RISK FACTORS RELATING TO THE MERGER
Because the market price of Associated common stock may fluctuate, you cannot be certain of the precise value
of the merger consideration you may receive in the merger.
At the time the merger is completed, each issued and outstanding share of Bank Mutual common stock, except for shares of Bank Mutual common
stock owned directly or indirectly by Associated (other than shares of Bank Mutual common stock held in a fiduciary capacity or in connection with debts previously contracted), will be converted into
the right to receive 0.422 shares of Associated common stock, with cash paid in lieu of fractional shares. Shares of Bank Mutual common stock held in Bank Mutual's treasury will be canceled and no
merger consideration will be paid in exchange therefor.
There
will be a time lapse between each of the date of this proxy statement/prospectus, the date on which Bank Mutual shareholders vote to approve the merger agreement and the date on
which Bank Mutual shareholders actually receive such shares. The market value of Associated common stock may fluctuate during these periods as a result of a variety of factors, including general
market and economic conditions, changes in Associated's businesses, operations and prospects and potential changes in applicable bank regulatory and tax law (or the absence thereof). Many of these
factors are outside of the control of Bank Mutual and Associated. Consequently, at the time Bank Mutual shareholders must decide whether to approve the merger agreement, they will not know the actual
market value of the shares of Associated common stock they may receive when the merger is completed. The actual value of the shares of Associated common stock received by Bank Mutual shareholders will
depend on the market value of shares of Associated common stock on that date. This value will not be known at the time of the special meeting and may be more or less than the current price of
Associated common stock or the price of Associated common stock at the time of the special meeting or at the completion of the merger.
The market price for Associated common stock may be affected by factors different from those that
historically have affected Bank Mutual.
Upon completion of the merger, holders of Bank Mutual common stock will become holders of Associated common stock. Associated's businesses
differ from those of Bank Mutual, and accordingly the results of operations of Associated will be affected by some factors that are different from those currently affecting the results of operations
of Bank Mutual. For a discussion of the businesses of Associated and Bank Mutual and of some important factors to consider in connection with those businesses, see the section entitled "The Parties to
the Merger" beginning on page [
·
] of this
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proxy
statement/prospectus and the documents incorporated by reference referred to under the section entitled "Where You Can Find More Information" beginning on page
[
·
], including, in particular, in the section entitled "Risk Factors" in
Associated's Annual Report on Form 10-K for the year ended December 31, 2016.
Bank Mutual's shareholders will have a reduced ownership and voting interest after the merger and will
exercise less influence over management.
Currently, Bank Mutual's shareholders have the right to vote in the election of the board of directors of Bank Mutual and the power to approve
or reject any matters requiring shareholder approval under the WBCL or Bank Mutual's charter and bylaws. Upon the completion of the merger, each Bank Mutual shareholder will become a shareholder of
Associated with a percentage ownership of Associated that is smaller than the shareholder's current percentage ownership of Bank Mutual. After the merger, Bank Mutual shareholders in the aggregate are
expected to become owners of approximately [
·
]% of the outstanding shares of
Associated common stock (based on the number of shares of Bank Mutual common stock outstanding as of the record date and including shares received in respect equity awards and without giving effect to
any shares of Associated common stock held by Bank Mutual shareholders prior to the merger). Even if all former Bank Mutual shareholders voted together on all matters presented to Associated's
shareholders, the former Bank Mutual shareholders would exercise significantly less influence over Associated after the merger relative to their influence over Bank
Mutual prior to the merger, and thus would have a less significant impact on the approval or rejection of future Associated proposals submitted to a shareholder vote.
The opinion received by the Bank Mutual board from RBCCM has not been, and is not expected to be, updated to
reflect any changes in circumstances that may have occurred since the date of the opinion.
The opinion delivered to the Bank Mutual board by RBCCM, financial advisor to Bank Mutual, as to the fairness, from a financial point of view,
of the exchange ratio to the holders of Bank Mutual common stock in the proposed merger speaks only as of July 20, 2017, the date of such opinion. Changes in the operations and prospects of
Associated or Bank Mutual, general market and economic conditions and other factors which may be beyond the control of Associated and Bank Mutual may have altered the value of Associated or Bank
Mutual or the sale prices of shares of Associated common stock as of the date of this proxy statement/prospectus, or may alter such values and sale prices by the time the merger is completed. RBCCM
does not have any obligation to update, revise or reaffirm its opinion to reflect subsequent developments and has not done so. Bank Mutual does not currently anticipate asking RBCCM to update its
opinion. The Bank Mutual board of directors' recommendation that Bank Mutual shareholders vote "
FOR
" approval of the merger agreement, however, is made
as of the date of this proxy statement/prospectus. See "The Merger—Opinion of Bank Mutual's Financial Advisor" and
Annex B
to this
proxy statement/prospectus.
Associated may be unable to successfully integrate Bank Mutual's operations and may not realize the
anticipated benefits of acquiring Bank Mutual.
Associated and Bank Mutual have operated and, until the completion of the merger will continue to operate, independently. The success of the
merger, including anticipated benefits and cost savings, will depend, in part, on Associated's ability to successfully integrate Bank Mutual's operations in a manner that results in various benefits,
including, among other things, enhanced revenues and revenue synergies, an expanded market reach and operating efficiencies and that does not materially disrupt existing customer relationships nor
result in decreased revenues due to loss of customers. The process of integrating operations could result in a loss of key personnel or cause an interruption of, or loss of momentum in, the activities
of one or more of the surviving bank's businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the ability of Associated or Bank
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Mutual
to maintain relationships with customers and employees. The diversion of management's attention and any delays or difficulties encountered in connection with the merger and the integration of
Bank Mutual's operations could have an adverse effect on the business, financial condition, operating results and prospects of the surviving corporation after the merger.
The
success of the surviving corporation following the merger will depend in part on the ability of Associated to integrate the two businesses. If Associated experiences difficulties in
the integration process, including those listed above, Associated may fail to realize the anticipated benefits of the merger in a timely manner or at all. Failure to achieve these anticipated benefits
could result in increased costs, decreases in the amount of expected revenues and diversion of management's time and energy and could have an adverse effect on the surviving corporation's business,
financial condition, operating results and prospects.
Among
the factors considered by the boards of directors of Associated and Bank Mutual in connection with their respective approvals of the merger agreement were the benefits that could
result from the merger. We cannot give any assurance that these benefits will be realized within the time periods contemplated or at all.
The merger agreement limits Bank Mutual's ability to pursue alternatives to the merger.
The merger agreement contains provisions that may discourage a third party from submitting an acquisition proposal to Bank Mutual that might
result in greater value to Bank Mutual's shareholders than the merger, or may result in a potential competing acquirer proposing to pay a lower per share price to acquire Bank Mutual than it might
otherwise have proposed to pay. These provisions include a general prohibition on Bank Mutual from soliciting or, subject to certain exceptions relating to the exercise of fiduciary duties by the Bank
Mutual board, entering into discussions with any third party regarding, an acquisition proposal or offers for competing transactions. Bank Mutual also has an unqualified obligation to submit the
proposal to approve the merger to a vote by its shareholders, even if Bank Mutual receives an alternative acquisition proposal that its board of directors believes is superior to the merger. In
addition, Bank Mutual must pay Associated a cash termination fee equal to $17.0 million in certain circumstances. See the sections entitled "The Merger Agreement—Termination of the
Merger Agreement" and "The Merger Agreement—Termination Fee" beginning on
pages [
·
] and
[
·
], respectively.
The merger agreement may be terminated in accordance with its terms and the merger may not be completed.
The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include: the
approval of the merger proposal by Bank Mutual shareholders, the receipt of all of the requisite regulatory approvals and expiration or termination of all statutory waiting periods in respect thereof,
the accuracy of representations and warranties under the merger agreement (subject to the materiality standards set forth in the merger agreement), Associated's and Bank Mutual's performance of their
respective obligations under the merger agreement in all material respects and each of Associated's and Bank Mutual's receipt of a tax opinion to the effect that the merger will be treated as a
transaction that qualifies as a "reorganization" within the meaning of Section 368(a) of the Code. These conditions to the closing of the merger may not be fulfilled in a timely manner or at
all, and, accordingly, the merger may be delayed or may not be completed.
In
addition, if the merger is not completed by June 30, 2018, either Associated or Bank Mutual may choose not to proceed with the merger, and the parties can mutually decide to
terminate the merger agreement at any time, before or after shareholder approval.
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Failure to complete the merger could negatively impact the stock price and the future business and financial
results of Bank Mutual.
If the merger is not completed for any reason, including as a result of Bank Mutual shareholders declining to approve the merger agreement, the
ongoing business of Bank Mutual may be adversely affected and, without realizing any of the benefits of having completed the merger, Bank Mutual would be subject to a number of risks, including the
following:
-
•
-
Bank Mutual may experience negative publicity and negative reactions from the financial markets, including negative impacts on its stock price;
-
•
-
Bank Mutual may experience negative reactions from its customers, vendors and employees;
-
•
-
Bank Mutual will have incurred substantial expenses and will be required to pay certain costs relating to the merger, whether or not the merger
is completed;
-
•
-
the merger agreement places certain restrictions on the conduct of Bank Mutual's businesses prior to completion of the merger. Such
restrictions may prevent Bank Mutual from taking certain specified actions during the pendency of the merger (see the section entitled "The Merger Agreement—Conduct of Businesses of Bank
Mutual and Associated Prior to Completion of the Merger" beginning on page [
·
] of
this proxy statement/prospectus for a description of the restrictive covenants applicable to Bank Mutual); and
-
•
-
matters relating to the merger (including integration planning) will require substantial commitments of time and resources by Bank Mutual
management, which would otherwise have been devoted to other opportunities that may have been beneficial to Bank Mutual as an independent company.
In
addition to the above risks, if the merger agreement is terminated and the Bank Mutual board seeks another merger or business combination, Bank Mutual shareholders cannot be certain
that Bank Mutual will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Associated has agreed to provide in the merger. If the merger
agreement is terminated under certain circumstances, Bank Mutual may be required to pay a termination fee of $17.0 million to Associated. See the section entitled "The Merger
Agreement—Termination Fee" beginning on page [
·
].
Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not
presently anticipated or cannot be met.
Before the transactions contemplated in the merger agreement, including the merger and the bank merger, may be completed, various approvals must
be obtained from the bank regulatory and other governmental authorities. In determining whether to grant these approvals, the regulators consider a variety of factors, including the regulatory
standing of each party and the factors described under "The Merger—Regulatory Approvals." An adverse development in either party's regulatory standing or these factors could result in an
inability to obtain one or more approvals or delay their receipt. These governmental entities may impose conditions, limitations or costs, require branch divestitures or place restrictions on the
conduct of Associated after the closing as a condition to the granting of such approvals or require changes to the terms of the merger or the bank merger. Such conditions or changes and the process of
obtaining regulatory approvals could have the effect of delaying completion of the merger or of imposing additional costs or limitations on Associated following the merger, any of which might have an
adverse effect on the surviving corporation following the merger. The regulatory approvals may not be received at any time, may not be received in a timely fashion, and may contain conditions on the
completion of the merger that adversely affect the surviving corporation's business following the closing, or which are not anticipated or cannot be met.
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Bank Mutual will be subject to business uncertainties while the merger is pending, which could adversely
affect its business.
Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Bank Mutual, and, consequently, the
surviving corporation. These uncertainties may impair Bank Mutual's ability to attract, retain and motivate key personnel until the merger is consummated and for a period of time thereafter, and could
cause customers and others that deal with Bank Mutual to seek to change their existing business relationships with Bank Mutual. Employee retention at Bank Mutual may be particularly challenging during
the pendency of the merger, as employees may experience uncertainty about their roles with the surviving corporation following the merger. In addition, the merger agreement restricts Bank Mutual from
taking specified actions without the consent of Associated, and generally requires Bank Mutual to continue its operations in the ordinary course, until the merger closes. These restrictions may
prevent Bank Mutual from pursuing attractive business opportunities that may arise prior to the completion of the merger. Please see the section entitled "The Merger Agreement—Conduct of
Businesses of Bank Mutual and Associated Prior to Completion of the Merger" beginning on page
[
·
] for a description of the restrictive covenants to which Bank Mutual is
subject.
Directors and executive officers of Bank Mutual may have interests in the merger that are different from, or
in addition to, the interests of Bank Mutual shareholders.
Directors and executive officers of Bank Mutual may have certain interests in the merger that are different from, or in addition to, interests
of Bank Mutual shareholders generally. These interests include, among others, certain payments and benefits payable under employment, change in control, and consulting agreements entered into, or to
be entered into, with executive officers, the treatment of outstanding equity awards pursuant to the merger agreement, and rights to ongoing indemnification and insurance coverage by the surviving
corporation for acts or omissions occurring prior to the merger. These interests also include Associated's agreement to increase the board size of each of Associated and Associated Bank, N.A. by one
and appoint Michael T. Crowley, Jr. to fill the new positions at the effective time. The Bank Mutual board was aware of and considered those interests, among other matters, in reaching its decisions
to (i) approve and adopt the merger agreement and the transactions contemplated thereby, and (ii) recommend the approval of the merger agreement to Bank Mutual shareholders. See the
section entitled "Interests of Bank Mutual's Directors and Executive Officers in the Merger" beginning on page
[
·
] of this proxy statement/prospectus for a more detailed description of these
interests.
Shares of Associated common stock to be received by Bank Mutual shareholders as a result of the merger will
have rights different from the shares of Bank Mutual common stock.
Upon completion of the merger, the rights of former Bank Mutual shareholders will be governed by the articles of incorporation and bylaws of
Associated. The rights associated with Associated common stock are different from the rights associated with Bank Mutual common stock, which currently govern the rights of Bank Mutual shareholders.
Please see the section entitled "Comparison of Shareholders' Rights" beginning on page
[
·
] for a discussion of the different rights associated with Associated common
stock.
The merger may not be accretive, and may be dilutive, to Associated's earnings per share, which may
negatively affect the market price of Associated common stock received by you as a result of the merger.
Because shares of Associated common stock will be issued in the merger, it is possible that, although Associated currently expects the merger to
be accretive to earnings per share in
2019, excluding one-time charges, the merger may be dilutive to Associated earnings per share, which could negatively affect the market price of shares of Associated common stock.
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In
connection with the completion of the merger, based on the number of issued and outstanding shares of Bank Mutual common stock as of the record date, Associated would issue
approximately [
·
] shares of Associated common stock. The issuance of these new
shares of Associated common stock could have the effect of depressing the market price of shares of Associated common stock through dilution of earnings per share or otherwise.
In
addition, future events and conditions could increase the dilution that is currently projected, including adverse changes in market conditions, additional transaction and integration
related costs and other factors such as the failure to realize some or all of the benefits anticipated in the merger. Any dilution of, or delay of any accretion to, Associated earnings per share could
cause the price of shares of Associated common stock to decline or grow at a reduced rate.
Associated will incur significant transaction and merger-related costs in connection with the merger.
Associated expects to continue to incur a number of non-recurring costs associated with completing the merger, combining the operations of the
two companies and achieving desired synergies. These fees and costs have been, and will continue to be, substantial.
Associated
will incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related
costs. Associated continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the integration of the two companies' businesses. See the risk
factor entitled "Associated may be unable to successfully integrate Bank Mutual's operations and may not realize the anticipated benefits of acquiring Bank Mutual" above.
Other
significant non-recurring transaction costs related to the merger include, but are not limited to, fees paid to legal, financial and accounting advisors, severance and benefit
costs and filing fees, as well as the costs and expenses of filing, printing and mailing this proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the merger.
Although
Associated expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow
Associated to offset integration and transaction-related costs over time, this net benefit may not be achieved in the near term, or at all. The costs described above, as well as other unanticipated
costs and expenses, could have a material adverse effect on the financial conditions and operating results of the surviving corporation following the closing of the merger.
Litigation relating to the merger could require us to incur significant costs and suffer management
distraction, as well as delay and/or enjoin the merger.
On July 28, 2017, two substantially identical purported class action complaints, each by various individual plaintiffs, were filed with
the Wisconsin Circuit Court for Milwaukee County on behalf of the respective named plaintiffs and other Bank Mutual shareholders against Bank Mutual, the members of the Bank Mutual board, and
Associated in connection with the proposed merger. The lawsuits are captioned Schumel et al v. Bank Mutual Corporation et al., case no. 2017CV006201, and Paquin et al. v.
Bank Mutual Corporation et al., case no. 2017CV006202. Both complaints allege state law breach of fiduciary duty claims against the Bank Mutual board for, among other things, seeking to sell
Bank Mutual through an allegedly defective process, for an allegedly unfair price and on allegedly unfair terms. The lawsuits seeks, among other things, to enjoin the consummation of the transaction
and damages. The complaints allege that Associated aided and abetted the directors' alleged breaches of fiduciary duty. Bank Mutual, its directors and Associated believe the allegations are without
merit.
Bank
Mutual and Associated could be subject to additional demands or litigation related to the merger, whether or not the merger is consummated. Such actions may create uncertainty
relating to the merger, and responding to such demands and defending such actions may be costly and distracting to management.
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INFORMATION ABOUT THE SPECIAL MEETING
Time, Place and Purpose of the Special Meeting
This proxy statement/prospectus is being furnished to Bank Mutual shareholders as part of the solicitation of proxies by the Bank Mutual board
for use at the special meeting to be held on [
·
], at
[
·
] local time, at
[
·
], or at any postponement or adjournment thereof.
At
the special meeting, Bank Mutual shareholders will be asked to consider and vote upon (i) a proposal to approve the merger agreement, (ii) a proposal to approve, by
advisory (non-binding) vote, certain compensation arrangements for Bank Mutual's named executive officers in connection with the merger and (iii) a proposal for adjournment of the special
meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. Bank Mutual shareholders must
approve the merger agreement in order for the merger to occur. If Bank Mutual shareholders fail to approve the merger agreement, the merger will not occur. A copy of the merger agreement is attached
as
Annex A
to this proxy statement/prospectus, and you are encouraged to read the merger agreement carefully and in its entirety.
Record Date and Quorum
Bank Mutual has set the close of business on
[
·
] as the record date for the special meeting, and only holders of record of Bank
Mutual common stock on the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you own shares of Bank Mutual common
stock as of the close of business on the record date. On the record date, there were
[
·
] shares of Bank Mutual common stock outstanding and entitled to vote and,
accordingly, [
·
] shares of Bank Mutual common stock must vote to approve the
merger agreement for the merger to occur. You will have one vote on all matters properly coming before the special meeting for each share of Bank Mutual common stock that you owned on the record date.
A majority of the votes entitled to be cast by the shares of Bank Mutual common stock entitled to vote at the special meeting, represented in person or by proxy,
constitutes a quorum for the purposes of the special meeting. Abstentions and broker non-votes, if any, are counted as present for purposes of establishing a quorum.
Vote Required
The approval of the merger agreement requires the affirmative vote of Bank Mutual shareholders entitled to cast at least a majority of the votes
which all Bank Mutual shareholders are entitled to cast. For the approval of the merger agreement, you may vote "
FOR,
"
"
AGAINST
" or "
ABSTAIN.
" Votes to abstain will not be counted as votes cast in favor of the approval of
the merger agreement, but will count for the purpose of determining whether a quorum is present.
If you fail to submit a proxy or to vote in person at the special meeting or if
you vote to abstain, it will have the same effect as a vote
"
against
"
the approval of the merger
agreement.
If
your shares of Bank Mutual common stock are registered directly in your name with the transfer agent of Bank Mutual, you are considered, with respect to those shares of Bank Mutual
common stock, the shareholder of record. If you are a shareholder of record, this proxy statement/prospectus and the enclosed proxy card have been sent directly to you by Bank Mutual.
If
your shares of Bank Mutual common stock are held through a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares of Bank Mutual common stock held in
"street name." In that case, this proxy statement/prospectus has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of Bank Mutual
common stock, the shareholder of record. As the beneficial owner, you have the right to direct your
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bank,
brokerage firm or other nominee how to vote your shares by following their instructions for voting.
Shares in Dividend Reinvestment or Employee Plans.
If a shareholder participates in the Direct Stock Purchase and Dividend Reinvestment
Plan for Bank
Mutual Common Stock, which is maintained by Bank Mutual's transfer agent, which we refer to as the "DRP," the proxy also will serve as voting instructions for the participant's shares held in the DRP.
Participants' shares will be voted by the administrator of the DRP in accordance with those voting instructions. If a participant does not return a proxy, the DRP administrator will not vote that
participant's shares held in the DRP.
Any
shareholder who owns shares through an investment in Bank Mutual Common Stock Fund of the Bank Mutual 401(k) Plan, which we refer to as the "401(k) Plan" will also use the 401(k)
Plan proxy card to instruct the 401(k) Plan's administrator how to vote those shares. The administrator will vote shares in those participants' 401(k) Plan accounts in accordance with the voting
instructions on the proxies. If a 401(k) Plan participant does not return a proxy, the administrator will vote that participant's shares in the 401(k) Plan in the same proportion as the voting of all
shares in the 401(k) Plan for which voting instructions have been received.
Under
the rules of the NASDAQ, banks, brokerage firms or other nominees who hold shares in "street name" for customers may not exercise their voting discretion with respect to approving
non-routine matters such as the approval of the merger agreement or the other matters being voted upon at the special meeting. As a result, absent specific voting instructions from the beneficial
owner of such shares of Bank Mutual common stock, banks, brokerage firms and other nominees may not vote those shares of Bank Mutual common stock on any of the proposals at the special meeting. A
so-called "broker non-vote" results when banks, brokerage firms and other nominees return a valid proxy but do not vote on a particular proposal because they do not have discretionary authority to
vote on the matter and have not received specific voting instructions from the beneficial owner of such shares.
The
proposal to approve certain compensation arrangements for Bank Mutual's named executive officers in connection with the merger requires the affirmative vote of a majority of the
votes cast by all Bank Mutual shareholders entitled to vote thereon; however, such vote is advisory (non-binding) only. If your shares of Bank Mutual common stock are present at the special meeting
but are not voted on the proposal, or if you vote to abstain on the proposal, your vote will not be considered "cast" with respect to the merger-related named executive officer compensation proposal
and this will not have an effect on the advisory (non-binding) vote to approve the merger-related named executive officer compensation. If you fail to submit a proxy or vote in person at the special
meeting, or if you do not instruct your bank, brokerage firm or other nominee to vote your shares of Bank Mutual common stock in favor of the proposal, your shares of Bank Mutual common stock will not
be voted, and this will not have an effect on the advisory (non-binding) vote to approve the merger-related named executive officer compensation except to the extent it results in there being
insufficient shares present at the meeting to establish a quorum. The vote on the merger-related named executive officer compensation proposal is separate from the vote to approve the merger
agreement. You may vote "against" the merger-related named executive officer compensation proposal and "for" approval of the merger agreement and vice versa. You also may abstain from this proposal
and vote on the merger agreement proposal and vice versa.
The
approval of adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to
approve the merger agreement requires the affirmative vote of a majority of the votes cast by all Bank Mutual shareholders entitled to vote thereon. If your shares of Bank Mutual common stock are
present at the special meeting but are not voted on the proposal, or if you vote to abstain on the proposal, your vote will not be considered "cast" with respect to the adjournment of the special
meeting, and this will not have an effect on the vote to adjourn the special meeting. If you fail to submit a proxy or vote in
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person
at the special meeting or if your shares of Bank Mutual common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee
to vote your shares of Bank Mutual common stock, your shares of Bank Mutual common stock will not be voted, and this will not have an effect on the vote to adjourn the special meeting, if necessary or
appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.
