt thereof, in which case 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 shall have been so modified).
For purposes of this Section 8.01(a)(xi):
The "Associated Average Price" shall mean
the average of the daily closing prices of a share of
Associated Common Stock during the Calculation Period as
quoted on NASDAQ.
The "Associated Closing Price" shall mean
the closing price of Associated Common Stock on the date of
this Agreement as quoted by NASDAQ.
The "Calculation Period" shall mean the ten
consecutive trading days ending (i) on the third trading 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 trading day prior to the day on which the thirty day
period described in Section 1.02 expires.
The "Final Index Price" shall mean the
average of the Final Prices for all of the companies
comprising the Index Group.
The "Final Price" of any company belonging
to the Index Group shall mean the average of the daily closing
prices of a share of common stock of such company, as reported
on the consolidated transactions reporting system for the
market or exchange on which such stock is principally traded,
during the Calculation Period.
The "Index Group" shall mean all of those
companies listed on Exhibit 8.01 hereto the common stock of
which is publicly traded and as to which there is no pending
publicly announced proposal at any time during the Calculation
Period for such company to acquire another company or
companies in transactions with a value exceeding 10% of the
acquirer's market capitalization or for such company to be
acquired.
The "Initial Index Price" shall mean the
average of the per share closing prices on the date of this
Agreement, of the common stock of the companies comprising the
Index Group, as reported on the consolidated
61
transactions reporting system for the market or the exchange
on which such common stock is principally traded.
If Associated or any company belonging to
the Index Group declares a stock dividend or effects a
reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the date of
this Agreement, and the end of the Calculation Period, the
closing prices for the common stock of such company shall be
appropriately adjusted for the purposes of the definitions
above so as to be comparable to the price on the date of this
Agreement.
(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.
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, except as provided
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, if (i) this
Agreement is terminated by Associated pursuant to Section 8.01(a) (ix)(y),
(ix)(z), or (x), (ii) a proposal for a Competing Transaction is received by the
Company or any of its officers, directors or employees or any investment banker,
financial advisor, attorney or other representative retained by the Company or
any of the Company Subsidiaries or is offered, presented, proposed or announced
to the Company, any of its officers, directors or employees or any investment
banker, financial advisor, attorney or other representative retained by the
Company or any of the Company Subsidiaries and thereafter this Agreement and the
Merger are not approved by the Company's shareholders and a Competing
Transaction is consummated or a definitive agreement is entered into by the
Company relating to a Competing Transaction within 18 months after the
termination of this Agreement, or (iii) this Agreement is terminated by
Associated pursuant to Section 8.01(a)(ii) or (xi), this Agreement is terminated
by the Company otherwise than in accordance with its right to do so under
Section 8.01 or the Company fails to consummate the Merger in breach of its
obligations under this Agreement to do so and in each such case a proposal for a
Competing Transaction was received by the Company or any of its officers,
directors or employees or any investment banker, financial advisor, attorney or
other representative retained by the Company or any of the Company Subsidiaries
or was offered, presented, proposed or announced to the Company, any of its
officers, directors or employees or any investment banker, financial advisor,
attorney or other representative retained by the Company or any of the
62
Company Subsidiaries or the Company's shareholders on or prior to the date of
such termination or breach, and a Competing Transaction is consummated or a
definitive agreement is entered into by the Company relating to a Competing
Transaction within 18 months after the termination of this Agreement, then in
each such case Associated shall suffer direct and substantial damages, which
damages cannot be determined with certainty, and to compensate Associated for
such damages the Company shall pay Associated the amount of Twenty Million
Dollars ($20,000,000). If such amount becomes payable, the Company shall make
payment within two business days after termination of this Agreement in the case
of the occurrence of any event described in clause (i) above and within two
business days after a Competing Transaction is consummated or a definitive
agreement is entered into by the Company relating to a Competing Transaction in
the case of the occurrence of any event described in clause (ii) or (iii) above.
SECTION 8.03. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that after approval
of the Merger by the shareholders of the Company, no amendment may be made which
would reduce the amount or change the type of consideration into which each
Share shall be converted pursuant to this Agreement upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, and (c) waive compliance with any of the agreements
or conditions contained herein. Any such extension or waiver shall be valid only
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 Articles I and
IX and Sections 4.07, 5.04, 5.05, 5.07, 6.07, 6.08, 6.09, 6.10, and 6.11 shall
survive the Effective Time indefinitely and those set forth in Sections 4.03(b),
4.05, 5.02(b), 8.02, and Article IX 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 particular representation and
warranty contained in this Agreement specifically referenced by the exception
contained in the Disclosure Schedules.