Shares Held by Bank Mutual Officers and Directors
As of the record date, the directors and executive officers of Bank Mutual and their affiliates beneficially owned and were entitled to vote
approximately [
·
] shares of Bank Mutual common stock representing approximately
[
·
]% of the shares of Bank Mutual common stock outstanding on that date.
Each
of the directors of Bank Mutual have entered into a voting and support agreement with Bank Mutual and Associated, solely in their capacities as shareholders of Bank Mutual, pursuant
to which they have agreed, among other things, to vote in favor of the Bank Mutual merger proposal and the other proposals presented at the special meeting and against any alternative acquisition
proposal. For more information regarding the voting and support agreements, see "The Merger Agreement—Voting and Support Agreements" and the form of voting and support agreement, which is
included as Exhibit B to the merger agreement attached as
Annex A
to this proxy statement/prospectus.
As
of the record date, Bank Mutual shareholders who are parties to the voting and support agreements beneficially owned and were entitled to vote approximately
[
·
] shares of Bank Mutual common stock representing approximately
[
·
]% of the shares of Bank Mutual common stock outstanding on that date.
Proxies and Revocations
If you are a shareholder of record, you may have your shares of Bank Mutual common stock voted on matters presented at the special meeting in
the following ways:
-
•
-
by telephone (toll-free) or Internet, by accessing the telephone number or Internet website specified on the enclosed proxy card. The control
number provided on your proxy card is designed to verify your identity when voting by telephone or Internet. Proxies delivered via the Internet or by telephone must be submitted by 8:00 a.m.,
Central Time, on the day of the special meeting;
-
•
-
by completing, signing, dating and returning the enclosed proxy card in the accompanying prepaid reply envelope; or
-
•
-
in person—you may attend the special meeting and cast your vote there.
If
you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of Bank Mutual common stock
voted. Those instructions will identify which of the above choices are available to you in order to have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at
the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee at the special meeting.
Please
refer to the instructions on your proxy or voting instruction card to determine the deadlines for voting over the Internet or by telephone. If you submit a proxy by mailing a
proxy card, your proxy card should be mailed in the accompanying prepaid reply envelope, and your proxy card must be filed with the Secretary of Bank Mutual by the time the special meeting begins.
Please do not send in your
stock certificates with your proxy card.
You will be provided at a later date a letter of transmittal and
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instructions
regarding the surrender of your stock certificates. You should then send your Bank Mutual stock certificates to the exchange agent, together with your completed and signed letter of
transmittal.
If
you vote by proxy, the individuals named on the enclosed proxy card (each of them, with full power of substitution) will vote your shares of Bank Mutual common stock in the way that
you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Bank Mutual common stock should be voted "for" or "against" or to "abstain"
from voting on all, some or none of the specific items of business to come before the special meeting.
If
you properly sign your proxy card but do not mark the boxes showing how your shares of Bank Mutual common stock should be voted on a matter, the shares of Bank Mutual common stock
represented by your properly signed proxy will be voted "
FOR
" the proposal to approve the merger agreement,
"
FOR
" the proposal to approve the advisory (non-binding) vote on certain compensation arrangements and
"
FOR
" adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the
special meeting to approve the merger agreement.
You
have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, and your last vote is the vote that will be
counted. If you are a Bank Mutual shareholder of record, you may revoke a proxy at any time prior to the time it is voted by filing a written notice of revocation with the corporate secretary, 4949
West Brown Deer Road, Milwaukee, Wisconsin 53223, by delivering a properly executed proxy bearing a later date or by voting in person at the special meeting. If you hold your shares through a broker,
bank or other nominee, you can revoke your proxy by contacting the broker, bank or other nominee and asking for a new proxy card. If you submitted your proxy by Internet or by telephone, you can vote
again by voting over the Internet or by telephone. If you attend the meeting, you must request a revocation of your submitted proxy and vote by ballot to revoke your proxy. Your attendance alone at
the shareholder meeting will not of itself constitute a revocation of your proxy. If you have any questions or need assistance voting your shares, please contact Georgeson, Bank Mutual's proxy
solicitor, at 1-888-680-1526.
IT IS IMPORTANT THAT YOU VOTE YOUR SHARES OF BANK MUTUAL COMMON STOCK PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED POSTAGE-PAID ENVELOPE, OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD TO VOTE BY TELEPHONE OR INTERNET. SHAREHOLDERS WHO
ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES BY REQUESTING A REVOCATION OF THEIR SUBMITTED PROXY AND VOTING IN PERSON.
Anticipated Date of Completion of the Merger
Subject to the satisfaction or waiver of the closing conditions described under the section entitled, "The Merger
Agreement—Conditions to Completion of the Merger" beginning on page
[
·
] of this proxy statement/prospectus, including the approval of the merger
agreement by Bank Mutual shareholders at the special meeting, Associated and Bank Mutual expect that the merger will be completed in the first quarter of 2018. However, it is possible that factors
outside the control of both companies could result in the merger being completed at a different time or not at all.
Solicitation of Proxies; Payment of Solicitation Expenses
Bank Mutual has engaged Georgeson to act as its proxy solicitor and to assist in the solicitation of proxies for the special meeting. Bank
Mutual has agreed to pay Georgeson a fixed fee of $15,000 plus per-call or per-service fees related to calls to shareholders or the taking of telephone votes and reasonable out-of-pocket expenses for
such services and also will indemnify Georgeson against certain claims, costs, damages, liabilities, judgments and expenses. Bank Mutual may reimburse banks,
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brokerage
firms, other nominees or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Bank Mutual common stock.
Bank
Mutual's directors, officers and employees also may solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts
for soliciting proxies. Bank Mutual will also request that brokerage houses and other custodians, nominees and fiduciaries send these proxy materials to beneficial owners of Bank Mutual common stock.
Bank Mutual will, upon request, reimburse such brokerage houses and custodians for their reasonable expenses in assisting with the solicitation of proxies.
Questions and Additional Information
If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of Bank Mutual common stock or
need additional copies of this proxy statement/ prospectus or the enclosed proxy card, please contact Georgeson, Bank Mutual's proxy solicitor, by calling toll-free at 1-888-680-1526.
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THE PARTIES TO THE MERGER
Bank Mutual Corporation
4949 West Brown Deer Road
Milwaukee, Wisconsin 53223
(414) 354-1500
Bank
Mutual is a Wisconsin corporation headquartered in Milwaukee, Wisconsin. Bank Mutual is regulated as a savings and loan holding company by the Federal Reserve Board. Its common
stock trades on The NASDAQ Global Select Market under the symbol BKMU.
Bank
Mutual's subsidiary bank was founded in 1892 and is a federally-chartered savings bank headquartered in Milwaukee, Wisconsin. It is regulated by the OCC and its deposits are insured
within limits established by the Federal Deposit Insurance Corporation. Its primary business is community banking, which includes attracting deposits from and making loans to the general public and
private businesses, as well as governmental and non-profit entities.
At
June 30, 2017, Bank Mutual had 62 banking offices in Wisconsin and one in Minnesota. More information about Bank Mutual Corporation is available at www.bankmutual.com.
Associated Banc-Corp
433 Main Street
Green Bay, Wisconsin 54301
(920) 491-7500
Associated
is a bank holding company registered pursuant to the Bank Holding Company Act of 1956, as amended. Its bank subsidiary, Associated Bank, N.A. traces its history back to the
founding of the Bank of Neenah in 1861.
At
December 31, 2016, Associated owned one nationally chartered commercial bank headquartered in Green Bay, Wisconsin which serves local communities across the upper Midwest, one
nationally chartered trust company headquartered in Wisconsin, and 10 limited purpose banking and nonbanking subsidiaries either located in or conducting business primarily in its three-state
footprint (Wisconsin, Illinois, and Minnesota) that are closely related or incidental to the business of banking or financial in nature.
Through
Associated Bank, N.A. and various nonbanking subsidiaries, Associated provides a broad array of banking and nonbanking products and services to individuals and businesses serving
more than 100 communities, primarily within Associated's three state branch footprint. As of June 30, 2017, Associated had 214 branches in Wisconsin, Illinois and Minnesota. More information
about Associated Banc-Corp is available at www.associatedbank.com.
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THE MERGER
This section describes the merger. The description in this section and elsewhere in this proxy statement/prospectus is
qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as
Annex A
and is incorporated
by reference into this proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger that is important to you. You are encouraged
to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about Bank Mutual or Associated. Such information can be found
elsewhere in this proxy statement/prospectus and in the public filings Bank Mutual and Associated make with the SEC that are incorporated by reference into this document, as described in the section
entitled "Where You Can Find More Information" beginning on page [
·
] of this proxy
statement/prospectus.
Transaction Structure
Pursuant to the merger agreement, Bank Mutual will merge with and into Associated with Associated surviving the merger as the surviving
corporation. Following the merger, Bank Mutual's wholly owned banking subsidiary will merge with and into Associated's wholly owned banking subsidiary, Associated Bank, N.A., with Associated Bank,
N.A. continuing as the surviving entity.
Merger Consideration
Upon completion of the merger, each share of Bank Mutual common stock that is issued and outstanding immediately prior to the effective time of
the merger, except for each share of Bank Mutual common stock owned directly or indirectly by Associated (other than shares of Bank Mutual common stock held in a fiduciary capacity or in connection
with debts previously contracted), will be converted into the right to receive 0.422 shares of Associated common stock, with cash paid in lieu of fractional shares, which we refer to as the "merger
consideration." Associated common stock is traded on the NYSE under the trading symbol "ASB." Shares of Bank Mutual common stock held in Bank Mutual's treasury will be canceled and no merger
consideration will be paid in exchange therefor.
If,
after the date of the merger agreement and prior to the effective time, the outstanding shares of Associated common stock change in number or class as a result of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange of shares, then the merger consideration will be adjusted to provide the holders of Bank Mutual common stock the same
economic effect as contemplated by the merger agreement.
For
a discussion of the treatment of awards outstanding under Bank Mutual's equity incentive plans as of the effective time, see "The Merger Agreement—Treatment of Bank
Mutual Equity Awards" beginning on page [
·
] of this proxy statement/prospectus.
Background of the Merger
On a regular basis, the Bank Mutual board reviews, with management, its business strategies, opportunities and challenges as part of its
consideration and evaluation of its long-term prospects in light of developments in its business, in the sectors in which it competes, in the economy generally and in financial markets, with the goal
of enhancing value for its shareholders.
From
time to time, Bank Mutual has had general discussions with other financial institutions regarding the possibility of a potential future strategic transaction. These general
discussions have included potential "merger of equals" transactions with similarly sized institutions and potential acquisitions of smaller institutions to enter new markets or increase penetration in
current markets. Bank Mutual has not effected any acquisition transactions in recent years because it did not believe
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that
any such transactions could be made on terms that it considered attractive. Bank Mutual has also considered other actions such as branch closures or consolidations.
In
2016, management of Bank Mutual began discussions related to these topics with representatives of RBCCM. These discussions included a review of the banking market, industry trends and
developments in mergers and acquisitions, and various potential opportunities of which management and RBCCM were aware. In mid-2016, the Bank Mutual board and management began regularly consulting
with representatives of RBCCM on industry topics and strategic and transaction developments. The Bank Mutual board decided to work with RBCCM in connection with a possible transaction based on, among
other factors, RBCCM's familiarity with Bank Mutual and Bank Mutual's strategic goals as well as RBCCM's reputation and experience generally in mergers and acquisitions, valuations, financing and
capital markets and familiarity with the industries in which Bank Mutual competes.
In
late 2016, Bank Mutual was approached by Marine Credit Union, which we refer to as "Marine," regarding Marine's potential interest in purchasing five branch offices of Bank Mutual's
subsidiary bank. Because Bank Mutual considered these branches to be outside of its core service area, Bank Mutual entered into related discussions with Marine, which continued along with diligence
reviews by Marine into 2017.
On
February 6, 2017, based on the discussions among the Bank Mutual board, management and representatives of RBCCM over the course of 2016 and early 2017, the board authorized
Bank Mutual management to pursue a potential merger of equals or other transaction with a similarly sized Midwest institution, which we refer to as "Party 1"; Bank Mutual also had had prior periodic
discussions with Party 1 in the past as to a potential transaction. In addition, the Bank Mutual board authorized initial general inquiries on a preliminary basis to gauge interest by other parties as
to a potential sale of Bank Mutual. Bank Mutual therefore authorized RBCCM to informally reach out to potential interested parties to as to potential interest in an acquisition of Bank Mutual.
Throughout
the month of February 2017, representatives of RBCCM reached out to 11 total parties. Those 11 financial institutions operate in Bank Mutual's geographical market or in
adjacent markets. They were identified by RBCCM based on its knowledge of the industry, its knowledge of those parties, the financial ability of the parties to execute a transaction, and input from
Bank Mutual. Bank Mutual did not place any restrictions on which parties would be contacted. Of the 11 parties contacted, three showed initial potential interest; the other institutions either
expressed no interest in, or no ability to enter into, such a transaction. Of the three parties who showed potential interest, one was Associated; we refer to the other two parties as "Party 2" and
"Party 3."
On
February 9, 2017, Bank Mutual and Party 1 executed a confidentiality agreement for Bank Mutual to conduct a review of non-public information regarding Party 1. On
February 10, 2017, Bank Mutual was given access to an electronic data room and began due diligence as to Party 1.
On
February 27, 2017, the Bank Mutual board held a special meeting to discuss the diligence as to Party 1, and authorized management to submit an initial non-binding indication of
interest to enter into a merger of equals or similar transaction with Party 1; the indication was submitted later that day. After considering that indication, Party 1 informed Bank Mutual that the
price offered by Bank Mutual was too low, and requested that Bank Mutual provide a better offer.
On
March 8, 2017, after further analysis and consideration, Bank Mutual provided a revised non-binding indication of interest to Party 1.
On
March 14, 2017, representatives of RBCCM had a discussion with Party 1's financial advisors, who indicated that the revised offer provided by Bank Mutual still did not meet
Party 1's expectations. Representatives of RBCCM discussed this feedback with Bank Mutual, and after further consideration and based on the terms that the Bank Mutual board decided would be acceptable
for a transaction
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with
Party 1, Bank Mutual's management discontinued negotiations with Party 1 given the disconnect between the parties as to pricing expectations.
On
March 24, March 27 and March 31, 2017, Bank Mutual's chairman and management team met with executives from Party 2, Party 3 and Associated, respectively, to
informally discuss those parties' interest in a potential transaction.
On
April 4, 2017, Bank Mutual's subsidiary bank and Marine signed and announced a definitive agreement for Marine to purchase five Bank Mutual branch offices.
On
April 17, 2017, a regularly scheduled meeting of the board of directors of Bank Mutual's subsidiary bank, which board includes all but one of Bank Mutual's directors, was
attended telephonically by representatives of RBCCM. Directors present discussed Bank Mutual's strategic plans as well as the informal discussions held with the three interested parties.
Representatives of RBCCM provided a summary of publicly available data about each party's trading price and market statistics. A summary of the discussions at the meeting and the materials presented
were subsequently shared with the Bank Mutual director not present at the meeting.
On
May 1, 2017, the Bank Mutual board held a meeting with representatives of RBCCM to engage in a robust discussion of Bank Mutual's strategic alternatives, including whether to
continue operations on a standalone basis, pursue acquisitions, re-engage Party 1 for a merger of equals, or explore a sale to a strategic partner, including one of the three interested parties or
other potential strategic partners. Representatives of RBCCM presented comprehensive materials comparing and contrasting the various alternatives, which included an overview of Party 1, Party 2, Party
3 and Associated, and a summary of prior discussions with each party. After careful consideration of its alternatives, the board directed Bank Mutual's management and RBCCM to contact Party 2, Party 3
and Associated and conduct a formal bidding process for the potential acquisition of Bank Mutual by one of those parties. Based on the earlier discussions and responses, Bank Mutual and RBCCM did not
consider it fruitful to again approach the other parties previously contacted or any additional parties.
Upon
reaching out to Party 3 subsequent to the May 1, 2017 board meeting, representatives of RBCCM were informed that Party 3 was no longer in a position to pursue an acquisition.
On May 9, 2017 and May 17, 2017, Bank Mutual executed confidentiality agreements with Party 2 and with Associated, respectively.
On
May 22, 2017, Bank Mutual provided Party 2, Associated, and their respective advisors with access to an electronic data room to review certain non-public due diligence
materials relating to Bank Mutual.
On
May 31, 2017, Bank Mutual provided a process letter to Party 2 and Associated requesting that non-binding indications of interest be submitted by June 26, 2017. Bank
Mutual also noted in the letter that it would provide a draft form of merger agreement, and that the parties should include an issues list of material comments related to the proposed agreement in
conjunction with their indications of interest.
On
June 8, 2017, members of the management teams of Bank Mutual and Party 2 held telephonic meetings where Bank Mutual management provided a detailed review of the company's
operations and gave the management team from Party 2 the opportunity to ask questions. Topics covered included corporate and financial strategy, accounting, tax, operations, technology, credit, legal
and compliance.
On
June 12, 2017, members of the management teams of Bank Mutual and Associated attended, along with their respective financial advisors, in-person diligence meetings in
Milwaukee. During the meetings, the Bank Mutual management team provided Associated with a detailed review of Bank Mutual's operations, and gave the Associated management team the opportunity to ask
questions.
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Topics
covered included corporate and financial strategy, accounting, tax, operations, technology, credit, legal and compliance.
On
June 13, 2017, Bank Mutual provided Party 2 and Associated with a draft form of merger agreement prepared by Bank Mutual's legal advisor, Quarles & Brady LLP,
which we refer to as "Quarles & Brady." On that day, Bank Mutual also entered into a formal engagement arrangement with RBCCM as to the potential transaction.
On
June 20, 2017, members of Bank Mutual's management team and representatives of RBCCM visited Party 2's headquarters for in-person meetings with the management team of Party 2.
Many of the same topics from the June 8, 2017 were discussed. In addition, the management team of Party 2 outlined their approach to integration of the proposed transaction as well as their
view of the benefits of the transaction to both company's stakeholders.
On
June 26, 2017, Associated and Party 2 submitted non-binding indications of interest, as well as their lists of material comments on the draft definitive agreement. Associated
also included a presentation which outlined the proposed benefits of a combination. Associated proposed an all-stock transaction with a fixed exchange ratio of 0.420 shares of Associated common stock
for each outstanding share of Bank Mutual common stock, which, based on the then-current trading price of Associated common stock, would provide consideration with a value of $10.27 per share of Bank
Mutual common stock. Party 2 proposed a 90% stock transaction with a fixed exchange ratio for each outstanding share of Bank Mutual common stock or an equivalent amount of cash, which, based on the
then-current trading price of Party 2's common stock, would provide consideration with a value of $9.91 per share of Bank Mutual common stock. In addition, Party 2 offered seats on its advisory board
and noted it was willing discuss a potential holding company board seat.
On
June 27, 2017, Bank Mutual's chairman and management team met telephonically with representatives of each of Quarles & Brady and RBCCM to review the indications of
interest. At the conclusion of the meeting, Bank Mutual's chairman and management team directed representatives of RBCCM to reach out to Associated and Party 2 and ask them to provide a revised best
and final offer by June 30, 2017. Following this telephonic meeting and throughout the period that Bank Mutual was engaging in discussions with Associated and the other potential acquirers
generally, Bank Mutual's chairman regularly kept directors apprised of developments.
On
June 30, 2017, Associated and Party 2 submitted revised indications of interest. Associated again proposed an all-stock transaction with an increased fixed exchange ratio of
0.422 shares of Associated common stock for each outstanding share of Bank Mutual common stock, which, based on the then-current trading price of Associated common stock, would have provided
consideration with a value of $10.63 per share of Bank Mutual common stock. In addition, Associated offered one seat on the Associated board. Party 2 again proposed a 90% stock transaction with a
higher fixed exchange ratio for each outstanding share of Bank Mutual common stock, which, based on the then-current trading price of Party 2's common stock would have provided consideration with a
value of $10.39 per share of Bank Mutual common stock. Shareholders electing to receive cash would receive a fixed $10.45 per share. In addition, Party 2 offered seats on its advisory board and Bank
Mutual collaboration on filling one holding company board seat with a director from Wisconsin.
On
June 30, 2017 and July 3, 2017, respectively, the Bank Mutual board was provided a summary of the directors' fiduciary and related duties in considering a transaction
and summary information and analyses as to the two indications of interest for the directors' review in advance of a special meeting of the board to discuss the proposals.
On
July 5, 2017, the Bank Mutual board met to discuss the two indications of interest. At that meeting, representatives of RBCCM provided financial analyses of each of the offers,
and a representative of Quarles & Brady provided an extended review of the directors' fiduciary and related
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duties
in considering the proposals as well as legal aspects of the offers, the comments made by Associated and Party 2 on the draft merger agreement and matters described in the section entitled "The
Merger—Bank Mutual's Reasons for the Merger; Recommendation of the Bank Mutual Board of Directors." After careful and extended deliberation, including questions for representatives of each
of RBCCM and Quarles & Brady, the Bank Mutual board unanimously elected to proceed with a potential acquisition transaction, and to move forward toward the negotiation and signing of a
definitive merger agreement with Associated. Associated and Party 2 were then informed of the board's decision.
On
July 6, 2017, representatives of Wachtell, Lipton, Rosen & Katz, which we refer to as "Wachtell Lipton," Associated's legal advisor, provided representatives of
Quarles & Brady with a revised draft of the merger agreement, which was shared with Bank Mutual's management and chairman and with representatives of RBCCM. After review and gathering of input,
representatives of Quarles & Brady sent Wachtell Lipton an initial revised draft of the merger agreement on July 7, 2017. Thereafter, negotiations on the merger agreement and related
documentation continued until execution on July 20, 2017. During the process, the Bank Mutual board was informally kept apprised by the chairman of progress in the negotiations and was provided
with certain interim drafts.
Simultaneously,
additional and confirmatory diligence by Associated began on July 6, and Bank Mutual began confirmatory diligence as to Associated, both of which continued through
the execution of the merger agreement. These diligence efforts included the review of further documents and information, and multiple related communications and telephonic discussions, in addition to
further in-person meetings.
As
part of that process, on July 10, 2017, members of the management teams of Bank Mutual and Associated attended, along with their respective financial advisors, in-person
confirmatory diligence meetings in Milwaukee.
On
July 11, 2017, representatives of each of Associated and Wachtell Lipton reviewed Bank Mutual's minute books and related records in Bank Mutual's offices in Milwaukee. On
July 12, 2017 representatives of each of Bank Mutual and Quarles & Brady reviewed Associated's minute books and related records in Associated's offices in Milwaukee. Also on
July 12, members of the management teams of Bank Mutual and Associated, and their respective legal and financial advisors, held a telephonic meeting to discuss regulatory approval matters,
including information related to Associated's informal meetings with certain of its regulators regarding the proposed transaction.
On
July 13, 2017, members of Bank Mutual's management team and chairman and representatives of RBCCM visited Green Bay to perform in-person reverse due diligence. Members of
Associated management team provided a review of their business and corporate strategy and gave the Bank
Mutual's management team and representatives the opportunity to ask questions and review certain due diligence materials.
During
the period between July 5, 2017 and July 20, 2017, Bank Mutual's chairman regularly kept directors apprised of developments, including by circulating drafts of the
various transaction documents and other materials prepared by the management of Bank Mutual and its legal and financial advisors relating to the proposed transaction.
On
July 20, 2017, the Bank Mutual board met and discussed the merger agreement and related matters with Bank Mutual's legal and financial advisors. A nearly final draft of the
merger agreement, draft board resolutions and a presentation of RBCCM regarding its financial analysis of the proposed transaction were provided to the Bank Mutual board in advance of the meeting. As
part of this meeting, representatives of RBCCM discussed RBCCM's financial analysis with the Bank Mutual board and orally conveyed the opinion of RBCCM that, as of the date thereof, the proposed
exchange ratio was fair, from a financial point of view, to Bank Mutual shareholders; RBCCM's written fairness
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opinion
dated July 20, 2017, confirming the oral opinion, subject to the assumptions, qualifications, limitations and other matters set forth therein, was later delivered to the board. See the
section entitled "The Merger—Opinion of Bank Mutual's Financial Advisor" for more information. A representative of Quarles & Brady again reviewed directors' fiduciary duties and
reviewed the terms of the merger agreement with the board. After extended deliberation, considering the matters described in the section entitled "The Merger—Bank Mutual's Reasons for the
Merger; Recommendation of the Bank Mutual Board of Directors," the Bank Mutual board unanimously approved the definitive merger agreement and related matters, and unanimously recommended that Bank
Mutual shareholders approve the transaction. That decision was conveyed to Associated, and shortly thereafter Bank Mutual and Associated signed the merger agreement and announced the transaction.
Bank Mutual's Reasons for the Merger; Recommendation of the Bank Mutual Board of Directors
In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, and to
recommend that its shareholders adopt the merger, the Bank Mutual board of directors consulted with Bank Mutual's financial and legal advisors, and considered a number of factors, both positive and
negative, including those set forth
below. The following discussion of those factors is not, and is not intended to be, exhaustive but includes the material factors considered in the board's determination.
-
•
-
the Bank Mutual board's belief that the merger with Associated was the best option available for Bank Mutual and its shareholders after the
extensive review undertaken by the board of directors, with the assistance of financial and legal advisors and Bank Mutual management, with respect to the strategic alternatives available to Bank
Mutual for enhancing shareholder value and balancing the potential risks, rewards and uncertainties associated with such alternatives;
-
•
-
the belief that the merger offers Bank Mutual shareholders the opportunity to participate in and benefit from the potential future growth,
financial, opportunities, and prospects of Associated, including potential future transactions involving Associated;
-
•
-
the financial and other terms of the merger agreement that resulted from a competitive process to gauge and elicit potential interest in Bank
Mutual, and arms-length negotiations between Bank Mutual and Associated and their respective representatives;
-
•
-
the fact that Bank Mutual's shareholders will have an opportunity to vote on the merger and that their approval is a condition to completion of
the merger;
-
•
-
the board's consideration of Bank Mutual's business, results of operations, asset quality, financial and market position and expectations and
challenges concerning Bank Mutual's future earnings and prospects including those related to potential reductions in loan growth as a result of loan concentrations, deposit growth and sources of
noninterest income, as well as future needs to augment technology, compliance, and regulatory functions;
-
•
-
the tax-free nature of the transaction to most Bank Mutual shareholders, as further described under "Material United States Federal Income Tax
Consequences;"
-
•
-
the financial presentations of RBCCM, Bank Mutual's financial advisor, to the Bank Mutual board during the process of consideration of
strategic alternatives prior to the execution of the merger agreement;
-
•
-
the opinion of RBCCM to the effect that as of the date of the merger agreement and based on and subject to certain assumptions, procedures,
qualifications and limitations, the exchange ratio was fair, from a financial point of view, to the holders of Bank Mutual common stock;
-
•
-
the strategic benefits of the transaction and the synergies and cost savings expected to be achieved by the combined company upon completion of
the merger, and potential for Bank
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Mutual's
shareholders, as future Associated shareholders, to benefit to the extent of their interest in the combined company from the synergies of the merger and the anticipated pro forma impact of
the merger;
-
•
-
the Bank Mutual board's consideration of the relative attractiveness of the merger as compared to other potential strategic alternatives;
-
•
-
information and discussions regarding Associated's business, results of operations, financial and market position and future earnings and
prospects, and the perceived strength of Associated's financial statements;
-
•
-
the historical performance and return to shareholders of each of Bank Mutual's common stock and Associated's common stock;
-
•
-
the board's understanding of the economic, interest rate, competitive and regulatory environment in which financial institutions operate and
would be expected in the future, and the likely effect of these factors on Bank Mutual both with and without the merger;
-
•
-
the necessary regulatory approvals in connection with the merger, consideration of the relevant factors assessed by the regulators for the
approvals, the parties' evaluations of those factors and the expectation that such approvals could be received in a reasonably timely manner without unacceptable conditions;
-
•
-
the terms and conditions of the merger agreement, including, among other things, the ability of the Bank Mutual board, under certain
circumstances, to change its recommendation to shareholders regarding the merger and the limitations imposed on Bank Mutual's operations pending the merger;
-
•
-
the possibility that Bank Mutual would be required to pay a termination fee under certain circumstances (see "The Merger
Agreement—Termination Fee");
-
•
-
the risk that the merger may not be consummated or that the closing may be unduly delayed, including as a result of factors outside either
party's control;
-
•
-
the cost savings expected to be realized by the combined entities, as well as the likely effects, including adverse effects, of those cost
savings on Bank Mutual's employees, and related protections and benefits expected to be provided by Associated to affected Bank Mutual employees;
-
•
-
expected opportunities with Associated for Bank Mutual employees, including those who may be displaced by the combination, as a result of
Associated's needs and typical number of job openings;
-
•
-
future management needs, and the need to further provide for leadership succession, at Bank Mutual if it were to remain an independent company;
-
•
-
the possibility of employee attrition or adverse effects on customer and other business relationships as a result of the announcement and
pendency of the merger, including by competitors seeking advantage due to potential changes resulting from the merger;
-
•
-
the effects of the merger on the communities in which Bank Mutual maintains offices;
-
•
-
the potential risk of diverting management attention and resources from the operation of Bank Mutual's business to consummation of the merger;
-
•
-
the risks and costs associated with successfully integrating Bank Mutual's business, operations and workforce with those of Associated,
including the risk of not realizing all of the anticipated benefits of the merger or not realizing them in the expected timeframe; and
-
•
-
other risks discussed under the sections entitled: "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements."
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The Bank Mutual board based its decisions and unanimous recommendation on the totality of the information presented to and factors considered by it, including in
its discussions with Bank Mutual's financial and legal advisors. Due to the many factors considered and their complexity, the Bank Mutual board did not quantify or assign any relative or specific
weights to the factors in reaching its determination to approve the merger agreement and the transactions contemplated by it. Also, the foregoing discussion is not necessarily in the order of
importance; individual members of the Bank Mutual board may have given differing weights to different factors.
In
considering the board's recommendation, you should be aware that certain directors and officers of Bank Mutual may have interests in the merger that are different from, or in addition
to, interests of shareholders of Bank Mutual generally; these factors may create potential conflicts of interest. The Bank Mutual board was aware of these interests and considered them when
evaluating, negotiating and approving the merger agreement, and in recommending the merger to Bank Mutual's shareholders. See "Interests of Bank Mutual's Directors and Executive Officers in the
Merger."
Many
of the factors considered by the Bank Mutual Board are forward-looking in nature. Therefore, this discussion should be read in light of the factors discussed in the section entitled
"Cautionary Statement Regarding Forward-Looking Statements."
After its consideration of the various factors set forth above, the Bank Mutual board of directors unanimously recommends that the Bank Mutual shareholders vote
"FOR" the proposal to adopt the merger agreement.
Opinion of Bank Mutual's Financial Advisor
On July 20, 2017, RBCCM rendered its written opinion to the Bank Mutual board that, as of that date and subject to the assumptions,
qualifications, limitations and other matters set forth therein, the exchange ratio of 0.422 shares of Associated common stock was fair, from a financial point of view, to Bank Mutual shareholders.
The full text of RBCCM's written opinion dated July 20, 2017 is attached to this proxy statement/prospectus as Annex B and constitutes part of this proxy statement/prospectus. RBCCM's
opinion was approved by RBCCM's Fairness Opinion Committee. This summary of RBCCM's opinion is qualified in its entirety by reference to the full text of the opinion. Bank Mutual urges holders of Bank
Mutual common stock to read RBCCM's opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations and qualifications of the
review undertaken by RBCCM.
RBCCM's opinion was provided for the information and assistance of the Bank Mutual board in connection with its consideration of the merger. RBCCM's opinion did
not address the merits of Bank Mutual's underlying decision to engage in the merger or the relative merits of the merger compared to any alternative business strategy or transaction in which Bank
Mutual might engage
. RBCCM's opinion does not constitute a recommendation to the Bank Mutual board or any holder of Bank Mutual common stock as to how any Bank Mutual board
member or such holder should vote with respect to the merger.
The
financial presentations of RBCCM to the Bank Mutual board during the process of consideration of strategic alternatives prior to the execution of the merger agreement and the opinion
of RBCCM, as reviewed by the Bank Mutual board of directors, were only two of many factors taken into consideration by the Bank Mutual board in connection with its evaluation of the merger. RBCCM's
opinion addressed solely the fairness of the exchange ratio, from a financial point of view, to Bank Mutual shareholders, and did not in any way address other terms or arrangements of the merger or
the merger agreement, including, without limitation, the financial or other terms of any other agreement contemplated by, or entered into in connection with, the merger agreement. Further, in
rendering its opinion, RBCCM expressed no opinion about the fairness of the amount or nature of the
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compensation
(if any) to any of Bank Mutual's officers, directors or employees, or class of such persons, relative to the compensation to be paid to the public shareholders of Bank Mutual.
In
rendering its opinion, RBCCM assumed and relied upon the accuracy and completeness of all of the information that was publicly available to RBCCM and all of the financial, legal, tax,
operating and other information provided to or discussed with RBCCM by Bank Mutual and Associated (including, without limitation, the financial statements and related notes thereto of each of Bank
Mutual and Associated), and RBCCM did not assume responsibility for independently verifying, and did not independently verify, such information. RBCCM assumed, with Bank Mutual's consent, that all
projections and forecasts provided to RBCCM by Bank Mutual or Associated, as the case may be (including forecasts provided to RBCCM by Bank Mutual and Associated with respect to certain cost synergies
expected to be realized from the merger, together with certain pro forma adjustment assumptions relating to the merger provided to RBCCM by Associated), were reasonably prepared on bases reflecting
the best currently available estimates and good faith judgments (as of the date of its opinion) of the management of Bank Mutual of the future financial performance Bank Mutual as a standalone entity
(or, in the case of the projected cost synergies, the best currently available estimates and good faith judgments (as of the date of its opinion) of each of Bank Mutual and Associated of the future
financial performance of Associated pro forma for the merger), that the merger would be a tax-free transaction, and any projected cost synergies would be achieved. In addition, RBCCM assumed, with
Bank Mutual's consent, that the median consensus Wall Street research estimates ("Wall Street research estimates") reviewed by it relating to Associated were reasonably prepared on bases not
materially different from the best currently available estimates and good faith judgments (as of the date of its opinion) of the management of Associated of the future financial performance of
Associated as a standalone entity. RBCCM expressed no opinion as to such projections and forecasts or the assumptions upon which they were based.
In
rendering its opinion, RBCCM did not assume any responsibility to perform, and did not perform, an independent evaluation or appraisal of any of the assets or liabilities of either
Bank Mutual or Associated, and RBCCM was not furnished with any such valuations or appraisals. RBCCM did not assume any obligation to conduct, and did not conduct, any physical inspection of the
property or facilities of either Bank Mutual or Associated. RBCCM is not an expert in the evaluation of allowances for loan and lease losses and did not independently verify such allowances or review
or examine any individual loan or credit files. RBCCM assumed, with Bank Mutual's consent, that the aggregate allowances for loan and lease losses set forth in the financial statements of Bank Mutual
and Associated are adequate to cover such losses. RBCCM did not investigate, and made no assumption regarding, any litigation or other claims affecting either Bank Mutual or Associated.
RBCCM
assumed in all respects material to its analyses, that all regulatory and other third-party consents would be obtained, all representations and warranties would be true and correct
in accordance with the merger agreement, and all other conditions to the consummation of the merger would be satisfied without waiver thereof. RBCCM further assumed that the executed version of the
merger agreement would not differ, in any respect material to its opinion, from the Latest Draft Agreement (as defined below).
RBCCM's
opinion speaks only as of the date thereof, is based on the conditions as they existed and information which RBCCM was supplied as of that the date thereof, and is without regard
to any market, economic, financial, legal, or other circumstances or event of any kind or nature which may exist or occur after such date. RBCCM did not undertake to reaffirm or revise its opinion or
otherwise comment upon events occurring after the date thereof and does not have an obligation to update, revise or reaffirm its opinion. RBCCM did not express any opinion as to the prices at which
Associated common stock or Bank Mutual common stock have traded or would trade following the announcement of the merger nor the prices at which Associated common stock would trade following the
consummation of the merger.
47
Table of Contents
For
the purposes of rendering its opinion, RBCCM undertook such review and inquiries as it deemed necessary or appropriate under the circumstances, including the
following:
-
•
-
reviewed the financial terms of a draft of the merger agreement dated July 19, 2017 (the "Latest Draft Agreement");
-
•
-
reviewed and analyzed certain publicly available financial and other data with respect to Bank Mutual and Associated and certain other relevant
historical operating data relating to Bank Mutual and Associated made available to RBCCM from published sources and from the internal records of Bank Mutual and Associated;
-
•
-
reviewed and analyzed internal projections of Bank Mutual;
-
•
-
reviewed Wall Street research estimates regarding the potential future performance of Associated;
-
•
-
reviewed selected market valuation metrics of Bank Mutual, Associated and other comparable publicly traded companies for each, as well as the
financial metrics implied by the exchange ratio
-
•
-
reviewed the financial metrics of selected precedent transactions, as well as the financial metrics implied by the exchange ratio;
-
•
-
conducted discussions with members of (i) senior management of (a) Bank Mutual with respect to the business prospects and
financial outlook of Bank Mutual as a standalone entity, (b) Associated with respect to the business prospects and financial outlook of Associated as a standalone entity, and (ii) the
senior managements of each of Bank Mutual and Associated with respect to the business prospects and financial outlook of Associated pro forma for the merger;
-
•
-
reviewed the reported prices and trading activity for Bank Mutual common stock and Associated common stock; and
-
•
-
reviewed such other financial and other information as RBCCM deemed appropriate.
Set
forth below is a summary of the material financial analyses performed by RBCCM in connection with rendering its opinion, as delivered to the Bank Mutual board in connection with its
meeting on July 20, 2017. The order of analyses described does not represent relative importance or weight given to those analyses by RBCCM. Some of the summaries of the financial analyses
include information presented in tabular format. To fully understand the summary of the analyses used by RBCCM, the tables must be read together with the text of each summary. The tables alone do not
constitute a complete description of the analysis.
For
purposes of its analyses, RBCCM reviewed a number of financial and operating metrics, including:
-
•
-
Tangible Book Value (which we refer to as "TBV"), which means a company's total book value less the value of any intangible assets, including
goodwill;
-
•
-
Earnings Per Share (which we refer to as "EPS") estimated for 2018 and for the next twelve month ("NTM") period for which financial information
was not available; and
-
•
-
Core Deposit Premium (which we refer to as "CDP"), which means the quotient of (i) the equity value of a company, less TBV, and
(ii) aggregate core deposits (excluding jumbo time deposits), expressed as a percentage.
Unless
context indicates otherwise, the analyses performed below were calculated using the following methodologies: (i) using the closing price of Bank Mutual common stock and
Associated common stock and the closing prices of selected bank and thrift holding companies as of July 19, 2017, (ii) historical financial and operating data for Bank Mutual, Associated
and the selected public
48
Table of Contents
company
analyses was based on publicly available information for each company as of July 19, 2017, and (iii) transaction values for the target companies derived from the selected
transactions analysis described below were calculated as of the announcement date of the relevant transaction based on the implied purchase prices announced on such date for the selected transactions
and otherwise based on publicly available information as of such date. Accordingly, this information may not reflect current or future market conditions. The calculations of TBV and CDP were based on
most recent publicly available data as of July 19, 2017. NTM and 2018 EPS estimates for (i) Associated and the selected public company analyses were based on Wall Street research
estimates available as of July 19, 2017, and (ii) Bank Mutual were based on Bank Mutual management projections. For the purposes of certain analyses below, the term "implied per share
merger consideration" refers to the implied per share value of the merger consideration of $10.38 based on the exchange ratio of 0.422 shares of Associated common stock per share of Bank Mutual common
stock and the closing price of Associated common stock as of July 19, 2017 of $24.60.
Public Company Analysis.
RBCCM reviewed certain financial and operating information and implied trading multiples for selected publicly
traded
companies as compared to the corresponding information and implied trading multiples for Bank Mutual. In choosing the selected companies, RBCCM considered publicly traded thrifts (excluding targets of
pending mergers and mutual form companies, as well as companies not traded on a national securities exchange) with assets between $1.5 and $10.0 billion, excluding lenders with
(i) greater than 85% of their loan portfolio consisting of one to four family loans, (ii) ratios of tangible common equity to total assets greater than 20%, and (iii) greater than
30% of revenue derived from fee income.
In
this analysis, RBCCM compared, among other things, (i) multiples of implied price per share of common equity to (a) TBV, (b) NTM EPS and (c) estimated 2018
EPS and (ii) CDP. The list of selected companies and related high, median and low multiples and percentages for such selected companies and for Bank Mutual are as follows:
Selected Companies
-
•
-
Northwest Bancshares, Inc.
-
•
-
Provident Financial Services, Inc.
-
•
-
United Financial Bancorp, Inc.
-
•
-
Dime Community Bancshares, Inc.
-
•
-
Beneficial Bancorp, Inc.
(1)
-
•
-
OceanFirst Financial Corp.
-
•
-
Meridian Bancorp, Inc.
-
•
-
Oritani Financial Corp.
-
•
-
Northfield Bancorp, Inc.
-
•
-
First Defiance Financial Corp.
-
•
-
First Connecticut Bancorp, Inc.
-
•
-
Blue Hills Bancorp, Inc.
(1)
-
•
-
BSB Bancorp, Inc.
(2)
-
•
-
Western New England Bancorp, Inc.
49
Table of Contents
-
•
-
Hingham Institution for Savings
(2)
-
•
-
ESSA Bancorp, Inc.
(2)
-
•
-
SI Financial Group, Inc.
(2)
-
(1)
-
Ratios
of estimated Price/NTM EPS were greater than 30.0x and, as a result, were considered not meaningful and were not included in the calculations of high, median
and low.
-
(2)
-
Figures
for estimated NTM EPS and estimated 2018 EPS were not available and, as a result, no Price/NTM EPS or Price/2018 EPS ratios were included in the calculations
of high, median and low.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price/TBV
|
|
Price/NTM
EPS
|
|
Price/2018E
EPS
|
|
CDP
|
|
|
High
|
|
|
2.23x
|
|
|
26.4x
|
|
|
29.7x
|
|
|
16.6
|
%
|
|
Median
|
|
|
1.49x
|
|
|
17.0x
|
|
|
16.7x
|
|
|
8.3
|
%
|
|
Low
|
|
|
1.05x
|
|
|
14.4x
|
|
|
13.9x
|
|
|
0.8
|
%
|
|
Bank Mutual at July 19, 2017
|
|
|
1.47x
|
|
|
23.1x
|
|
|
20.6x
|
|
|
7.9
|
%
|
This
analysis produced implied per share equity reference ranges for Bank Mutual common stock consisting of TBV multiples ranging from 1.05x to 2.23x, NTM EPS multiples ranging from
14.4x to 26.4x, 2018E EPS multiples ranging from 13.9x to 29.7x and CDP percentages ranging from 0.8% to 16.6%, which indicated the following implied per share equity reference ranges for Bank Mutual
common stock, compared to the implied per share merger consideration:
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied Per Share Equity Reference Range For Bank Mutual based on:
|
|
|
|
|
|
Implied Per Share
Merger Consideration
|
|
|
TBV
|
|
NTM EPS
|
|
2018E EPS
|
|
CDP
|
|
|
$6.60 - $14.02
|
|
$5.83 - $10.70
|
|
$5.86 - $12.47
|
|
$6.51 - $12.38
|
|
$
|
10.38
|
|
Selected Transactions Analysis.
RBCCM reviewed certain implied transaction multiples and percentages for a set of precedent merger and
acquisition
transactions as compared to the corresponding implied transaction multiples and percentages for the merger. In selecting these precedent transactions, RBCCM considered mergers and acquisitions
publicly announced from 2014 to present in which target entities were classified as thrifts at the time of announcement and which had assets between $1.0 and $10.0 billion. RBCCM excluded from
its analysis transactions in which the targets were lenders with (i) greater than 85% of their loan portfolio consisting of one to four family loans, (ii) ratios of tangible common
equity to total assets greater than 20%, and (iii) greater than 30% of revenue derived from fee income.
In
this analysis, RBCCM compared, among other things, (i) multiples of implied price per share of common equity to (a) TBV and (b) NTM EPS and (ii) CDP. The
list of selected transactions and
50
Table of Contents
related
high, median and low multiples and percentages for such selected transactions and for Bank Mutual are as follows:
|
|
|
|
|
|
|
Announcement Date
|
|
Acquiror
|
|
Target
|
|
May 5, 2016
|
|
Bar Harbor Bankshares
|
|
Lake Sunapee Bank Group
(1)
|
|
January 12, 2016
|
|
Old National Bancorp
|
|
Anchor BanCorp Wisconsin Inc.
|
|
January 5, 2016
|
|
OceanFirst Financial Corp.
|
|
Cape Bancorp, Inc.
|
|
December 8, 2015
|
|
Univest Corporation of Pennsylvania
|
|
Fox Chase Bancorp, Inc.
|
|
December 10, 2014
|
|
Renasant Corporation
|
|
Heritage Financial Group, Inc.
|
|
October 29, 2014
|
|
WesBanco, Inc.
|
|
ESB Financial Corporation
(1)
|
|
April 29, 2014
|
|
Southside Bancshares, Inc.
|
|
OmniAmerican Bancorp, Inc.
(2)
|
-
(1)
-
Figures
for estimated NTM EPS and estimated 2018 EPS were not available and, as a result, no Price/NTM EPS or Price/2018 EPS ratios were included in the calculations
of high, median and low.