63
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 applicable party at the following address for such party or
the date sent by telecopier to the applicable party at the following telecopier
number for such party if notice is also delivered by registered or certified
mail on or before two (2) business days after delivery by telecopier (or at such
other address or telecopier number for a party as shall be specified by like
notice):
(a) If to Associated:
Associated Banc-Corp
Attention: Xxxxx X. Xxxxxxx, Chief
Administrative Officer,
General Counsel & Corporate Secretary
0000 Xxxxxx Xxxx
Xxxxx Xxx, XX 00000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxxx Xxxxxxx Van Deuren s.c.
Attention: Xxxxxxx X. Xxxxxx, Esq.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
(b) If to Company:
First Federal Capital Corp
Attention: Xxxx X. Xxxxx
000 Xxxxx Xxxxxx
Xx Xxxxxx, XX 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx & Friedrich LLP
Attention: Xxxxx Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
64
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 Company Subsidiaries) has, directly or indirectly, an
interest of 5% or more;
(b) "beneficial owner" with respect to any Shares, means a
person who shall be deemed to be the beneficial owner of such Shares (i) which
such person or any of its affiliates or associates beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or associates (as
such term defined in Rule 12b-2 of the Exchange Act) has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement, or understanding or upon the exercise of consideration rights,
exchange rights, warranties, or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement, or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates has any agreement, arrangement, or
understanding for the purposes of requiring, holding, voting, or disposing of
any Shares, or (iv) pursuant to Section 13(d) of the Exchange Act and any rules
or regulations promulgated thereunder;
(c) "business day" means any day other than a day on which
banks in Wisconsin are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "knowledge" (and terms of similar import) with respect to
a party means the actual knowledge of that party;
(f) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity, or group (as
defined in Section 13(d) of the Exchange Act); and
(g) "subsidiary" means with respect to any person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such person or by one or more of its
subsidiaries, or by such person and one or more of its subsidiaries, (ii) any
general partnership, joint venture, limited liability company, statutory trust,
or other entity, at least a majority of the outstanding partnership, membership,
or other similar interests of which shall at the time be owned by such person,
or by one or more of its subsidiaries, or by such person and one or more of its
subsidiaries, and (iii) any limited partnership of which such person or any of
its subsidiaries is a general partner. For the purposes of this definition,
"voting stock" means shares, interests, participations, or other equivalents in
the equity interest (however designated) in such person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of
such person, other than shares,
65
interests, participations, or other equivalents having such power only by reason
of the occurrence of a contingency.
SECTION 9.05. Mitigation and Reimbursement. The Company agrees to
cooperate with Associated, and to use its best efforts to cause any
"disqualified individuals" with respect to the Company (as defined by Code
Section 280G and the applicable Proposed Treasury Regulations) to cooperate, in
restructuring certain agreements, if necessary, to be identified by Associated
in order to minimize and/or mitigate the tax consequences of:
(a) the potential loss of any tax deductions to the Company
and/or Associated with respect to the deductibility of payments pursuant to the
identified agreements; and
(b) any excise tax imposed on such disqualified individuals.
The provisions of this Section 9.05 shall survive the Effective Time
indefinitely.
SECTION 9.06. 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 9.07. 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 9.08. Entire Agreement. This Agreement together with the
Disclosure Schedules and Exhibits hereto and the Confidentiality Agreement dated
March 22, 2004, 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.
SECTION 9.09. 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 Cash Considerations and shares of
Associated Common Stock pursuant to Section 1.06 hereof.
66
SECTION 9.10. 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 (a) the right to receive the
consideration payable pursuant to Article I, (b) Sections 1.05, 5.07, 6.08, 6.09
and 6.11 (which are intended to be for the benefit of the applicable directors
of the Company and may be enforced by such persons, their heirs and/or
representatives), (b) Sections 6.07 and 6.10 (which are intended to be for the
benefit of the employees of the Company and the Company Subsidiaries and may be
enforced by such persons), and (c) Section 5.05 (which is intended to be for the
benefit of affiliates of the Company and may be enforced by such persons).
SECTION 9.11. 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 9.12. 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.
SECTION 9.13. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions of this
Agreement (including, without limitation, the provisions contained in each of
Sections 1.05, 1.06, 1.09, 1.10, 4.03(b), 5.02(b), 5.07, 6.07, and 6.11 of this
Agreement) were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
[Remainder of page intentionally left blank. Signature page to follow.]
67
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/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
FIRST FEDERAL CAPITAL CORP
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
68