-
(2)
-
Ratios
of estimated Price/NTM EPS were greater than 30.0x and, as a result, were considered not meaningful and were not included in the calculations of high, median
and low.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price/TBV
|
|
Price/NTM
EPS
|
|
CDP
|
|
|
High
|
|
|
2.07x
|
|
|
28.8x
|
|
|
18.3
|
%
|
|
Median
|
|
|
1.48x
|
|
|
23.2x
|
|
|
10.5
|
%
|
|
Low
|
|
|
1.23x
|
|
|
16.2x
|
|
|
4.7
|
%
|
|
Bank Mutual at $10.38
|
|
|
1.65x
|
|
|
25.6x
|
|
|
11.2
|
%
|
This
analysis produced implied per share equity reference ranges for Bank Mutual common stock consisting of TBV multiples ranging from 1.23x to 2.07x, NTM EPS multiples ranging from
16.2x to 28.8x and CDP percentages ranging from 4.7% to 18.3%, which indicated the following implied per share equity reference ranges for Bank Mutual common stock, compared to the implied per share
merger consideration:
|
|
|
|
|
|
|
|
|
|
Implied Per Share Equity Reference Range For Bank
Mutual based on:
|
|
|
|
|
|
Implied Per Share
Merger Consideration
|
|
|
TBV
|
|
NTM EPS
|
|
CDP
|
|
|
$7.72 - $13.03
|
|
$6.59 - $11.69
|
|
$7.95 - $13.01
|
|
$
|
10.38
|
|
Dividend Discount Analysis.
RBCCM performed a dividend discount analysis ("DDA") of Bank Mutual, on a standalone basis ("Bank Mutual
DDA"), by
calculating the estimated net present value of the after-tax free cash flows of Bank Mutual available for dividends from June 30, 2017 through December 31, 2021, together with excess
cash available for dividends as of June 30, 2017, based on Bank Mutual's management projections. The Bank Mutual DDA assumed a ratio of tangible common equity to tangible assets of 9.0% and a
pre-tax opportunity cost of cash of 2.0%.
RBCCM
performed the Bank Mutual DDA using discount rates ranging from 10.0% to 13.0%, based on an estimated cost of equity using the capital asset pricing model ("CAPM"), inclusive of an
equity size premium, and a terminal value at the end of the forecast period, using terminal multiples ranging from 14.0x to 18.0x estimated 2022 EPS. The terminal multiples for the Bank Mutual DDA
were selected based on a review of the historical EPS multiples for the selected companies referred to
51
Table of Contents
above.
The Bank Mutual DDA indicated the following implied per share reference ranges as compared to implied per share merger consideration:
|
|
|
|
|
|
Bank Mutual DDA Implied Per Share Equity
Reference Range
|
|
Implied Per Share Merger Consideration
|
|
|
$6.36 - $8.51
|
|
$
|
10.38
|
|
Public Company Analysis.
RBCCM reviewed certain financial and operating information and implied trading multiples for selected publicly
traded
companies as compared to the corresponding information and implied trading multiples for Associated. In choosing the selected companies, RBCCM considered publicly traded banks (excluding
thrifts and mutual form companies, as well as companies not traded on a national securities exchange) in the Midwest with assets between $10.0 billion and $50.0 billion.
In
this analysis, RBCCM compared, among other things, multiples of implied price per share of common equity to (i) TBV, (ii) NTM EPS and (iii) estimated 2018 EPS.
The list of selected companies and the related high, median and low multiples and percentages for such selected companies and for Associated are as follows:
Selected Companies
-
•
-
Wintrust Financial Corporation
-
•
-
Commerce Bancshares Inc.
-
•
-
TCF Financial Corporation
-
•
-
UMB Financial Corporation
-
•
-
MB Financial, Inc.
-
•
-
Chemical Financial Corporation
-
•
-
Old National Bancorp
-
•
-
First Midwest Bancorp, Inc.
-
•
-
Great Western Bancorp, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price/TBV
|
|
Price/NTM
EPS
|
|
Price/2018E
EPS
|
|
|
High
|
|
|
2.59x
|
|
|
19.4x
|
|
|
18.6x
|
|
|
Median
|
|
|
2.28x
|
|
|
15.8x
|
|
|
14.7x
|
|
|
Low
|
|
|
1.38x
|
|
|
12.9x
|
|
|
11.8x
|
|
|
Associated at July 19, 2017
|
|
|
1.89x
|
|
|
16.7x
|
|
|
15.4x
|
|
52
Table of Contents
The analysis produced implied per share equity reference ranges for Associated common stock consisting of TBV multiples ranging from 1.38x to 2.59x, NTM EPS
multiples ranging from 12.9x to 19.4x and estimated 2018 EPS multiples ranging from 11.8x to 18.6x, which indicated the following implied per share equity reference ranges for Associated common stock,
compared to the July 19, 2017 closing price of Associated common stock:
|
|
|
|
|
|
|
|
|
|
Implied Per Share Equity Reference Range for Associated
based on:
|
|
|
|
|
|
Associated common
stock on July 19, 2017
|
|
|
TBV
|
|
NTM EPS
|
|
2018E EPS
|
|
|
$17.95 - $33.65
|
|
$18.91 - $28.55
|
|
$18.90 - $29.80
|
|
$
|
24.60
|
|
Dividend Discount Analysis.
RBCCM performed a DDA of Associated, on a standalone basis ("Associated DDA"), by calculating the estimated
net present
value of the after-tax free cash flows of Associated available for dividends from June 30, 2017 through December 31, 2021, together with excess cash available for dividends as of
June 30, 2017, based on Wall Street research estimates, which estimates were used after discussions with Associated management and approval by Bank Mutual management. RBCCM assumed a ratio of
tangible common equity to tangible assets of 7.0% and a pre-tax opportunity cost of cash of 2.00%.
RBCCM
performed the Associated DDA using discount rates ranging from 10.0% to 13.0% based on an estimated cost of equity using CAPM, inclusive of equity size premium, and a terminal
value at the end of the forecast period, using terminal multiples ranging from 14.0x to 18.0x estimated 2022 EPS. The terminal multiples were selected based on a review of the historical EPS
multiples for the selected public companies referred to above. The Associated DDA indicated the following implied per share value references range, as compared to the July 19, 2017
closing price of Associated common stock:
|
|
|
|
|
|
Associated Implied Per Share Equity
Reference Range
|
|
Associated common stock on
July 19, 2017
|
|
|
$20.75 - $28.37
|
|
$
|
24.60
|
|
RBCCM calculated certain implied exchange ratio reference ranges for the merger.
Selected Public Companies Exchange Ratio Analysis.
Based on the per share reference ranges for Bank Mutual common stock and Associated
common stock
implied by the selected publicly traded companies analyses described above for which the same financial metrics were applied, and the corresponding assumptions underlying each such analysis, RBCCM
calculated implied exchange ratio reference ranges. In each case, the low end of each implied ratio reference range was calculated by dividing the low end of the applicable Bank Mutual common stock
implied per share reference range by the high end of the applicable Associated common stock implied per share reference range, and the high end of each implied exchange ratio reference range was
calculated by dividing the high end of the applicable Bank Mutual common stock implied per share reference range by the low end of the applicable Associated common stock implied per share reference
range. The analysis indicated the following implied reference ranges as compared to the exchange ratio in the merger:
|
|
|
|
|
|
|
|
|
|
|
Implied Reference Range
|
|
Exchange Ratio
|
|
|
Price/TBV
|
|
|
0.196x - 0.781x
|
|
|
0.422x
|
|
|
Price/NTM EPS
|
|
|
0.204x - 0.566x
|
|
|
0.422x
|
|
|
Price/2018E EPS
|
|
|
0.197x - 0.660x
|
|
|
0.422x
|
|
53
Table of Contents
Selected Transactions Exchange Ratio Analysis.
Based on the per share reference ranges for Bank Mutual common stock implied by the
selected
transactions analysis described above, for Associated common stock implied by the selected publicly traded companies analysis described above, and the corresponding assumptions underlying each such
analysis, RBCCM calculated implied exchange ratio reference ranges. In each case, the low end of each implied exchange ratio reference range was calculated by dividing the low end of the applicable
Bank Mutual common stock implied per share selected transactions reference range by the high end of the applicable Associated common stock implied per share selected publicly traded companies
reference range, and the high end of each implied exchange ratio reference range was calculated by dividing the high end of the applicable Bank Mutual common stock implied per share selected
transactions reference range by the low end of the applicable Associated common stock implied per share selected publicly traded companies reference range. The analysis indicated the following implied
reference ranges, as compared to the exchange ratio in the merger:
|
|
|
|
|
|
|
|
|
|
|
Implied Reference Range
|
|
Exchange Ratio
|
|
|
Price/TBV
|
|
|
0.229x - 0.726x
|
|
|
0.422x
|
|
|
Price/NTM EPS
|
|
|
0.231x - 0.618x
|
|
|
0.422x
|
|
Dividend Discount Analysis.
Based on the per share reference ranges for Bank Mutual common stock and Associated common stock implied by
the DDAs
described above, and the corresponding assumptions underlying each such DDA, RBCCM calculated implied exchange ratio reference ranges. RBCCM calculated such implied exchange ratio reference range as
follows: the low end of each implied exchange ratio reference range was calculated by dividing the low end of the applicable Bank Mutual common stock standalone implied per share reference range by
the high end of the applicable Associated common stock implied per share reference range, and the high end of each implied exchange ratio reference range was calculated by dividing the high end of the
applicable Bank Mutual common stock standalone implied per share reference range by the low end of the applicable Associated common stock implied per share reference range. The analysis indicated the
following implied reference range, as compared to the exchange ratio in the merger:
|
|
|
|
|
|
|
Implied Reference Range
|
|
Exchange Ratio
|
|
|
0.224x - 0.410x
|
|
|
0.422x
|
|
RBCCM also noted for the Bank Mutual board certain additional factors that were provided for informational purposes, including the following
analyses:
Trading Range and Research Target Analysis for Bank Mutual
Trading Range.
RBCCM reviewed certain historical stock price information based on closing stock price information over the one year
period ended
July 19, 2017, for Bank Mutual common stock. This review indicated the following historical stock price information for Bank Mutual common stock as compared to the implied per share merger
consideration:
|
|
|
|
|
|
|
Trading Period Prior to July 19, 2017
|
|
Stock Price
|
|
|
52 Week High
|
|
$
|
10.20
|
|
|
52 Week Low
|
|
$
|
7.31
|
|
|
Implied Per Share Merger Consideration
|
|
$
|
10.38
|
|
Analyst Target Stock Price Range.
RBCCM reviewed research reports for Bank Mutual common stock published by equity analysts. In order
to better
compare the published stock price targets with the
54
Table of Contents
implied
per share merger consideration, RBCCM discounted such stock price targets to present value (as of July 19, 2017), for a one-year discount period, applying an illustrative discount range
of 10.0% to 13.0%, which was selected taking into consideration the discount rate ranges used in the Bank Mutual DDA described above. This calculation indicated a range of stock price targets for Bank
Mutual common stock of $8.19 to $10.00 per share, as compared to the implied per share merger consideration of $10.38. The public market trading targets published by equity research analysts do not
necessarily reflect current market trading prices for Bank Mutual common stock and these estimates are subject to uncertainties, including the future financial performance of Bank Mutual and future
market conditions.
Trading Range and Research Target Analysis for Associated
Trading Range.
RBCCM reviewed certain historical stock price information based on closing stock price information over the one year
period ended
July 19, 2017, for Associated common stock. This review indicated the following historical stock price information for Associated common stock as compared to the closing price of Associated
common stock on July 19, 2017:
|
|
|
|
|
|
|
Trading Period Prior to July 19, 2017
|
|
Stock Price
|
|
|
52 Week High
|
|
$
|
26.70
|
|
|
52 Week Low
|
|
$
|
17.77
|
|
|
Closing price of Associated common stock on July 19, 2017
|
|
$
|
24.60
|
|
Analyst Target Stock Price Range.
RBCCM reviewed research reports for Associated common stock published by equity analysts. In order to
better
compare the published stock price targets with the price of Associated common stock on July 19, 2017, RBCCM discounted such stock price targets to present value (as of July 19, 2017),
for a one-year discount period, applying an illustrative discount range of 10.0% to 13.0%, which was selected taking into consideration the discount rate ranges used in the Associated DDA described
above. This calculation indicated a range of stock price targets for Associated common stock of $18.58 to $25.45 per share, as compared to the closing price of Associated common stock on
July 19, 2017 of $24.60. The public market trading targets published by equity research analysts do not necessarily reflect current market trading prices for Associated common stock and these
estimates are subject to uncertainties, including the future financial performance of Associated and future market conditions.
No single company or transaction used in the above analyses as a comparison was identical to Bank Mutual, Associated, or the merger, and an
evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involved complex considerations and judgments concerning financial and operating characteristics and
other factors that could affect the acquisition, public trading or other values of the companies, businesses or transactions analyzed.
The
preparation of a fairness opinion is a complex process that involves the application of subjective business judgment in determining the most appropriate and relevant methods of
financial analysis and the application of those methods to particular circumstances. Several analytical methodologies were used by RBCCM, and no one method of analysis should be regarded as critical
to the overall conclusion reached. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques.
The overall conclusions of RBCCM were based on all the analyses and factors presented herein taken as a whole and also on application of RBCCM's own experience and judgment. Such conclusions may
involve significant elements of subjective judgment and qualitative analysis. RBCCM therefore believes that its analyses must be considered as a whole and that selecting portions of the analyses and
the factors considered, without considering all factors and analyses, could create an incomplete or misleading view of the processes underlying its opinion.
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Bank
Mutual selected RBCCM to render to the Bank Mutual board its opinion based on its qualifications, expertise, reputation and knowledge of Bank Mutual's business and affairs and its
experience with community bank holding companies and the industry in which Bank Mutual operates. RBCCM has advised on numerous acquisitions of community bank holding companies. RBCCM is an
internationally recognized investment banking firm and is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, corporate restructurings,
underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. In the ordinary course of business, RBCCM and its
affiliates may act as a market maker and broker in the publicly traded securities of Bank Mutual and/or Associated and receive customary compensation, and may also actively trade securities of Bank
Mutual and/or Associated for its own account and the accounts of its customers, and, accordingly, RBCCM and its affiliates may hold a long or short position in such securities. RBCCM has not provided
any investment banking or financial advisory services to Bank Mutual in the past two calendar years for which it received any fees or other compensation. RBCCM and its affiliates have provided
investment banking services to Associated in the past two years, including executing certain securities market transactions for Associated and providing certain cash management services, for which it
received aggregate compensation of approximately $500,000. In light of RBCCM's relationship with Associated, RBCCM anticipates that it may be selected by Associated to provide investment banking and
financial advisory and/or financing services that may be required by Associated in the future, regardless of whether the merger is successfully completed.
Under
its engagement agreement with Bank Mutual, RBCCM became entitled to a fee of $1,000,000 upon the delivery of its written opinion in connection with the merger, which fee is not
contingent upon the successful completion of the merger or acceptance of the written opinion by the Bank Mutual board. In addition, for RBCCM's services as financial advisor to Bank Mutual in
connection with the merger if the merger is successfully completed, RBCCM will receive an additional fee of at least $5,000,000 and no greater than $5,500,000, against which the fee RBCCM received for
delivery of its opinion will be credited. In addition, if, in connection with the merger not being completed, Bank Mutual receives a termination fee, RBCCM will be entitled to 20.0% of that net fee in
cash, when it is received by Bank Mutual. Bank Mutual has also agreed to indemnify RBCCM for certain liabilities that
may arise out of its engagement. The terms of RBCCM's engagement letter were negotiated at arm's-length between Bank Mutual and RBCCM, and the Bank Mutual board was aware of this fee arrangement at
the time it reviewed and approved the merger agreement.
Certain Associated and Bank Mutual Unaudited Prospective Financial Information
Associated and Bank Mutual do not, as a matter of course, publicly disclose forecasts or internal projections as to future performance,
revenues, earnings, financial condition or other results due to, among other reasons, the inherent uncertainty of the underlying assumptions and estimates and the inherent difficulty of accurately
predicting financial performance for future periods. Associated and Bank Mutual have included in this proxy statement/prospectus certain limited unaudited prospective financial information for
Associated and Bank Mutual, which we refer to as the "prospective information," to give Bank Mutual shareholders access to certain information provided to the Associated board and the Bank Mutual
board, respectively, and to Bank Mutual's financial advisor in connection with the merger.
The
prospective information provided was prepared in good faith on a reasonable basis based on the best available information at the time, but was not prepared for the purpose of public
disclosure. As a result, the inclusion of the prospective information in this proxy statement/prospectus should not be regarded as an indication that Associated, Bank Mutual or any other recipient of
the prospective information considered, or now considers, it to be necessarily predictive of actual future results, or that it should be construed as financial guidance, and it should not be relied on
as such, and readers of this
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proxy
statement/prospectus are cautioned to not place under reliance on prospective financial information. This prospective information was prepared solely for internal use and is subjective in many
respects. While presented with numeric specificity, the prospective information reflects numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and
financial conditions and matters specific to Associated's business and Bank Mutual's business, all of which are difficult to predict and many of which are beyond Associated's and Bank Mutual's
control. In addition, since the prospective information covers multiple years, such prospective information by its nature becomes less predictive with each successive year.
The
prospective information also reflects assumptions as to certain business decisions that are subject to change. The prospective information reflects subjective judgment in many
respects and thus is
susceptible to multiple interpretations and periodic revisions based on actual experience and business developments.
As
such, the prospective information constitutes forward-looking information and is subject to risks and uncertainties that could cause actual results to differ materially from the
results forecasted in such prospective information, including, but not limited to, Associated's performance, Bank Mutual's performance, industry performance, general business and economic conditions,
customer requirements, competition, adverse changes in applicable laws, regulations or rules, and the various risks set forth in Associated's and Bank Mutual's respective reports filed with the SEC.
For other factors that could cause the actual results to differ, please see the "Risk Factors" section beginning on page
[
·
] and "Cautionary Statement Regarding Forward-Looking Statements" beginning on
page [
·
] in this proxy statement/prospectus.
The
prospective information was not prepared for the purpose of public disclosure, nor was it prepared with a view toward compliance with GAAP, with published guidelines of the SEC or
with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither KPMG LLP nor
Deloitte & Touche LLP, which serve as Associated's and Bank Mutual's respective current independent registered public accounting firms, or any other independent accountants, have
compiled, examined or performed any procedures with respect to prospective information included below, nor expressed any opinion or any other form of assurance on such information or its
achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
Furthermore,
the prospective information does not take into account any circumstances or events occurring after the date they were prepared, including the transactions contemplated by
the merger agreement. Further, the prospective information does not take into account the effect of any possible failure of the merger to occur. The prospective information does not take into account
the possible financial and other effects on Associated or Bank Mutual of the merger and does not attempt to predict or suggest future results of the combined company. The prospective information does
not give effect to the merger, including the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with consummating the merger, the potential
synergies that may be achieved by the combined company as a result of the merger, the effect on Associated or Bank Mutual of any business or strategic decision or action that has been or will be taken
as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions which would likely have been taken if the merger agreement had not been
executed, but which were instead altered, accelerated, postponed or not taken in anticipation of the merger. None of Associated, Bank Mutual, Bank Mutual's financial advisor nor any of their
affiliates intends to, and each of them disclaims any obligation to, update, revise or correct the prospective information if it is or becomes inaccurate (even in the short term). The inclusion of the
prospective information herein should not be deemed an admission or representation by Associated or Bank Mutual that it is viewed by Associated or Bank Mutual as material information of Associated or
Bank Mutual, respectively, particularly in light of the inherent risks and uncertainties associated with such forecasts. The
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prospective
information included below is not being included to influence your decision whether to vote in favor of the merger proposal or any other proposal to be considered at the special meetings
but is being provided solely because it was made available to and considered by Associated's and Bank Mutual's respective boards of directors and Bank Mutual's financial advisor in connection with the
merger.
In
light of the foregoing, and considering that the special meeting will be held several months after the prospective information was prepared, as well as the uncertainties inherent in
any forecasted information, Bank Mutual shareholders are cautioned not to place unwarranted reliance on such information, and Bank Mutual shareholders are urged to review Associated's most recent SEC
filings for a description of Associated's reported financial results and the financial statements of Associated included in this proxy statement/prospectus and Bank Mutual's most recent SEC filings
for a description of Bank Mutual's reported financial results and the financial statements of Bank Mutual included in this proxy statement/prospectus. See "Where You Can Find More Information"
beginning on page [
·
].
Certain Projections Regarding Bank Mutual.
Bank Mutual provided RBCCM with an estimated EPS (prior to anticipated cost savings) of
$0.21 for the six
months ending December 31, 2017, $0.42 for the year ending December 31, 2018 and $0.51 for year ending December 31, 2019. RBCCM then used an assumed annual EPS growth rate of 5%
for calendar years 2020 through 2022 at the direction of Bank Mutual management. In addition, Bank Mutual management provided RBCCM with estimates of total assets of $2.7 billion at
June 30, 2017, $2.8 billion at December 31, 2017, $2.9 billion at December 31, 2018 and $3.1 billion at December 31, 2019. RBCCM then estimated the
amount of Bank Mutual's total assets as of December 31, 2020 through 2022 using an assumed year-over-year annual growth rate of 5% at the direction of Bank Mutual management.
Certain Projections Regarding Associated.
Associated provided Bank Mutual and RBCCM, and Associated and Bank Mutual's management
discussed with each
other, (1) an estimated EPS of $0.74 for Associated for the six months ending December 31, 2017 and $1.60 for fiscal year 2018, which reflect median consensus Wall Street research
estimates published by FactSet Research Systems for such periods, and (2) an assumed annual EPS growth rate of 7% for calendar years 2019 through 2022, as per guidance from Associated
management and approved for use by Bank Mutual management. In addition, Associated management provided Bank Mutual and RBCCM with estimates of total assets of $29.8 billion at June 30,
2017, $30.5 billion at December 31, 2017, and $32.0 billion at December 31, 2018, which are within the range of Wall Street research estimates published by FactSet Research
Systems for such dates. RBCCM then estimated the amount of Associated's total assets as of December 31, 2019 through 2022 using an assumed year-over-year annual growth rate of 5%, as per
guidance from Associated management and approved for use by Bank Mutual management.
Closing and Effective Time
Unless the parties otherwise mutually agree, the closing of the merger will take place at 10:00 a.m. (central time) on the date that is
five business days after satisfaction or waiver of the latest to occur conditions set forth in the merger agreement. See "The Merger Agreement—Conditions to Completion of the Merger" below
for a more complete description of the conditions that must be satisfied prior to closing. The date on which the closing occurs sometimes is referred to in this proxy statement/prospectus as the
closing date.
On
the closing date, the surviving corporation will effect the merger by filing articles of merger with the Wisconsin Department of Financial Institutions, which we refer to as "WDFI."
The merger will become effective as of the date and time specified in such articles of merger or, if mutually agreed upon by the parties, at a later time specified in such articles of merger. The time
at which the merger becomes effective is sometimes referred to in this proxy statement/prospectus as the effective time.
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Regulatory Approvals
Completion of the merger and the bank merger are subject to the receipt of all approvals required to complete the transactions contemplated by
the merger agreement, including from the Federal Reserve Board and the OCC. Notifications and/or applications requesting approval may also be submitted to various other federal and state regulatory
authorities and self-regulatory organizations. Associated and Bank Mutual have agreed to use their reasonable best efforts to obtain all requisite regulatory approvals. Associated, Bank Mutual and/or
their respective subsidiaries have filed, or are in the process of filing, applications and notifications to obtain these regulatory approvals.
Federal Reserve Board.
Completion of the merger is subject, among other things, to approval by the Federal Reserve Board pursuant to
Section 4
of the BHC Act. In considering the approval of an
application under Section 4 of the BHC Act, the Federal Reserve Board considers whether the transaction "can reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests,
unsound banking practices, or risk to the stability of the United States banking or financial system." In evaluating these factors, the Federal Reserve Board reviews: (i) the effect of the
proposal on competition in the relevant markets; (ii) the financial resources of the companies involved, including pro forma capital ratios of the combined company (both in terms of absolute
capital ratios and capital ratios relative to peer groups determined by the regulators); (iii) the managerial resources of the companies involved and the combined organization (including their
management expertise, operations, internal controls, risk management systems and supervisory records of compliance with applicable banking and anti-money laundering laws), (iv) the risk to the
stability of the United States banking or financial system; and (v) the transaction's expected benefits to the public.
The
Federal Reserve Board also reviews the records of performance of the relevant insured depository institutions under the Community Reinvestment Act of 1977, which we refer to as the
"CRA," and considers the concentration of deposits on a nationwide basis. Furthermore, the BHC Act and Federal Reserve Board regulations require published notice of, and the opportunity for public
comment on, the applications to the Federal Reserve Board, and authorize the Federal Reserve Board to hold a public hearing or meeting if the Federal Reserve Board determines that a hearing or meeting
would be appropriate. The public comment period will be at least 30 days. The Federal Reserve Board takes into account the views of third party commenters, particularly on the subject of the
merging parties' service to their communities, and any hearing, meeting or comments provided by third parties could prolong the period during which the application is under review by the Federal
Reserve Board.
Transactions
approved by the Federal Reserve Board generally may not be completed until 30 days after the approval of the Federal Reserve Board is received, during which time the
Department of Justice, which we refer to as the "DOJ," may challenge the transaction on antitrust grounds. With the approval of the Federal Reserve Board and the concurrence of the DOJ, the waiting
period may be reduced to no less than 15 days. The commencement of an antitrust action would stay the effectiveness of such an approval unless a court specifically ordered otherwise. In
reviewing the merger, the DOJ could analyze the merger's effect on competition differently than the Federal Reserve Board, and thus it is possible that the DOJ could reach a different
conclusion than the Federal Reserve Board does regarding the merger's effects on competition. A determination by the DOJ not to object to the merger may not prevent the filing of antitrust actions by
private persons or state attorneys general.
OCC.
The bank merger must be approved by the OCC under the Bank Merger Act. An application for approval of the bank merger will be filed
with the OCC
as soon as is practicable and will be subject to a comment period of at least 30 days. In evaluating an application filed under the Bank Merger Act, the OCC generally considers: (i) the
competitive impact of the transaction, (ii) financial and managerial resources of the banks party to the bank merger or mergers, (iii) the
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convenience
and needs of the community to be served and the record of the banks under the Community Reinvestment Act, (iv) the banks' effectiveness in combating money-laundering activities and
(v) the extent to which the bank merger or mergers would result in greater or more concentrated risks to the stability of the United States banking or financial system. In connection with its
review, the OCC will provide an opportunity for public comment on the application for the bank merger, and is authorized to hold a public meeting or other proceeding if it determines that would be
appropriate.
Additional Regulatory Approvals and Notices.
Associated will either (i) submit to the DOJ and the Federal Trade Commission, which
we refer to
as the "FTC," a copy of the applications that it submits to the Federal Reserve Board if it meets the criteria for an exemption from any approval requirement under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, which we refer to as the "HSR Act," or (ii) file with the DOJ and FTC, unless exempt, the Notification and Report Form, and any other supplemental
information required in connection with the termination or expiration of applicable waiting periods under the HSR Act. There are no approvals or notices of other federal or state regulatory
authorities required for the proposed transactions.
There
can be no assurances that the regulatory approvals discussed above will be received on a timely basis, or as to the ability of Associated and Bank Mutual to obtain the approvals on
satisfactory terms or as to the absence of litigation challenging such approvals. In recent similar transactions, the Federal Reserve Board and OCC have taken a longer time to render decisions on
applications than the typical time period for approval set forth in their respective regulations.
Accounting Treatment
Associated prepares its financial statements in accordance with GAAP. The merger will be accounted for using the acquisition method of
accounting. Associated will be treated as the acquirer for accounting purposes.
NYSE Market Listing
The shares of Associated common stock to be issued in the merger will be listed for trading on the NYSE.
Delisting and Deregistration of Bank Mutual Common Stock
If the merger is completed, Bank Mutual common stock will be delisted from the NASDAQ and deregistered under the Exchange Act, and Bank Mutual
will no longer be required to file periodic reports with the SEC with respect to Bank Mutual common stock.
Dividends/Distributions
From and after the date of the merger agreement, July 20, 2017, Bank Mutual may not, and may not permit its subsidiaries to, without the
prior written consent of Associated, make any dividend payments or distributions other than (i) regular quarterly cash dividends by Bank Mutual at a rate not in excess of $0.055 per share of
Bank Mutual common stock or (ii) dividends paid by any subsidiary to Bank Mutual or any of Bank Mutual's wholly owned subsidiaries.
The
merger agreement provides that Associated and Bank Mutual must coordinate with one another with respect to the declaration of dividends in respect of Associated common stock and Bank
Mutual common stock, and the record dates and payment dates with respect thereto, with the intention that the holders of Bank Mutual common stock should not receive two dividends, or fail to receive a
dividend, in any quarter with respect to their shares of Bank Mutual common stock and any shares of Associated common stock they receive in exchange therefor in the merger.
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No
dividends or other distributions declared or made with respect to Associated common stock will be paid to the holder of any unsurrendered certificate that evidenced ownership of
shares of Bank Mutual common stock until such holder properly surrenders such shares. See the section entitled "The Merger Agreement—Exchange and Payment Procedures" beginning on page
[
·
] of this proxy statement/prospectus.
Appraisal Rights
Dissenters' or appraisal rights are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary
transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered
to shareholders in connection with the extraordinary transaction. Appraisal or dissenters rights are not available in all transactions.
Section 180.1302(4)
of the WBCL provides that no appraisal rights are available for holders of the shares of any class or series of shares if, on the record date fixed to
determine the shareholders entitled to notice of a shareholders meeting at which shareholders are to vote on the proposed on agreement and plan of merger, the shares are either registered on a
national securities exchange or quoted on the National Association of Securities Dealers, Inc. automated quotations system. Bank Mutual's shares are listed on the NASDAQ. Consequently, Bank
Mutual shareholders do not have appraisal rights in connection with the merger.
Litigation Related to the Merger
On July 28, 2017, two substantially identical purported class action complaints, each by various individual plaintiffs, were filed with
the Wisconsin Circuit Court for Milwaukee County on behalf of the respective named plaintiffs and other Bank Mutual shareholders against Bank Mutual, the members of the Bank Mutual board, and
Associated in connection with the proposed merger. The lawsuits are captioned Schumel et al v. Bank Mutual Corporation et al., case no. 2017CV006201, and Paquin et al. v.
Bank Mutual Corporation et al., case no. 2017CV006202. Both complaints allege state law breach of fiduciary duty claims against the Bank Mutual board for, among other things, seeking to sell
Bank Mutual through an allegedly defective process, for an allegedly unfair price and on allegedly unfair terms. The lawsuits seeks, among other things, to enjoin the consummation of the transaction
and damages. The complaints allege that Associated aided and abetted the directors' alleged breaches of fiduciary duty. Bank Mutual, its directors and Associated believe the allegations are without
merit.
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Explanatory Note Regarding the Merger Agreement
The merger agreement and this summary of terms are included to provide you with information regarding the terms of the merger agreement. Factual
disclosures about Bank Mutual and Associated contained in this proxy statement/prospectus or in the public reports of Bank Mutual and Associated filed with the SEC may supplement, update or modify the
factual disclosures about Bank Mutual and Associated contained in the merger agreement. The merger agreement contains representations and warranties by Bank Mutual, on the one hand, and by Associated,
on the other hand, made solely for the benefit of the other. The representations, warranties and covenants made in the merger agreement by Bank Mutual and Associated were qualified and subject to
important limitations agreed to by Bank Mutual and Associated in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties
contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing
circumstances in which a party to the merger agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in
circumstance or otherwise, and allocating risk between the parties to the merger agreement, rather than establishing matters as facts. The representations and warranties also may be subject to a
contractual standard of materiality different from that generally applicable to shareholders and reports and documents filed with the SEC, and some were qualified by the matters contained in the
confidential disclosure schedules that Bank Mutual and Associated each delivered in connection with the merger agreement and certain documents filed with the SEC. Moreover, information concerning the
subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement.
Accordingly, the representations and warranties in the merger agreement should not be relied on by any persons as characterizations of the actual state of facts about Bank Mutual or Associated at the
time they were made or otherwise.
Effect of the Merger; Effective Time; Organizational Documents of the Surviving Corporation
Effect of the Merger
Pursuant to the merger agreement, Bank Mutual will merge with and into Associated with Associated surviving the merger as the surviving
corporation. We sometimes refer to
Associated following the merger as the "surviving corporation." As a result of the merger, there will no longer be any publicly held shares of Bank Mutual common stock. Bank Mutual shareholders will
participate in the surviving corporation's future earnings and potential growth only through their ownership of Associated common stock. All of the other incidents of direct ownership of Bank Mutual
common stock, such as the right to vote on certain corporate decisions, to elect directors and to receive dividends and distributions from Bank Mutual, will be extinguished upon completion of the
merger but will become analogous rights in Associated. Although both Associated and Bank Mutual are Wisconsin
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corporations,
your rights under the Associated charter and Associated bylaws will differ in some respects from your rights under the Bank Mutual charter and Bank Mutual bylaws. For more detailed
information regarding a comparison of your rights as a shareholder of Bank Mutual and Associated, see the section entitled "Comparison of Shareholders' Rights" beginning on page
[
·
] of this proxy statement/prospectus.
All
of the properties, rights, privileges, powers and franchises of Bank Mutual shall vest in the surviving corporation, and all debts, duties and liabilities of Bank Mutual shall become
the debts, liabilities and duties of the surviving corporation.
Effective Time
On the closing date, the surviving corporation will effect the merger by filing articles of merger with the WDFI. The merger will become
effective as of the date and time of filing the articles of merger or, if mutually agreed upon by the parties, at a later time specified in such articles of merger, which we refer to as the "effective
time."
Organizational Documents of the Surviving Corporation
The articles of incorporation and bylaws of Associated that are in effect immediately prior to the effective time will be the articles of
incorporation and bylaws of the surviving
corporation immediately after the consummation of the merger. The surviving corporation will continue to exist under the name "Associated Banc-Corp."
Board of Directors
The directors of Associated holding office immediately prior to the effective time will serve as the directors of the surviving corporation from
and after the effective time of the merger.
Notwithstanding
the above, on or prior to the effective time, Associated will increase the board sizes of each of the surviving corporation and Associated Bank, N.A. at the effective
time by one and appoint Michael T. Crowley, Jr., Bank Mutual's current chairman and former chief executive officer to fill such new positions at the effective time. Assuming satisfactory performance,
Associated will nominate Mr. Crowley for election at the next succeeding annual meeting of Associated shareholders.
Officers
The officers of Associated holding office immediately prior to the effective time will serve as the officers of the surviving corporation from
and after the effective time of the merger.
Merger Consideration
Upon completion of the merger, each share of Bank Mutual common stock that is issued and outstanding immediately prior to the effective time of
the merger, except for shares of Bank Mutual common stock owned directly or indirectly by Associated (in each case other than shares of Bank Mutual common stock held in a fiduciary capacity or in
connection with debts previously contracted), will be converted into the right to receive 0.422 shares of Associated common stock, with cash paid in lieu of fractional shares, which we refer to as the
"merger consideration." Shares of Bank Mutual common stock held in Bank Mutual's treasury will be canceled and no merger consideration will be paid in exchange therefor.
If,
after the date of the merger agreement and prior to the effective time, the outstanding shares of Associated common stock change in number or class as a result of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange of shares, then the merger consideration
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will
be adjusted to provide the holders of Bank Mutual common stock the same economic effect as contemplated by the merger agreement prior to such event.
Fractional Shares
Associated will not issue any fractional shares of Associated common stock in the merger. Instead, a Bank Mutual shareholder who otherwise would
have received a fraction of a share of Associated common stock will receive an amount in cash (rounded to the nearest cent) determined by multiplying (i) the volume weighted average sale price
of Associated common stock on the NYSE over the five trading days ending on the day preceding the closing date by (ii) the fraction of a share of Associated common stock that such holder would
otherwise have been entitled to receive.
Exchange and Payment Procedures
At or prior to the closing, Associated will deposit, or cause to be deposited, with Wells Fargo Shareowner Services, or another bank or trust
company designated by Associated and reasonably acceptable to Bank Mutual, for the benefit of the holders of shares of Bank Mutual common stock, sufficient cash and Associated common stock to be
exchanged in accordance with the merger agreement, including the merger consideration, which amounts we refer to as the "conversion fund." Within five business days after the closing date, Associated
will cause the exchange agent to mail to each holder of record of one or more certificates representing shares of Bank Mutual common stock, which we refer to as "certificates," a letter of transmittal
and other customary transmittal materials for use in surrendering the applicable certificates in exchange for the merger consideration. No interest will be paid or accrue on any merger consideration.
Distributions with Respect to Unsurrendered Shares
No dividends or other distributions declared or made with respect to Associated common stock will be paid to the holder of any unsurrendered
certificate that evidenced ownership of shares of Bank Mutual common stock until such holder properly surrenders such certificates. Promptly after such surrender, the holder will be entitled to
receive the merger consideration, the fractional share cash amount to which such holder is entitled and any dividends or other distributions that have been payable or become payable with respect to
the holder's shares of Associated common stock. No interest will be payable on the foregoing.
Transfers Following the Effective Time
After the effective date, there will be no transfer of Bank Mutual common stock (or rights related thereto) on the stock transfer books of Bank
Mutual.
Termination of Exchange Fund
Any portion of the conversion fund that remains unclaimed by the shareholders of Bank Mutual for 12 months following the effective time
will be paid to the surviving corporation. Any former holders of Bank Mutual common stock who have not properly surrendered their shares may thereafter only look to the surviving corporation, or its
successors in interest, for the merger consideration payable in respect of such shares of Bank Mutual common stock, any cash payable in lieu of any fractional shares of Associated and any dividends or
distributions such holder has the right to receive pursuant to the merger agreement. None of the surviving corporation, the exchange agent or any other persons will be liable to any holder of shares
of Bank Mutual common stock for any shares of Associated common stock (or any related dividends or distributions) or cash from the conversion fund that is delivered in good faith to any public
official pursuant to any applicable abandoned property, escheat or similar laws.
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Lost, Stolen or Destroyed Stock Certificates
If any certificate representing shares of Bank Mutual common stock is lost, stolen or destroyed, upon the making of an affidavit of such fact by
the person claiming the certificate to be lost, stolen or destroyed and, if required by the surviving corporation, the posting by such person of a bond in such amount as the exchange agent may
determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such certificate, the exchange agent will issue in exchange for the lost, stolen or
destroyed certificate the applicable merger consideration and cash in lieu of fractional shares in respect of the shares of Bank Mutual common stock represented by that certificate pursuant to the
merger agreement.
Withholding Rights
Associated, the exchange agent and the surviving corporation will be entitled to deduct and withhold, or cause to be deducted and withheld, from
any amounts payable pursuant to the merger agreement such amounts as are required to be deducted or withheld under applicable tax laws. To the extent that amounts are so deducted or withheld, such
deducted or withheld amounts will be treated for purposes of the merger agreement as having been paid to the person in respect of which such deduction or withholding was made.
Treatment of Bank Mutual Equity Awards
Under the merger agreement, awards outstanding under Bank Mutual's equity incentive plans as of the effective time will be treated as follows:
Treatment of Stock Options.
At the effective time, each option granted by Bank Mutual to purchase shares of Bank Mutual common stock
will be
automatically converted into an option to purchase Associated common stock, on the same terms and conditions as were applicable to the Bank Mutual option prior to the effective time (including by
giving effect to any accelerated vesting as a result of the merger), the number of shares of Associated common stock (rounded down to the nearest whole number of shares of Associated common stock)
equal to the number of shares of Bank Mutual common stock subject to such Bank Mutual option immediately prior to the effective time multiplied by 0.422, at an exercise price per share of Associated
common stock (rounded up to the nearest whole cent) equal to the exercise price per share of Bank Mutual common stock subject to such Bank Mutual option immediately prior to the effective time divided
by 0.422.
Treatment of Restricted Stock Awards.
At the effective time, each Bank Mutual restricted stock award that is outstanding immediately
prior to the
effective time and vests upon the effective time in accordance with its terms will be converted automatically into the right to receive the merger consideration in respect of each share of Bank Mutual
common stock subject to such Bank Mutual restricted stock award immediately prior to the effective time, less applicable tax withholdings.
Representations and Warranties
The merger agreement contains representations and warranties made by Bank Mutual and Associated. These include, among other things,
representations relating to:
-
•
-
corporate organization, power and existence;
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•
-
authority to enter into the merger and the binding nature of the merger agreement;
-
•
-
capitalization;
-
•
-
no breach of organizational documents, law or other agreements as a result of the merger;
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•
-
third party consents and approvals;
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-
•
-
filing of necessary reports with regulatory authorities;
-
•
-
brokers/finder fees;
-
•
-
compliance with SEC filing requirements;
-
•
-
conformity with GAAP and SEC requirements of financial statements filed with the SEC;
-
•
-
internal controls over financial reporting and disclosure controls and procedures;
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•
-
operation in the ordinary course of business and absence of material adverse effects since January 1, 2017;
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•
-
title to real property, condition, ownership and sufficiency of assets;
-
•
-
involvement in litigation and orders issued by governmental authorities;
-
•
-
certain tax matters;
-
•
-
certain regulatory matters;
-
•
-
governmental licenses, permits and reports;
-
•
-
insider transactions; and
-
•
-
compliance with applicable laws.
Bank
Mutual makes additional representations and warranties to Associated in the merger agreement relating to, among other things:
-
•
-
material contracts;
-
•
-
intellectual property;
-
•
-
certain matters related to investment securities;
-
•
-
certain employee benefit matters, including matters relating to employee benefit plans;
-
•
-
labor relations and employment matters;
-
•
-
certain environmental matters;
-
•
-
insurance coverage;
-
•
-
Bank Mutual's loan portfolio;
-
•
-
inapplicability of state takeover statutes to the transactions contemplated by the merger agreement; and
-
•
-
the receipt of an opinion from Bank Mutual's financial advisor regarding the fairness, from a financial point of view, of the exchange ratio
for the consideration to be paid to holders of Bank Mutual common stock in the merger.
Some
of the representations and warranties contained in the merger agreement are qualified by as to "materiality" or by a "material adverse effect" standard (that is, they will not be
deemed to be untrue or incorrect unless their failure to be true or correct is material or would result in a material adverse effect on the company making such representation or warranty). In
addition, certain of the representations and warranties in the merger agreement are subject to knowledge qualifications, which means that those representations and warranties would not be deemed
untrue, inaccurate or incorrect as a result of matters of which certain officers of the party making the representation did not have actual knowledge.
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For
purposes of the merger agreement, a "material adverse effect" with respect to Associated, Bank Mutual or the surviving corporation, as the case may be, means a material adverse
effect on (i) the businesses, operations, financial condition or results of operations of such party and its subsidiaries taken as a whole or (ii) the ability of such party to perform
its material obligations under the merger agreement or any other transaction documents.
However,
in the case of clause (i) above, a material adverse effect will not include the impact of:
-
•
-
a change after July 20, 2017 in or the enactment of any federal, state, foreign and local laws, statutes, codes, rules, regulations,
ordinances, judgments, orders, decrees and the like of any governmental entity, including common law or any change in the interpretation thereof;
-
•
-
any change or event after July 20, 2017 relating to the general economy of any nation or region in which the Party operates;
-
•
-
any change or event after July 20, 2017 relating to the financial institution industry generally;
-
•
-
any action specifically required by the merger agreement or with the prior written consent of Associated;
-
•
-
the identity of Associated or Associated's plans for the customers, suppliers, employees, businesses, operations or assets of Bank Mutual or
any of its subsidiaries; or
-
•
-
the announcement of the transactions contemplated by the merger agreement.
except,
in the case of the first, second and third bullets above, to the extent that the effects of such change or event are disproportionately adverse to the businesses, operations, financial
condition or results of operations of such party and its subsidiaries, taken as a whole, as compared to other companies in the industry, and in the geographical area, in which such party and its
subsidiaries operates.
Conduct of Businesses of Bank Mutual and Associated Prior to Completion of the Merger
Under the merger agreement, Bank Mutual has agreed to certain restrictions on its activities and the activities of its subsidiaries during the
period from the date of the merger agreement to the closing date. In general, Bank Mutual is required to, and to cause its subsidiaries to, conduct their business and operations in the ordinary course
business consistent with past practice, to use commercially reasonable efforts, consistent with sound business practice, to keep in full force and effect its existence and all material rights relating
or pertaining to their business and to maintain their assets in such general state of repair as is reasonably necessary for the conduct of their business consistent with then present needs and past
practices.
The
following is a summary of the more significant restrictions imposed upon Bank Mutual, subject to the exceptions set forth in the merger agreement. Bank Mutual will not, and will
cause its subsidiaries not to, without Associated's prior written consent (such consent not to be unreasonably withheld):
-
•
-
knowingly take any action that is intended to or would reasonably be likely to adversely affect or materially delay the ability of the parties
to obtain any necessary approvals of any governmental entity or the requisite Bank Mutual shareholder approval required for the transactions contemplated by the merger agreement or the agreement
governing the bank merger or to perform its covenants and agreements thereunder or to consummate the transactions contemplated thereby; or
-
•
-
in each case, other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money (other
than indebtedness of Bank Mutual or any of its wholly owned subsidiaries to Bank Mutual or any of its subsidiaries), or assume, guarantee,
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closing
agreement with respect to a material amount of taxes, or settle any material tax claim, audit, assessment or dispute or surrender any right to claim a refund of a material amount of taxes;
-
•
-
make an application for the opening, relocation or closing of any, or open, relocate or close any, branch office or other significant office or
operations facility of it or its subsidiaries or make application for the closing of or close any branch, other than pursuant to agreements entered into prior July 20, 2017 and disclosed to
Associated as of July 20, 2017, or purchase any new real property (other than other real estate owned properties in the ordinary course of business consistent with past practice) in an amount
in excess of $750,000 for any individual property or enter into, amend or renew any material lease with respect to real property requiring aggregate payments under any individual lease in excess of
$250,000 annually; or
-
•
-
agree to take, make any commitments to take, or adopt any resolutions of the board or similar governing body authorizing of any of the actions
described above.
Associated
has also agreed to certain restrictions on its activities and the activities of its subsidiaries during the period from the date of the merger agreement to the closing date.
In general, Associated will, and will cause its subsidiaries to, use commercially reasonable efforts, consistent with sound business practice, to keep in full force and effect its existence and all
material rights, franchises, proprietary rights and contractual rights relating or pertaining to their business. Subject to the
exceptions set forth in the merger agreement, Associated will not, and will cause its subsidiaries not to, without Bank Mutual's prior written consent:
-
•
-
knowingly take any action that is intended to or would reasonably be likely to adversely affect or materially delay the ability of the parties
to obtain any necessary approvals of any governmental entity or the requisite Bank Mutual shareholder approval required for the transactions contemplated by the merger agreement or the agreement
governing the bank merger or to perform its covenants and agreements thereunder or to consummate the transactions contemplated thereby; and
-
•
-
amend its organizational documents in a manner that would materially and adversely affect the holders of Bank Mutual common stock relative to
other holders of Associated common stock.
Regulatory Matters
Associated and Bank Mutual have agreed to cooperate with each other and use their reasonable best efforts to as promptly as possible prepare,
file, effect and obtain the requisite approvals of the Federal Reserve Board and the OCC under the applicable law, and the registration of the Associated common stock pursuant to the Form S-4
of which this proxy statement/prospectus forms a part, and to comply with such regulatory approvals. Each of Associated and Bank Mutual has the right review in advance, subject to applicable
law relating to the exchange of information and certain other limitations, all substantive written information submitted to any regulatory authority in connection with such regulatory approvals.
Associated and Bank Mutual have agreed to consult with each other with respect to obtaining all permits, consents, approvals and authorizations of the aforementioned regulatory authorities necessary
or advisable to consummate the transactions contemplated by the merger agreement.
Bank Mutual Shareholder Meeting; Withdrawal of Recommendation
Pursuant to the merger agreement, Bank Mutual agreed to take all action necessary to convene a meeting of its shareholders, to be held as soon
as reasonably practicable after the Form S-4 of which this proxy statement/prospectus forms a part is declared effective, for the purpose of obtaining the vote of Bank Mutual
shareholders required to approve the merger. Bank Mutual and the Bank Mutual board must use its reasonable best efforts to obtain from Bank Mutual shareholders such vote, including by recommending
that Bank Mutual shareholders approve the merger agreement and the transactions contemplated thereby, and Bank Mutual and the Bank Mutual board may not withdraw, qualify or adversely modify (or
publicly propose or resolve to do so) such recommendation by the Bank Mutual board.
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Notwithstanding the restrictions described above, prior to the time that the approval of the merger by Bank Mutual shareholders is obtained, the Bank Mutual board
may withdraw, qualify or adversely modify its recommendation if (i) the Bank Mutual board determines in good faith, after consultation with its financial advisor and outside counsel, that
(a) an alternative acquisition proposal constitutes a superior proposal or a change or effect has occurred following the date of the merger agreement and (b) in each case it is
reasonably likely that to continue to recommend the merger agreement to shareholders in light of such alternative acquisition proposal or change or effect would result in a violation of its fiduciary
duties under the WCBL; (ii) the Bank Mutual board provides three business days' prior written notice to Associated of its intention to take such action and a reasonable description of the event
or circumstances giving rise to its determination to take such action; and (iii) at the end of such period, the Bank Mutual board takes into account any amendment or modification to the merger
agreement proposed by Associated and again determines in good faith, after consultation with its financial advisor and outside counsel, that it would nevertheless reasonably likely result in a
violation of its fiduciary duties under the WBCL to continue to recommend the merger agreement in light of such alternative acquisition proposal or change or effect.
Notwithstanding
the forgoing, unless the merger agreement has been terminated in accordance with its terms, Bank Mutual must nevertheless convene a meeting of its shareholders and submit
the merger
agreement to Bank Mutual shareholders for approval at such meeting, for the purpose of voting on the adoption of the merger agreement and the transactions contemplated thereby.
See
also "—Termination of the Merger Agreement" and "—Termination Fee" beginning on
page [
·
] of this proxy statement/prospectus.
No Solicitation
Bank Mutual has agreed to immediately cease any discussions and cause to be terminated any and any activities, discussions or negotiations with
any third party with respect to any acquisition proposal and to use its reasonable best efforts to enforce any confidentiality or similar agreement relating to an acquisition proposal. Bank Mutual
also agreed to inform Associated within two business days following receipt of any acquisition proposal and the substance thereof, and will keep Associated reasonably apprised of any related
developments, discussions and negotiations on a reasonably current basis.
Notwithstanding
these restrictions, the merger agreement provides that in the event Bank Mutual receives an unsolicited bona fide acquisition proposal prior to the receipt of the
requisite Bank Mutual shareholder approval, and its board of directors concludes in good faith (after consultation with Bank Mutual's financial advisor and outside counsel) that that such acquisition
proposal constitutes a superior proposal or would reasonably be likely to result in a superior proposal and, after considering the advice of outside counsel, that the failure to take such actions
would be reasonably likely to result in a violation of its fiduciary duties under the WBCL, Bank Mutual may (i) furnish information to the person making such acquisition proposal pursuant to a
customary confidentiality agreement (subject to the requirement that Bank Mutual must promptly provide such information not previously provided to Associated to Associated), (ii) participate in
discussions or negotiations regarding such acquisition proposal, and (iii) subject to the restrictions described under "—Bank Mutual Shareholder Meeting; Withdrawal of
Recommendation," change its recommendation.
As
used herein, "acquisition proposal" means, other than the transactions contemplated by the merger agreement, any offer or proposal relating to, or any third-party indication of
interest in, (i) any acquisition or purchase of 25% or more of the consolidated assets of Bank Mutual or 25% or more of any class of equity or voting securities of Bank Mutual or any of Bank
Mutual's subsidiary whose assets, individually or in the aggregate, constitute 25% or more of consolidated assets of Bank Mutual, (ii) any tender offer (including a self-tender offer) or
exchange offer, if consummated, would result in such third party beneficially owning 25% or more of any class of equity or voting securities of Bank
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Mutual
or any its subsidiaries whose assets, individually or in the aggregate, constitute 25% or more of the consolidated assets of Bank Mutual, or (iii) a merger, consolidation, share exchange
or other business combination involving Bank Mutual or its subsidiaries whose assets, individually or in the aggregate, constitute 25% or more of the consolidated assets of Bank Mutual.
As
used herein, "superior proposal" means a bona fide written acquisition proposal (except the references therein to "25%" shall be replaced by "50%") which the Bank Mutual board
reasonably concludes in good faith to be more favorable from a financial point of view to Bank Mutual shareholders than the merger and the other transactions contemplated by the merger agreement.
Expenses
Except as otherwise provided in the merger agreement, whether or not the merger is consummated, all costs and expenses incurred in connection
with the merger, the merger agreement, the bank merger and the transactions contemplated thereby will be paid by the party incurring such expenses. However, costs and expenses of printing and mailing
this proxy statement/prospectus and all filing and other fees paid to the SEC in connection with the merger will be paid by Associated.
Employee Matters
During the period commencing at the effective time and ending on the first anniversary of the closing date, Associated will cause the surviving
corporation to provide each continuing employee of Bank Mutual and its subsidiaries, for so long as they remain employed with Associated and its subsidiaries, with employee benefit plans and
compensation opportunities and employee benefits that, in the aggregate, are no less favorable than the employee benefits and compensation opportunities that are at that time made available to
similarly-situated employees of Associated; however, Associated may satisfy this obligation for a transitional period by providing employee continued participation in the Bank Mutual benefit plans.
For
all purposes (other than purposes of benefit accruals) under the Associated benefit plans, each continuing employee is credited with his or her years of service with Bank Mutual and
its subsidiaries
and their respective predecessors to the same extent as such continuing employee was entitled to credit for such service under any applicable Bank Mutual benefit plan. The foregoing does not apply
(i) to the extent that its application would result in a duplication of benefits with respect to the same period of service or (ii) for purposes of any defined benefit pension plan, any
benefit plan that provides post-employment welfare benefits or any benefit plan that is a frozen plan or provides grandfathered benefits.
Associated
has agreed to use commercially reasonable efforts to: (i) waive pre-existing condition exclusions and actively-at-work requirements with respect to participation and
coverage requirements applicable to such employees and their eligible dependents under the Associated medical, dental, vision and pharmaceutical plans, except to the extent such pre-existing condition
exclusions and actively-at-work requirements would apply under the analogous Bank Mutual benefit plan, (ii) provide each such employee and their eligible dependents with credit for any eligible
expenses paid under a Bank Mutual benefit plan prior to the date such employee transitions to Associated's plans in satisfying any applicable deductible, co-insurance or maximum out-of-pocket
requirements under any Associated plans.
For
a period commencing at the effective time and ending on the first anniversary of the closing date, Associated will provide severance benefits to any continuing employee whose
position is terminated by Associated or its subsidiaries (other than for cause) as a result of the transaction contemplated by the merger agreement in accordance with Associated's severance policy in
effect for similarly situated employees of Associated, or, if applicable, Associated will provide severance benefits to certain continuing employees in accordance with agreements disclosed to
Associated.
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Associated
and Bank Mutual have agreed to establish a retention bonus program, consulting arrangements or similar arrangements for certain continuing employees for an interim period
following the effective time.
Bank
Mutual will either continue Bank Mutual's 401(k) plan(s) or if, and only if, requested by Associated in writing prior to the effective time, Bank Mutual will terminate Bank Mutual's
401(k) plan(s), effective immediately prior to the effective time. If Associated requests that Bank Mutual's 401(k) plan(s) be terminated, continuing employees will be eligible to participate,
effective as of the effective time, in a 401(k) plan sponsored or maintained by Associated or one of its subsidiaries.
Indemnification and Insurance
The merger agreement provides that from and after the effective time, the surviving corporation will, to the fullest extent permitted by
applicable law, indemnify and hold harmless (i) all present and former directors, officers and employees of Bank Mutual and its subsidiaries and (ii) any person who, while a director,
officer or employee of Bank Mutual and its subsidiaries, served an employee benefit plan because his or her duties to Bank Mutual or its subsidiaries also imposed duties on, or otherwise involved
services by, the person to the plan or to participants in or beneficiaries of the plan (which we collectively refer to as the "indemnified parties") against all losses, reasonable fees, costs and
other expenses actually and reasonably incurred by an indemnified party in connection with any threatened, pending or completed civil, criminal, administrative or investigative action, suit,
arbitration or other proceeding which involves federal, state or local law to which an indemnified party was made a party by virtue of his or her service in any of the capacities set forth above, to
the extent that such indemnified party has been successful on the merits or otherwise in the defense of such indemnification proceeding, unless it is proven by final adjudication that such person
breached or failed to perform a duty owed to Bank Mutual and its subsidiaries.
The
merger agreement requires the surviving corporation to maintain for a period of six years after completion of the merger, or if such term is not available, such other maximum period
of coverage available, a directors' and officers' insurance policy or policies covering each indemnified party covered by Bank Mutual's existing directors' and officers' insurance policy, on and
subject to terms and conditions no less advantageous to the insureds than Bank Mutual's existing directors' and officers' insurance policy, for acts or omissions occurring prior to the closing of the
merger. However, the surviving corporation is not required to spend in aggregate an amount in excess of 300% of amount of the aggregate premiums paid by Bank Mutual for fiscal year 2017 for such
insurance, which we refer to as the "premium cap." If Bank Mutual is unable to maintain such policy (or substitute policy) as a result of the premium cap, Bank Mutual will obtain a policy or policies
of insurance with substantially similar terms and conditions as may then be available, and with an equal or lesser claims reporting time period as may then be available for payment of such amount.
Certain Additional Covenants
The merger agreement also contains additional covenants, including, among others, covenants relating to the filing of this proxy
statement/prospectus, covenants relating to regulatory filings and approvals (which are described under the section "The Merger—Regulatory Approvals" beginning on
page [
·
]), the listing of shares of Associated common stock to be issued in
the merger, coordination with respect to litigation relating to the merger, conversion and integration matters, and public announcements with respect to the transactions contemplated by the merger
agreement.
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Conditions to Completion of the Merger
Each of Associated and Bank Mutual's obligation to complete the transactions contemplated by the merger agreement is subject to fulfillment of
certain conditions, including:
-
•
-
no judgement, decree, injunction or order of any governmental entity of competent jurisdiction preventing the consummation of the transactions
contemplated by the merger agreement being in effect, and no federal, state, foreign and local laws, statutes, codes, rules, regulations, ordinances, judgements, orders, decrees and the like of any
governmental entity having been enacted or deemed applicable to the merger agreement that makes consummation of the transactions contemplated by the merger agreement illegal;
-
•
-
No action or proceeding brought by any Governmental Entity seeking a judgment, decree, injunction or order that would restrain or prevent the
consummation of the Closing Transactions shall be pending;
-
•
-
all regulatory authorizations, consents, orders or approvals (i) from the Federal Reserve Board and the OCC, (ii) from the WDFI,
to the extent required of the transactions contemplated by the merger agreement, (iii) if required, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and (iv) as set forth
in the merger agreement that are necessary to consummate the transactions contemplated thereby, or any other approvals the failure of which to be obtained would reasonably be likely to have,
individually, or in the aggregate, a material adverse effect on the surviving corporation, having been obtained and remaining in full force and effect and all statutory waiting periods in respect
thereof having expired;
-
•
-
approval of the merger agreement at the special meeting by the requisite vote of Bank Mutual shareholders; and
-
•
-
the registration statement of which this proxy statement/prospectus forms a part having been declared effective by the SEC, and no stop
order suspending the effectiveness of the registration statement having been issued and no proceedings for that purpose having been initiated or threatened by the SEC and not withdrawn;
Associated's
obligation to complete the transactions contemplated by the merger agreement is also subject to fulfillment of certain conditions,
including:
-
•
-
accuracy of representations and warranties of Bank Mutual in the merger agreement as of the date of the merger agreement and as of the closing
date, other than, in most cases, inaccuracies that in the aggregate do not have, and would not reasonably be likely to have, a material adverse effect on Bank Mutual or the surviving corporation;
-
•
-
performance in all material respects by Bank Mutual of all of its obligations required to be performed under the merger agreement at or prior
to the closing date;
-
•
-
receipt of an opinion of Wachtell Lipton, dated as of the closing date of the merger, to the effect that the merger will be treated as a
transaction that qualifies as a "reorganization" within the meaning of Section 368(a) of the Code; and
-
•
-
delivery by Bank Mutual of certain customary certificates and other documentation, including officers' certificates as required by the merger
agreement.
Bank
Mutual's obligation to complete the transactions contemplated by the merger agreement is also subject to fulfillment of certain conditions,
including:
-
•
-
accuracy of representations and warranties of Associated in the merger agreement as of the date of the merger agreement and as of the closing
date, other than, in most cases, inaccuracies that
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Termination of the Merger Agreement
The merger agreement can be terminated at any time prior to completion of the merger in the following
circumstances:
-
•
-
by mutual written consent of Associated and Bank Mutual;
-
•
-
by either Associated or Bank Mutual, if the merger has not been completed on or before June 30, 2018, which we refer to as the
"termination date," unless the failure of the merger to be completed by such date is due to the breach of the merger agreement by the party seeking to terminate the merger agreement;
-
•
-
by either Associated or Bank Mutual, if any governmental entity that must grant a requisite regulatory approval has denied approval of the
merger or the bank merger, and such denial has become final and nonappealable or any governmental entity of competent jurisdiction has issued a final nonappealable order permanently enjoining or
otherwise prohibiting or making illegal the consummation of the merger or the bank merger, unless the failure to obtain a requisite regulatory approval is due to the failure of the party seeking to
terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement;
-
•
-
by either Associated or Bank Mutual (provided that the terminating party is not then in material breach of any representation, warranty,
covenant or other agreement contained in the merger agreement), if there is a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation or
warranty ceases to be true) set forth in the merger agreement on the part of the other party, which either individually or in the aggregate would constitute, if occurring or continuing on the date the
merger is completed, the failure of a closing condition of the terminating party and which is not cured by the earlier of the termination date and 30 days following written notice to the party
committing such breach, or by its nature or timing cannot be cured during such period; or
-
•
-
by Associated, if (a) prior to the requisite approval of the merger agreement by Bank Mutual shareholders, Bank Mutual or the Bank
Mutual board (i) submits the merger agreement to its shareholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies (or discloses its intention
to withdraw or materially and adversely modify) its recommendation as contemplated by the merger agreement, or recommends to its shareholders an acquisition proposal other than the merger, or
(ii) materially breaches its obligations to hold a meeting of its shareholders to approve the merger agreement or not to solicit alternative acquisition proposals; or (b) a tender offer
or exchange offer for 25% or more of the outstanding shares of Bank Mutual common stock is commenced (other than by Associated or one of its subsidiaries), and the Bank Mutual board recommends that
the shareholders of Bank
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Effect of Termination
If the merger agreement is terminated, it will become void and have no effect, except that (i) both Associated and Bank Mutual will
remain liable for any liabilities or damages arising out of its fraud or its willful and material breach of any provision of the merger agreement and
(ii) designated provisions of the merger agreement will survive the termination, including those relating to payment of fees and expenses and the confidential treatment of information.
Termination Fee
Bank Mutual will be required to pay Associated a termination fee of $17.0 million if the merger agreement is terminated in either of the
following circumstances:
-
•
-
In the event that, after the date of the merger agreement, a bona fide acquisition proposal has been made known to the Bank Mutual board or has
been made directly to Bank Mutual shareholders generally, or any person has publicly announced (and not withdrawn) an acquisition proposal with respect to Bank Mutual, and (A) (1) thereafter
the merger agreement is terminated by either Associated or Bank Mutual because the merger has not been completed prior to the termination date without the requisite vote having being obtained from
Bank Mutual shareholders, or (2) thereafter the merger agreement is terminated by Associated based on a breach of the merger agreement by Bank Mutual that would constitute the failure of a
closing condition and that has not been cured during the permitted time period or by its nature cannot be cured during such period, and (B) within 12 months after the date of such
termination, Bank Mutual enters into a definitive agreement or consummates a transaction with respect to an acquisition proposal (whether or not the same acquisition proposal as that referred to
above), provided that for purposes of the foregoing, all references in the definition of acquisition proposal to "25%" will instead refer to "50%;" or
-
•
-
In the event that the merger agreement is terminated by Associated pursuant to the last bullet set forth under "The Merger
Agreement—Termination of the Merger Agreement" above.
Amendment and Waiver
The merger agreement may only be amended in writing signed on behalf of each of the parties. However, no amendment may be made which materially
adversely affects the Bank
Mutual shareholders without their prior approval. Any waiver of any provision of the merger agreement must be in writing and signed by the party against whom such waiver is to be enforced.
Governing Law; Jurisdiction
The merger agreement is governed by and will be construed in accordance with the laws of the State of Wisconsin, without giving effect to any
applicable conflicts of law. The parties agree that any action or proceeding arising out of or related to the merger agreement will be brought exclusively in the Courts of Wisconsin or federal court
within the State of Wisconsin.
Specific Performance
Associated and Bank Mutual agree that there is no adequate remedy at law for the damage which any party might sustain for failure of the other
parties to consummate any of the transactions contemplated by the merger agreement. Accordingly, each party will be entitled, at its option, to
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specific
performance to enforce the consummation of each transaction described in the merger agreement.
Voting and Support Agreements
Each of the directors of Bank Mutual have entered into a voting and support agreement with Associated and Bank Mutual, solely in their
capacities as shareholders of Bank Mutual, pursuant to which they have agreed, among other things, to vote in favor of the Bank Mutual merger
proposal and the other proposals presented at the special meeting and against alternative acquisition proposals, as well as certain other customary restrictions with respect to the voting and transfer
of his or her shares of Bank Mutual common stock. The voting and support agreements will terminate if the merger agreement is terminated for any reason in accordance with its terms. The preceding
discussion is a summary of the voting and support agreements and is qualified in its entirety by reference to the form of voting and support agreement, which is included as Exhibit B to the
merger agreement attached as
Annex A
of this proxy statement/prospectus.
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ADVISORY (NON-BINDING) VOTE ON MERGER-RELATED COMPENSATION
FOR BANK MUTUAL'S NAMED EXECUTIVE OFFICERS
Pursuant to Rule 14a-21(c) of the Exchange Act and as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,
Bank Mutual is providing its shareholders with a separate advisory (non-binding) vote to approve the merger-related compensation for its named executive officers as described in "Interests of Bank
Mutual's Directors and Executive Officers in the Merger—Quantification of Potential Change in Control Benefits of Bank Mutual's Named Executive Officers."
Shareholders
are being asked to approve the following resolution on an advisory (non-binding) basis:
"RESOLVED,
that the compensation that may be paid or become payable to Bank Mutual's named executive officers in connection with the merger, and the agreement or understandings pursuant
to which such compensation may be paid or become payable, in each case, as disclosed pursuant to Item 402(t) of Regulation S-K in "Interests of Bank Mutual's Directors and Executive
Officers in the Merger—Quantification of Potential Change in Control Benefits of Bank Mutual's Named Executive Officers," is hereby APPROVED."
The
vote is advisory in nature and, therefore, is not binding on Bank Mutual or on Associated or the boards of directors or the compensation committees of Bank Mutual or Associated,
regardless of whether the merger proposal is approved.
Approval
of this advisory (non-binding) proposal is not a condition to completion of the merger. The vote is an advisory vote and will not be binding on Bank Mutual or the surviving
corporation in the merger. If the merger is completed, the merger-related compensation may be paid to Bank Mutual's named executive officers to the extent payable in accordance with the terms of their
compensation agreements and arrangements and the outcome of this advisory (non-binding) vote will not affect Bank Mutual's or Associated's obligations to make these payments even if Bank Mutual
shareholders do not approve, by advisory (non-binding) vote, this proposal.
The
vote on the merger-related named executive officer compensation is separate from the vote to approve the merger agreement. You may vote "against" the merger-related named executive
officer compensation and "for" approval of the merger agreement and vice versa. You also may abstain from this proposal and vote on the merger agreement proposal and vice versa.
The
Bank Mutual board unanimously recommends that you vote "
FOR
" the approval, in a non-binding advisory vote, of the merger-related named
executive officer compensation proposal.
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ADJOURNMENT OF THE SPECIAL MEETING TO SOLICIT
ADDITIONAL PROXIES
Bank Mutual shareholders are being asked to grant authority to proxy holders to vote in favor of one or more adjournments of the special
meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. If this proposal is approved,
the special meeting could be successively adjourned to any date. Bank Mutual does not intend to adjourn the special meeting to solicit additional proxies if the merger agreement is approved or
disapproved at the special meeting.
The
Bank Mutual board unanimously recommends that you vote "
FOR
" adjournment of the special meeting, if necessary or appropriate, to
solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.
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INTERESTS OF BANK MUTUAL'S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER
The directors and executive officers of Bank Mutual have certain interests related to the merger that may differ from, or be in addition to,
those of other Bank Mutual shareholders. You should consider those interests, which are discussed below, in connection with your consideration of the merger and the proposal to approve, by advisory
(non-binding) vote, certain compensation arrangements for Bank Mutual's named executive officers in connection with the merger. These interests are described in more detail below, and certain of them
are quantified in the narrative below and the table below.
Certain Assumptions
Except as otherwise specifically noted, for purposes of quantifying the potential payments and benefits described in this section, the following
assumptions, as well as those described in the footnotes to the table under the heading "—Quantification of Potential Change in Control Benefits of Bank Mutual's Named Executive Officers"
below, were used:
-
•
-
The relevant price per share of Bank Mutual common stock is $9.73, which is equal to the average closing market price of a share of Bank Mutual
common stock over the first five business days following the first public announcement of the transaction; and
-
•
-
The effective time of the merger is assumed to occur on January 31, 2018, which is the assumed effective time of the merger solely for
purposes of the disclosure in this section, and each named executive officer is assumed to experience a qualifying termination of employment (as discussed below) on such date.
Treatment of Bank Mutual Equity Awards
Under the merger agreement, awards outstanding under Bank Mutual's equity incentive plans as of the effective time will be treated as follows:
Treatment of Stock Options.
At the effective time, each option granted by Bank Mutual to purchase shares of Bank Mutual common stock
will be
automatically converted into an option to purchase Associated common stock, on the same terms and conditions as were applicable to the Bank Mutual option prior to the effective time (including by
giving effect to any accelerated vesting as a result of the merger), the number of shares of Associated common stock (rounded down to the nearest whole number of shares of Associated common stock)
equal to the number of shares of Bank Mutual common stock subject to such Bank Mutual option immediately prior to the effective time multiplied
by 0.422, at an exercise price per share of Associated common stock (rounded up to the nearest whole cent) equal to the exercise price per share of Bank Mutual common stock subject to such Bank Mutual
option immediately prior to the effective time divided by 0.422.
Treatment of Restricted Stock Awards.
At the effective time, each Bank Mutual restricted stock award that is outstanding immediately
prior to the
effective time and vests upon the effective time in accordance with its terms will be converted automatically into the right to receive the merger consideration in respect of each share of Bank Mutual
common stock subject to such Bank Mutual restricted stock award immediately prior to the effective time, less applicable tax withholdings.
Change in Control.
Bank Mutual's equity award plans and related award agreements provide that unvested restricted stock and stock
options held by
executive officers and directors will automatically vest upon a change in control of Bank Mutual.
Quantification of Value of Unvested Equity Awards.
For an estimate of the value to be received by each of Bank Mutual's named executive
officers in
respect of their unvested Bank Mutual equity awards outstanding as of the date hereof, assuming all such awards vest at the effective time, see
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"—Quantification
of Potential Change in Control Benefits of Bank Mutual's Named Executive Officers" below. We estimate that the aggregate value to be received in respect of Bank Mutual
unvested equity awards outstanding as of August 18, 2017 by Bank Mutual's executive officers other than its named executive officers and by Bank Mutual's non-officer directors, assuming all
such awards vest at the effective time, is approximately $138,877 and $183,108, respectively. The estimated amounts (i) include all equity awards outstanding as of August 18, 2017 but
(ii) exclude any equity awards that may vest between August 18, 2017 and January 31, 2018 irrespective of the merger. For reference, the estimated value of equity awards held by
Bank Mutual's executive officers other than its named executive officers and its non-employee directors that would vest between August 18, 2018 and January 31, 2018 irrespective of the
merger is approximately $187,757 and $300,568, respectively.
Employment Agreements and Potential Payments upon a Change in Control
Bank Mutual has entered into employment agreements, which include change in control provisions, with each of David A. Baumgarten, Michael W.
Dosland, Joseph W. Fikejs, Christopher L. Mayne, Greg A. Lawson, Patrick W. Lawton, Terri M. Pfarr and Kimberlie D. Weekley. Mr. Baumgarten's employment agreement has a rolling two-year period;
the agreements with other executive officers have a one-year term. Each such executive officer has the right to terminate his or her employment following a change in control of Bank Mutual for "good
reason" if any of the following occur as a result of the change in control: (a) the executive's base or incentive compensation, employee benefits, responsibilities or duties are reduced;
(b) the executive officer is transferred more than 50 miles from his or her current principal office of employment; or (c) the executive officer is required to travel as part of his or
her duties materially more than in the past such.
Upon
a qualifying termination (described below) of employment, each such executive officer would be entitled to receive the following severance payments and termination benefits pursuant
to the employment agreements, subject to each executive officer's execution and non-revocation of a release of claims: (a) a lump sum payment equal to 100% (200% in the case of
Mr. Baumgarten) of his or her base salary at the time of termination, payable within thirty days following the date of such qualifying termination of employment; (b) insurance benefits
(life, medical, dental and optical) at the Bank's expense for one year (two years in the case of Mr. Baumgarten); (c) a lump sum cash payment in an amount equal to the Bank's annual
aggregate contributions for the executive to all qualified retirement plans in the year preceding termination (times two in the case of Mr. Baumgarten), payable within thirty days following the
qualifying termination of employment; and (d) a prorated cash incentive compensation payment based upon Bank Mutual's results through the month in which in the qualifying termination of
employment occurs, payable in a lump sum at the time incentive compensation is paid to active employees. As with any termination of employment, each executive officer would also receive compensation
for accrued but unused vacation time. For purposes of this disclosure, a "qualifying termination" means (i) an involuntary termination of an executive officer's employment by Bank Mutual (or
its successor) for any reason other than cause, death, retirement or disability, (ii) an executive officer's resignation for good reason that occurs during the period commencing on a change in
control and ending on the last day of the calendar year following the year of the change in control, or (iii) a non-renewal of an executive officer's employment agreement that occurs while a
change in control is pending or at the first renewal date occurring following a change in control.
Under
each employment agreement, if an executive officer's merger-related payments or benefits are subject to the 20% excise tax under Section 4999 of the tax code, such payments
and benefits will be reduced so that the excise tax does not apply.
In
addition, the employment agreements for the executive officers include (a) provisions with respect to the use of confidential information and (b) provisions with respect
to the non-solicitation of Bank Mutual's customers and employees for a period of two years following termination of
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employment.
If the executive breaches the confidentiality and non-solicitation provisions, as applicable, Bank Mutual is entitled to injunctive and equitable relief in addition to other remedies
available at law.
For
an estimate of the value of severance that would be paid to each of Bank Mutual's named executive officers assuming that a qualifying termination of his or her employment occurs upon
the effective time of the merger, see "—Quantification of Potential Change in Control Benefits of Bank Mutual's Named Executive Officers" below. We estimate that the aggregate value of
severance that would be paid under the employment agreements to each of Bank Mutual's executive officers other than its named executive officers, assuming that a qualifying termination of his or her
employment occurs upon the effective time of the merger, is $430,000.
Quantification of Potential Change in Control Benefits of Bank Mutual's Named Executive Officers
The following table sets forth the estimated value of the payments and benefits that could be paid to Bank Mutual's named executive officers
upon a qualifying termination of employment on or following a change in control (such as the merger) under the individual employment agreements with the named executive officers and/or the terms of
Bank Mutual's equity compensation plans. These amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the named executive officers; the actual amounts would
be known only at the time that they become eligible for payment and would be payable only if a termination event or change in control were to occur.
The
following table reflects the amounts that could be payable under the various arrangements if a change in control occurred as of January 31, 2018 (the assumed date of the
effective time solely for purposes of this disclosure) and a qualifying termination of employment occurred immediately thereafter. The table does not include certain payments that are generally
otherwise upon termination of employment for any reason (such as, if applicable, accrued vacation time, non-enhanced amounts payable pursuant to Bank Mutual retirement plans, and amounts payable
pursuant to third party insurance).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Executive Officer
|
|
Cash
($)
(1)
|
|
Equity
($)
(2)
|
|
Pension/
NQDC
(3)
|
|
Perquisites/
Benefits
($)
(4)
|
|
Tax
Reimbursement
($)
(5)
|
|
Other
(3)
|
|
Total
($)
(5)
|
|
|
David A, Baumgarten
|
|
|
1,479,640
|
|
|
226,888
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,706,528
|
|
|
Michael W. Dosland
|
|
|
277,529
|
|
|
99,949
|
|
|
—
|
|
|
15,391
|
|
|
—
|
|
|
—
|
|
|
392,869
|
|
|
Joseph W. Fikejs
|
|
|
277,498
|
|
|
127,222
|
|
|
—
|
|
|
6,609
|
|
|
—
|
|
|
—
|
|
|
411,329
|
|
|
Christopher L. Mayne
|
|
|
273,530
|
|
|
94,441
|
|
|
—
|
|
|
17,049
|
|
|
—
|
|
|
—
|
|
|
385,020
|
|
|
Greg A. Larson
|
|
|
270,133
|
|
|
93,789
|
|
|
—
|
|
|
11,882
|
|
|
—
|
|
|
—
|
|
|
375,804
|
|
|
Patrick W. Lawton
|
|
|
243,884
|
|
|
111,999
|
|
|
—
|
|
|
1,243
|
|
|
—
|
|
|
—
|
|
|
357,126
|
|
-
(1)
-
For
each named executive officer other than Mr. Baumgarten, this amount represents the named executive officer's base salary. For Mr. Baumgarten, this
amount represents base salary for two years. In each case, such amounts would be paid in a lump sum within 30 days following the executive officer's termination date. The estimated amount of
cash severance payable to each named executive officer in respect of salary is equal to: Mr. Baumgarten—$1,400,000, Mr. Dosland—$258,594,
Mr. Fikejs—$261,250, Mr. Mayne—$254,867, Mr. Larson—$251,980 and Mr. Lawton—$231,510.
These
amounts also include a prorated cash incentive compensation payment based upon Bank Mutual's results through the end of the month of termination. Because these amounts assume a
January 31, 2018 termination, the amount presented is one-twelfth of a full year cash incentive payment. The actual amount to be received would depend on actual results and be prorated for the
portion of the calendar year in which the event occurs, and thus may be greater or less based
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Table of Contents
on
actual results or if the termination occurs in a different calendar month. Such amounts would be paid in a lump sum at the time cash incentive compensation is paid to active employees following the
merger. These estimates assume that target performance is achieved. The estimated amount of each named executive officer's prorated bonus is equal to: Mr. Baumgarten—$38,850,
Mr. Dosland—$5,387, Mr. Fikejs—$5,443, Mr. Mayne—$5,310, Mr. Larson—$5,250 and Mr. Lawton—$4,823.
For
each named executive officer other than Mr. Baumgarten, these amounts also include a lump sum cash payment equal to one times Bank Mutual's annual aggregate contributions for the executive
to qualified benefit plans in which the named executive officer participated during the year prior to termination. Such amounts would be paid in a lump sum within 30 days following the named
executive officer's termination date. The estimated amount of each named executive officer's payment related to the qualified benefit plan is equal to: Mr. Dosland—$13,548,
Mr. Fikejs—$10,805, Mr. Mayne—$13,353, Mr. Larson—$12,903 and Mr. Lawton—$7,551.
For
Mr. Baumgarten, pursuant to his consulting arrangement with Associated, these amounts also include a lump sum cash payment equal to $40,790, which approximates the sum of (a) the
value of life, medical, dental and optical insurance for 24 months and (ii) two times the Company's annual aggregate contribution for the benefit of Mr. Baumgarten in 2016 to all
qualified retirement plans in which Mr. Baumgarten participated.
These
amounts are "double-trigger" benefits payable upon a qualifying termination following a change in control under each named executive officer's employment agreement.
-
(2)
-
All
outstanding, unvested restricted stock awards and stock options will vest "single trigger" upon a change in control pursuant to each named executive officer's
grant agreement and/or the Bank Mutual stock plans. The amount shown represents the value of the equity awards based on the average closing market price of a share of Bank Mutual common stock over the
first five business days following the first public announcement of the transaction, or $9.73 per share. The estimated amounts (i) include all equity awards outstanding as of August 18,
2017 and (ii) exclude any equity awards that may vest between August 18, 2017 and January 31, 2018 irrespective of the merger. For reference, the estimated value of equity awards
held by Bank Mutual's named executive officers that would vest between August 18, 2018 and January 31, 2018 irrespective of the merger is: Mr. Baumgarten—$327,654,
Mr. Dosland—$151,304, Mr. Fikejs—$48,809, Mr. Mayne—$145,467, Mr. Larson—$148,396 and
Mr. Lawton—$115,660. Unvested stock options held by executive officers as of August 18, 2017 with an exercise price greater than $9.73 per share have no unrealized value as
of such date and, therefore, are not included in the table.
The
estimated value of accelerated vesting of all outstanding, unvested stock options held by each named executive officer set forth in the table is equal to:
Mr. Baumgarten—$10,240, Mr. Dosland—$5,120, Mr. Fikejs—$5,928, Mr. Mayne—$5,120, Mr. Larson—$5,120 and
Mr. Lawton—$20,216.
The
estimated value of accelerated vesting of all outstanding, unvested restricted stock awards held by each named executive officer set forth in the table is equal to:
Mr. Baumgarten—$216,648, Mr. Dosland—$94,829, Mr. Fikejs—$121,294, Mr. Mayne—$89,321, Mr. Larson—$88,669
and Mr. Lawton—$91,783.
-
(3)
-
Except
as set forth in the columns titled "Cash", "Equity", and "Perquisites/Benefits" in the table above, no other benefits will be paid to the named executive
officers in connection with the transaction.
-
(4)
-
These
amounts include payments of premiums for employer-paid life insurance and employer-paid medical and dental benefits. Certain of these benefits would not be
payable if the executive accepts other employment.
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Table of Contents
-
(5)
-
No
tax gross-ups are payable to the named executive officers in connection with a change in control. Under each employment agreement, if a named executive officer's
merger-related payments or benefits are subject to the 20% excise tax under Section 4999 of the tax code, such payments and benefits will be reduced so that the excise tax does not apply.
Therefore, the actual amounts payable to an executive might be less than the amount indicated in this table.
Post-Merger Arrangements with Certain Executive Officers
Mr. Baumgarten's employment will end upon the effectiveness of the merger. However, to help provide for an orderly transition, Associated
will retain Mr. Baumgarten as a consultant for a period commencing at the effective time and ending on December 31, 2018. Mr. Baumgarten would receive a payment of $350,000,
payable in equal monthly installments, for these services. Consistent with the intent that Mr. Baumgarten shall experience a "separation from service" as of the effective time of the merger,
Mr. Baumgarten's services during each month of the consulting period will not exceed 20% of the average level of his services as an employee of Bank Mutual over the 36-month period prior
thereto.
Ms. Pfarr
has been informed by Associated that her employment will terminate at the end of 2018. However, she will continue as an employee until that time, with substantially
similar compensation terms. Upon her termination of employment at the end of 2018 and subject to her execution of a release of claims, Ms. Pfarr will be eligible to receive, in full
satisfaction of Associated's obligations under her employment agreement, a lump sum cash payment equal to $203,872 plus her annual cash bonus payable in respect of fiscal year 2018. In the event of
her termination of employment prior to the end of 2018 and subject to her execution of a release of claims, Mr. Pfarr will be eligible to receive, in full satisfaction of Associated's
obligations under her employment agreement, (a) the lump sum cash payment, excluding the 2018 bonus, referenced in the immediately preceding sentence and (b) a lump sum payment equal to
the base salary Ms. Pfarr would have received for the period commencing on her termination date and ending on December 31, 2018.
As
of the date of this proxy statement/prospectus, none of Bank Mutual's executive officers (other than Mr. Baumgarten and Ms. Pfarr) have entered into any agreements or
arrangements with Associated regarding continued service with Associated after the effective time. However, it is possible that Associated may enter into employment or other arrangements with certain
other executive officers of Bank Mutual prior to the effective time.
In
addition, the merger agreement provides that the parties shall determine and establish a retention bonus program, consulting arrangements or similar arrangements for certain Bank
Mutual employees who remain employed through the effective time of the merger or at Associated for an interim period following the merger, subject to mutual determination by the parties on the
employees to receive such compensation and the terms thereof. Such determinations have not yet been made.
Deferred Plans for Directors
Bank Mutual maintains a deferred retirement plan for its current non-officer directors (other than Robert B. Olson, who is covered by and is
receiving payments under a plan of an entity acquired by Bank Mutual, Michael T. Crowley, Jr., who is a former employee of Bank Mutual, and Mike I. Shafir, as a result of the agreement pursuant to
which he was elected to the board). Non-officer directors who have provided at least five years of service will be paid $1,333 per month for 10 years (or, if less, the actual number of years of
service on the board) after their retirement from the Bank Mutual board or age 65, whichever is later. In the event a director dies prior to completion of these payments, payments will go to the
director's heirs.
As
of the date hereof, all of the eligible non-officer directors' benefits have already fully vested, other than those for Lisa Mauer who became a director in 2014 and whose benefits
would vest upon a
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Table of Contents
change
in control. Although the benefits for directors who have vested will not increase, upon the merger, the eligible directors will no longer be Bank Mutual or successor-entity directors and thus
will begin receiving payments under the deferred plan for directors, except that payments will not begin until attaining age 65 for any such director who is less than 65 at the effective time of the
merger.
Board Seats
The merger agreement provides that Associated will increase the board size of each of the surviving corporation and Associated Bank, N.A. at the
effective time by one and appoint Michael T. Crowley, Jr., Bank Mutual's current chairman and former chief executive officer, and Bank Mutual's largest individual shareholder, to fill such new
positions at the effective time. Assuming satisfactory performance, Associated will nominate Mr. Crowley Jr. for election at the next succeeding annual meeting of Associated shareholders.
Indemnification
The directors and officers of Bank Mutual are indemnified for certain liabilities pursuant to the WBCL and Bank Mutual's bylaws as well as
through directors and officers liability insurance. In addition, the merger agreement provides the directors, officers and employees of Bank Mutual to certain rights to ongoing indemnification and
insurance coverage by the surviving corporation for acts or omissions occurring prior to the merger. For additional information see the section entitled "The Merger
Agreement—Indemnification and Insurance" beginning on page [
·
] of this
proxy statement/prospectus.
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Table of Contents
THE MERGER
1.1
The Merger
.
Subject to the terms and
conditions hereof, at the Effective Time, the Company shall be merged with and into Buyer and the separate existence of the Company shall
thereupon cease, and Buyer shall be the surviving corporation in the Merger. The Merger will have the effect set forth in the WBCL, this Agreement and the Articles of Merger and, without limiting the
foregoing, all properties, rights, privileges, powers and franchises of the Constituent Corporations will vest in the Surviving Corporation without reversion or impairment as provided under the WBCL.
The Surviving Corporation shall have all liabilities of the Constituent Corporations as provided under the WBCL.
1.2
Effective Time of the Merger
.
The
Merger shall become effective as of the time and date of filing of the Articles of Merger, in a form consistent with the provisions of this Agreement (the
"
Articles of Merger
"), with the Wisconsin Department of Financial Institutions ("
WDFI
") in accordance
with the provisions of the WBCL or, if mutually agreed upon by the Parties, at the time specified in the Articles of Merger, if later than the time of filing. As part of the Closing, the Parties
A-1
shall
cause the Articles of Merger to be properly executed and filed in accordance with the WBCL and shall make all other filings or recordings required by the WBCL to effectuate the Merger. The date
and time when the Merger shall become effective is herein referred to as the "
Effective Time
."
1.3
Bank Merger.
Immediately following the Merger, or at such later
time as Buyer may determine in its sole discretion, the Bank will merge (the "
Bank
Merger
") with and into Buyer Bank. Buyer Bank shall be the surviving entity in the Bank Merger and, following the Bank Merger, the separate corporate existence of the Bank
shall cease. Promptly following the date of this Agreement, the Parties will cause Buyer Bank and the Bank to enter into a customary agreement and plan of merger (the "
Bank
Merger Agreement
"), which Bank Merger will be subject to completion of the Merger and which Bank Merger Agreement shall automatically terminate upon any termination of this
Agreement. Prior to the Effective Time, the Company shall cause the Bank, and Buyer shall cause Buyer Bank, to execute such certificates or articles of merger and such other documents and certificates
as are necessary to effectuate the Bank Merger following the Merger ("
Bank Merger Certificates
").
ARTICLE II
THE SURVIVING CORPORATION
2.1
Articles of Incorporation
.
The Articles of
Incorporation of the Buyer, as in effect at the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation immediately
after the consummation of the Merger.
2.2
Bylaws.
The Bylaws of the Buyer, as in effect
at the Effective Time, shall be the Bylaws of the Surviving Corporation immediately after the consummation of the Merger.
2.3
Directors.
The directors of Buyer holding office immediately
prior to the consummation of the Merger shall be the directors of the Surviving Corporation as of the Effective
Time, subject to the provisions of
Section 6.7
of this Agreement.
2.4
Officers.
The officers of Buyer holding office
immediately prior to the consummation of the Merger shall be the officers of the Surviving Corporation as of the Effective
Time, subject to the provisions of
Section 6.7
of this Agreement.
ARTICLE III
CONVERSION OF SHARES
3.1
Consideration.
As of the Effective Time, by virtue of
the Merger and without any action on the part of Buyer, the Company, or the holder of any shares of Company Common Stock,
each share of Company Common Stock issued and outstanding immediately prior to the Effective Time, will be converted, subject to the fractional share procedures in
Section 3.5
, into the right to
receive 0.422 fully paid and nonassessable shares (the "
Exchange
Ratio
") of Buyer Common Stock (the "
Per Share Stock Consideration
").
The
total stock consideration to be paid by Buyer in respect of shares of Company Common Stock is referred to herein as the "
Merger
Consideration
".
Notwithstanding
anything in this
Section 3.1
to the contrary, at the Effective Time and by virtue of the Merger, each share of
Company Common Stock held in the Company's treasury and each share of Company Common Stock owned directly or indirectly by Buyer (other than shares held in a fiduciary
capacity or in connection with debts previously contracted) will be cancelled and no shares of Buyer Common Stock or other consideration will be issued or paid in exchange therefor.
A-2
3.2
Exchange of Company Stock Certificates
.
(a) The
Parties to this Agreement agree: (i) that Wells Fargo Shareowner Services or another bank or trust company designated by Buyer and reasonably acceptable to
the Company shall serve, pursuant to customary terms of an exchange agent agreement (the "
Exchange Agent Agreement
"), as the exchange agent for purposes
of this Agreement (the "
Exchange Agent
"); and (ii) to execute and deliver the Exchange Agent Agreement at or prior to the Effective Time.
(b) At
or prior to the Effective Time, Buyer shall authorize the issuance of and shall make available to the Exchange Agent, for the benefit of the holders of Company Common
Stock for exchange in accordance with this
Article III
: (i) a sufficient number of shares of Buyer Common Stock for payment of the Merger
Consideration pursuant to
Section 3.1
, and (ii) sufficient cash for payment of cash in lieu of any fractional shares of Buyer Common Stock
in accordance with
Section 3.5
. Such amount of cash and shares of Buyer Common Stock, together with any dividends or distributions with respect
thereto paid after the Effective Time, are referred to as the "
Conversion Fund
."
(c) Within
five (5) business days after the Closing Date, Buyer shall cause the Exchange Agent to mail to each holder of record of one or more certificates
representing such shares of Company Common Stock (the "
Company Stock Certificates
") a letter of transmittal and other appropriate and customary
transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the Company Stock Certificates shall pass, only upon proper delivery of such Company Stock
Certificates to the Exchange Agent) for use in effecting the surrender of Company Stock Certificates pursuant to this Agreement.
(d) No
interest will be paid or accrued on any portion of the Merger Consideration deliverable upon surrender of a Company Stock Certificate.
(e) After
the Effective Time, there shall be no transfers of Company Common Stock (or rights related thereto) on the stock transfer books of the Company.
(f) No
dividends or other distributions declared with respect to Buyer Common Stock and payable to the holders of record thereof after the Effective Time shall be paid to
the holder of any unsurrendered Company Stock Certificate until the holder thereof shall surrender such Company Stock Certificate in accordance with this
Article III
. Promptly after the surrender
of a Company Stock Certificate in accordance with this
Article III
, the record holder thereof shall be entitled to receive any such dividends or other distributions, without interest thereon, which
theretofore had become payable with respect to shares of Buyer Common Stock into which the shares of Company Common Stock represented by such Company Stock Certificate were converted at the Effective
Time pursuant to
Section 3.1
.
(g) Any
portion of the Conversion Fund that remains unclaimed by the shareholders of the Company twelve (12) months after the Effective Time shall be paid to the
Surviving Corporation, or its successors in interest. Any shareholders of the Company who have not theretofore complied with this
Article III
shall thereafter look only to the Surviving Corporation, or its successors in interest, for issuance of Buyer Common Stock and/or cash pursuant to the Merger Consideration and the payment of cash in
lieu of any fractional shares deliverable in respect of such shareholders' shares of Company Common Stock, as well as any accrued and unpaid dividends or distributions on shares of such Buyer Common
Stock. Notwithstanding the foregoing, none of the Surviving Corporation, the Exchange Agent or any other person shall be liable to any former holder of shares of Company Common Stock for any amount
delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws.
(h) In
the event any Company Stock Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Company
Stock
A-3
Certificate
to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond in such amount as the Exchange Agent may determine is reasonably
necessary as indemnity against any claim that may be made against it with respect to such Company Stock Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Company Stock Certificate, and in accordance with this
Article III
, shares of Buyer Common Stock pursuant to the Merger Consideration and cash in
lieu of any fractional shares deliverable in respect thereof pursuant to this Agreement.
(i) If,
between the date of this Agreement and the Effective Time, the outstanding shares of Buyer Common Stock shall have been changed into a different number of shares or
into a different class by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Merger Consideration per share shall be adjusted appropriately to provide the holders of Company Common Stock the same economic effect as contemplated by this Agreement prior
to such event.
3.3
Intentionally Omitted
.
3.4
Cancellation of Shares
.
At the Effective Time, the shares of Company Common Stock will no longer be outstanding and will automatically be cancelled and will cease to exist. Company Stock Certificates that
represented Company Common Stock before the Effective Time will be deemed for all purposes to represent the number of shares of Buyer Common Stock into which they were converted pursuant to this
Article III.
3.5
No Fractional Shares
.
Notwithstanding anything to the contrary contained in this Agreement, no fractional shares of Buyer Common Stock shall be issued as Merger Consideration in the
Merger. Each holder of Company Common Stock who would otherwise be entitled to receive a fractional share of Buyer Common Stock pursuant to this
Article III
shall instead be entitled to receive an
amount in cash (without interest) rounded to the nearest whole cent, determined by
multiplying Buyer Common Stock Price by the fractional share of Buyer Common Stock to which such former holder would otherwise be entitled.
3.6
Buyer Common Stock
.
At the Effective
Time, by virtue of the Merger and without any action on the part of Buyer, the Company, or the holder of any shares of Buyer Common Stock, the
shares of Buyer Common Stock issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall not be affected by the Merger.
3.7
Company Equity Awards
.
(a) At
the Effective Time, each Company Stock Option shall be converted automatically into an option (an "
Adjusted Stock
Option
") to purchase, on the same terms and conditions as were applicable under such Company Stock Option immediately prior to the Effective Time (including by giving effect to
any accelerated vesting as a result of the Merger), the number of shares of Buyer Common Stock (rounded down to the nearest whole number of shares of Buyer Common Stock) equal to the product of
(A) the number of shares of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time, multiplied by (B) the Exchange Ratio, which Adjusted Stock
Option shall have an exercise price per share of Buyer Common Stock equal to the quotient (rounded up to the nearest whole cent) obtained by dividing (1) the exercise price per share of Company
Common Stock
subject to such Company Stock Option immediately prior to the Effective Time, by (2) the Exchange Ratio.
(b) At
the Effective Time, each Company Restricted Stock Award that is outstanding immediately prior to the Effective Time and vests upon the Effective Time in accordance
with its terms as in effect as of the date hereof shall be converted automatically into the right to receive the Merger Consideration in respect of each share of Company Common Stock subject to such
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Company
Restricted Stock Award immediately prior to the Effective Time, less applicable tax withholdings.
(c) At
the Effective Time, any Company Restricted Stock Award that is outstanding as of the Effective Time and does not vest upon the Effective Time in accordance its terms
as in effect on the date hereof shall be converted into an award of restricted shares of Buyer Common Stock with the same terms and conditions as were applicable under such Company Restricted Stock
Award immediately prior to the Effective Time (including vesting terms), and relating to the number of shares of Buyer Common Stock equal to the product of (A) the number of shares of Company
Common Stock subject to such Company Restricted Stock Award immediately prior to the Effective Time, multiplied by (B) the Exchange Ratio, with any fractional shares rounded to the nearest
whole share of Buyer Common Stock.
(d) At
or prior to the Effective Time, the Company, the Company Board and its compensation committee, as applicable, shall adopt any resolutions and take any actions that
are necessary to effectuate the provisions of this
Section 3.7
. Promptly after the Closing, Buyer shall register under the Securities Act the
shares of Buyer Common Stock issuable pursuant to the Company Restricted Stock Awards.
3.8
Withholding Rights
.
Notwithstanding
anything in this Agreement to the contrary, the Exchange Agent, Buyer, and the Surviving Corporation shall be entitled to deduct and withhold, or
cause to be deducted and withheld, from any amounts otherwise payable pursuant to this Agreement such amounts as are required to be deducted or withheld with respect to the making of such payment
under the Code or any applicable provision of state, local or foreign Tax law. To the extent that amounts are so deducted or withheld, such deducted or withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Person in respect of which such deduction or withholding was made.
ARTICLE IV
CLOSING
4.1
Closing Transactions
.
(a)
Closing
. Unless otherwise agreed to by the Company and Buyer or unless this
Agreement shall have been terminated in accordance with
Article X
, the Closing will occur at 10:00 a.m. (Central time) on the date that is
five (5) business days after the satisfaction or waiver (subject to applicable law) of the latest to occur of the conditions set forth in this
Article IV
(other than those conditions that by
their nature can only be satisfied at the Closing, but subject to the satisfaction or waiver
thereof), unless another date, time or place is agreed to in writing by the Company and Buyer. The date upon which the Closing actually occurs is referred to as the "
Closing
Date
."
(b)
Closing Transactions
. Subject to satisfaction or waiver of the conditions set forth
in
Sections 4.2
and
4.3
, the Parties will consummate the following transactions at the Closing
(the "
Closing Transactions
"):
(i) there
will be delivered to Buyer and the Company, as applicable, the certificates and other documents and instruments required to be delivered to such Parties under
Sections 4.2
and
4.3
;
(ii) Buyer
and the Company shall cause the Articles of Merger to be properly executed and filed in accordance with the WBCL, and shall take any and all other lawful actions
and do any and all other lawful things necessary to effect the Merger and to enable the Merger to become effective; and
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4.2
Conditions to Buyer's Obligations
.
The obligation of Buyer to consummate the Closing Transactions is subject to the satisfaction (or waiver by Buyer in writing) of the following conditions as of
the time of the Closing:
(a) The
representations and warranties of the Company set forth in (i)
Sections 8.3
and
8.6(a)
shall be true and correct (other than, the case of
Section 8.3
, such failures to be true
and correct as are insignificant) in each case of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as if
made on and as of the Closing Date, and (ii)
Sections 8.1
,
8.2
and
8.4(a)
shall be true and
correct in all material respects as of the date of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as if made on and as of the Closing Date. All other representations and warranties set forth in
Article VIII
(read without giving effect to any
qualification as to materiality or Material Adverse Effect set forth in such representations or
warranty) will be true and correct in all respects at and as of the date of this Agreement and the Closing Date, as if made on and as of the Closing Date (other than those representations and
warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects), except where the failure of such representations and
warranties to be true and correct have not had and would not reasonably be expected to have a Material Adverse Effect on the Company;
(b) The
Company will have performed and complied, in all material respects, with all of the covenants and agreements required to be performed by it under this Agreement at
or prior to the Closing;
(c) No
judgment, decree, injunction or order of any Governmental Entity of competent jurisdiction shall be in effect as of the Closing that restrains or prevents the
consummation of the transactions contemplated by this Agreement, and there shall not be any Legal Requirement enacted or deemed applicable to this Agreement that makes consummation of the transactions
contemplated by this Agreement illegal;
(d) No
action or proceeding brought by any Governmental Entity seeking a judgment, decree, injunction or order that would restrain or prevent the consummation of the Closing
Transactions shall be pending;
(e) All
regulatory authorizations, consents, orders or approvals (w) from the federal Regulatory Authorities, (x) the approval of the WDFI, to the extent
required under Wis. Stats. Chapter 221, (y) required, if any, under the HSR Act, and (z) set forth in
Sections 8.4
and
9.4
which are
necessary to consummate the transaction contemplated by this Agreement, including the Merger and the Bank Merger, or those the failure of
which to be obtained would reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect on Buyer or the Surviving Corporation, shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in respect thereof shall have expired (such approvals and the expiration of such waiting periods being referred to herein as the
"
Requisite Regulatory Approvals
");
(f) The
Company shall have received the requisite Company Shareholder Approval;
(g) On
or prior to the Closing Date, Buyer shall have received an opinion of Wachtell, Lipton, Rosen & Katz, in form and substance reasonably satisfactory to Buyer,
to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will be treated as a transaction that qualifies as a "reorganization"
within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon representations contained in certificates of officers of the Company and Buyer;
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(h) The
Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn; and
(i) On
or prior to the Closing Date, the Company will have delivered to Buyer all of the following (dated as of the Closing Date, except as otherwise indicated):
(i) Certificates,
each dated not earlier than twenty (20) days prior to the Closing Date, of the secretary of state or similar Governmental Entity of the
jurisdiction under the laws of which each of the Companies is organized and stating that such company is in good standing or has comparable active status in such jurisdiction;
(ii) A
certificate from the chief executive officer or chief financial officer of the Company certifying that each of the conditions set forth in
Sections 4.2(a)
and
4.2(b)
has been and is satisfied as of the time of the Closing;
(iii) A
certificate from the Secretary or an Assistant Secretary of the Company certifying that the Merger has been approved by the requisite vote of the shareholders of the
Company; and
(iv) Such
other documents or instruments as Buyer reasonably requests and as are reasonably necessary to effect the transactions contemplated by this Agreement.
4.3
Conditions to the Company's Obligations
.
The obligation of the Company to consummate the Closing Transactions is subject to the satisfaction (or waiver by the Company in writing) of the following
conditions as of the time of the Closing:
(a) The
representations and warranties of Buyer set forth in (i)
Sections 9.3
and
9.7
shall be true and correct (other than, the case of
Section 9.3
, such failures to be true and
correct as are insignificant) in each case of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as if made on
and as of the Closing Date, and (ii)
Sections 9.1
,
9.2
and
9.4(a)
shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as if made on and as of the Closing Date. All other representations and warranties set forth in
Article IX
(read without giving effect to any
qualification as to materiality or Material Adverse Effect set forth in such representations or
warranty) will be true and correct in all respects at and as of the date of this Agreement and the Closing Date, as if made on and as of the Closing Date (other than those representations and
warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects), except where the failure of such representations and
warranties to be true and correct have not had and would not reasonably be expected to have a material adverse effect on Buyer's ability to consummate the transactions contemplated hereby;
(b) Buyer
will have performed and complied: (i) in all respects with the obligations of Buyer under
Section 3.2(b)
; and (ii) in all material respects, with all of the other covenants and agreements
required to be performed by Buyer under
this Agreement at or prior to the Closing;
(c) No
judgment, decree, injunction or order of any Governmental Entity of competent jurisdiction shall be in effect as of the Closing that restrains or prevents the
consummation of the transactions contemplated by this Agreement, and there shall not be any Legal Requirement enacted or deemed applicable to this Agreement that makes consummation of the transactions
contemplated by this Agreement illegal;
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(d) No
action or proceeding brought by any Governmental Entity seeking a judgment, decree, injunction or order that would restrain or prevent the consummation of the Closing
Transactions shall be pending;
(e) The
Requisite Regulatory Approvals shall have been obtained;
(f) The
Company shall have received the requisite Company Shareholder Approval;
(g) On
or prior to the Closing Date, the Company shall have received an opinion of Quarles & Brady LLP in form and substance reasonably satisfactory to the
Company to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will be treated as a transaction that qualifies as a
"reorganization" within the meaning of Section 368(a) of the Code. In rendering such opinion, counsel may require and rely upon representations contained in certificates of officers of the
Company and Buyer;
(h) The
Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn; and
(i) On
or prior to the Closing Date, Buyer will have delivered to the Company all of the following:
(i) Certificates,
each dated not earlier than twenty (20) days prior to the Closing Date, of the secretary of state or similar Governmental Entity of the
jurisdiction under the laws of which Buyer is organized and stating that Buyer is in good standing or has comparable active status in such jurisdiction;
(ii) A
certificate of the chief executive officer or chief financial officer of Buyer dated as of the Closing Date certifying that each of the conditions set forth in
Sections 4.3(a)
and
4.3(b)
has been and is satisfied as of the time of the Closing;
(iii) A
certificate from the Secretary or an Assistant Secretary of Buyer certifying that the Merger has been approved by the board of directors of Buyer;
(iv) Documentation
evidencing a fully paid extended period policy of insurance as contemplated by
Section 6.6(e)
on
terms and conditions provided for thereunder;
(v) The
Exchange Agent Agreement duly executed by Buyer and the Exchange Agent;
(vi) Evidence
of listing on the Exchange of the shares of Buyer Common Stock to be issued in the Merger; and
(vii) Such
other documents or instruments as the Company reasonably requests and are reasonably necessary to effect the transactions contemplated by this Agreement.
4.4
Absence of Control
.
Subject to any
specific provisions of this Agreement, it is the intent of the Parties to this Agreement that, until the Closing, neither Buyer nor the Company by
reason of this Agreement shall be deemed (until consummation of the Merger) to control, directly or indirectly, the other Party or any of its respective subsidiaries and shall not exercise, or be
deemed to exercise, directly or indirectly, a controlling influence over the management or policies of such other Party or any of its respective subsidiaries.
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ARTICLE V
PRE-CLOSING COMPANY COVENANTS
5.1
Operation and Maintenance of the Company Business.
Prior to
the Closing, unless disclosed on
Schedule 5.1
or unless Buyer otherwise consents in writing, the Company will and will cause its Subsidiaries to:
(a) conduct
their business and operations only in the ordinary course of business consistent with past practice;
(b) use
commercially reasonable efforts, consistent with sound business practice, to keep in full force and effect its existence and all material rights, franchises,
proprietary rights and contractual rights relating or pertaining to their business; and
(c) maintain
their assets in such general state of repair as is reasonably necessary for the conduct of their business consistent with then present needs and past practices,
including replacement in accordance with reasonably prudent business practices of any inoperable, worn out or obsolete assets with assets of quality consistent with reasonably prudent business
practices and then current needs and, in the event of a condemnation, casualty, loss or other material damage to any of the assets prior to the Closing Date, either use commercially reasonable efforts
to repair or replace such condemned or damaged property through (and only to the extent of) the use of the proceeds of such condemnation or insurance, or preserve such proceeds for use by the
Surviving Corporation following the Effective Time.
5.2
Negative Covenants.
Prior to the Closing, without Buyer's
prior written consent, which may not be unreasonably withheld, except as identified on
Schedule 5.2
the Company will not and will cause its
Subsidiaries not to:
(a) knowingly
take any action that is intended to or would reasonably be likely to adversely affect or materially delay the ability of the Parties to obtain any necessary
Requisite Regulatory Approval, the Company Shareholder Approval or to perform its covenants and agreements under this Agreement or the Bank Merger Agreement or to consummate the transactions
contemplated hereby or thereby;
(b) in
each case, other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money (other than indebtedness of the
Company or any of its wholly owned Subsidiaries to the Company or any of its Subsidiaries), or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any
other person (other than any Subsidiary of the Company);
(c) (i)
adjust, split, combine or reclassify any capital stock;
(ii) make,
declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock
or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of
its capital stock (except (A) regular quarterly cash dividends by the Company at a rate not in excess of $0.055 per share of the Company Common Stock, (B) dividends paid by any of the
Subsidiaries of the Company to the Company or any of its wholly owned Subsidiaries, or (C) the acceptance of shares of the Company Common Stock as payment for the exercise price of the Company
Stock Options or for withholding taxes incurred in connection with the exercise of the Company Stock Options or the vesting of the Company Restricted Stock Awards, if any, in each case, in accordance
with the terms of the applicable award agreements as in effect as of the date hereof);
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(iii) grant
any stock options, stock appreciation rights, performance shares, restricted stock units, restricted shares or other equity-based awards or interests, or grant
any individual, corporation or other entity any right to acquire any shares of its capital stock; or
(iv) issue,
sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable into, or exercisable for, any
shares of its capital stock or any options, warrants, or other rights of any kind to acquire any shares of capital stock, except for the issuance of shares of Company Common Stock upon the exercise of
the Company Stock Options or the vesting of the Company Restricted Stock Awards, in each case, outstanding as of the date hereof;
(d) (i)
terminate, materially amend, or waive any material provision of, any Material Contract, or make any material change in any instrument or agreement governing the
terms of any of its securities, other than normal renewals in the ordinary course of business consistent with past practice, (ii) enter into any contract that would constitute a Material
Contract if it were in effect on the date of this Agreement, other than in the ordinary course of business, or (iii) enter into any Contract, other than any confidentiality agreement, which
imposes any non-compete or client or customer non-solicit requirement or any other provision that imposes any material geographic or other restriction upon the ability of any of the Companies (or,
after the Merger, Buyer and its Subsidiaries) to freely engage in any line of business anywhere in the world or require any of the Companies (or, after the Merger, Buyer and its Subsidiaries) to
purchase or sells goods or services on an exclusive basis;
(e) (i)
increase the base salary of any employee, director, independent contractor or consultant other than increases in base salary for employees (excluding any employee
with an individual employment agreement with the Company) in the ordinary course of business consistent with past practice (including due to promotions in the ordinary course of business consistent
with past practice) that do not exceed three (3) percent of the aggregate cost of all employee annual base salaries and wage rates in effect as of the date hereof, (ii) adopt or make any
change to any employee benefit plan, other than (A) amendments to welfare benefit plans (other than severance plans) in the ordinary course of business consistent with past practice that do not
materially increase the cost or expense of maintaining such employee benefit plan, or (B) the annual extension of existing employment agreements for one year in the ordinary course of business
consistent with past practice and without any amendments to such agreements, (iii) accelerate the vesting of any equity-based awards or compensation, other than any acceleration required by the
existing terms of any such awards or compensation, (iv) establish, amend or fund any rabbi trust or similar arrangement, (v) terminate the employment or services of or hire any employee,
director or independent contractor whose annual base compensation is greater than $60,000, other than terminations for cause, (vi) enter into or amend any collective bargaining agreement or
similar arrangement, in each case other than as required by law or required by the terms of any existing agreement or employee benefit plan or (vii) except as required by law or as mandated by
accounting or tax standards or rules, materially change any actuarial or other assumption used to calculate funding obligations with respect to any Company Plan or materially change the manner in
which contributions to any Company Plan are made or the basis on which such contributions are determined;
(f) enter
into loan transactions not in accordance with, or consistent with, past practices of the Bank or that are on terms and conditions that, to the knowledge of the
Company, are materially more favorable than those available to the borrower from competitive sources in arm's-length transactions;
(g) (i)
enter into any new credit or new lending relationships greater than Twenty Million Dollars ($20,000,000) that would require an exception to the Bank's formal loan
policy as in effect
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as
of the date of this Agreement or that are not in strict compliance with the provisions of such loan policy; (ii) make any single new loan in excess of Twenty Million Dollars ($20,000,000);
or (iii) other than incident to a reasonable loan restructuring, extend additional credit to any Person and any director or officer of, or any owner of a material interest in, such Person (any
of the foregoing with respect to a Person being referred to as a "Borrowing Affiliate") if such Person or such Borrowing Affiliate is the obligor under any indebtedness to the Company or any of its
Subsidiaries which constitutes a nonperforming loan or against any part of such indebtedness the Company or any of its Subsidiaries has established loss reserves or any part of which has been
charged-off by the Company or any of its Subsidiaries;
(h) except
for debt workouts in the ordinary course of business consistent with past practice, settle any material claim, suit, action or proceeding in an amount and for
consideration in excess of $250,000 individually or $750,000 in the aggregate or that would impose material restrictions on the business of it or its Subsidiaries or Buyer or its Subsidiaries;
(i) amend
the articles or certificate of incorporation, bylaws, operating agreement or other organizational document of any of the Companies;
(j) merge
or consolidate itself or any of its Subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of
its Subsidiaries
(k) sell,
transfer, mortgage, encumber, license, let lapse, cancel, abandon or otherwise dispose of or discontinue any of its assets, deposits, business or properties,
except for (i) pursuant to Contracts specified on
Schedule 5.2(k)
entered into prior to the date of this Agreement, (ii) sales of
properties on the Company's surplus or for sale property list at amounts at or exceeding their value on the books and records of the Company as of the date hereof, or (iii) other sales,
transfers, mortgages, encumbrances, licenses, lapses, cancellations, abandonments or other dispositions or discontinuances in the ordinary course of business that do not, together with other such
transactions, represents an aggregate net book value of more than One Million Dollars ($1,000,000);
(l) implement
or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or applicable regulatory accounting requirements;
(m) except
for transactions in the ordinary course of business consistent with past practice (including by way of foreclosure or acquisitions of control in a fiduciary or
similar capacity or in satisfaction of debts previously contracted in good faith), make any investment either by purchase of stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual, corporation or other entity, other than in a wholly owned Subsidiary of the Company;
(n) materially
restructure or materially change its investment securities or derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise, or
the manner in which the portfolio is classified or reported, except as may be required by GAAP or by applicable laws, regulations, guidelines or policies imposed by any Governmental Entity or
requested by a Governmental Entity;
(o) enter
into any material new line of business or change in any material respect its lending, investment, underwriting, risk and asset liability management and other
banking and operating, hedging policies, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital exposure applicable with
respect to its loan portfolio or any segment thereof), except as required by such policies or applicable law, regulation or policies imposed by any Governmental Entity;
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(p) make,
or commit to make, any capital expenditures in excess of $1,000,000 in the aggregate, other than as disclosed in the Company's capital expenditure budget set forth
in
Schedule 5.2(p)
and ordinary and necessary maintenance of or repairs to Company property in the ordinary course of business;
(q) make,
change or revoke any material Tax election, change an annual Tax accounting period, adopt or change any material Tax accounting method, file any material amended
Tax Return, enter into any closing agreement with respect to a material amount of Taxes, or settle any material Tax claim, audit, assessment or dispute or surrender any right to claim a refund of a
material amount of Taxes;
(r) (i)
make application for the opening or relocation of, or open or relocate, any branch office, loan production office or other significant office or operations facility
of it or its Subsidiaries, (ii) make application for the closing of or close any branch, other than pursuant to agreements entered into prior to the date hereof set forth in
Schedule 5.2(r)
,
or (iii) purchase any new real property (other than other real estate owned (OREO) properties in the ordinary course of
business consistent with past practice) in an amount in excess of $750,000 for any individual property or enter into, amend or renew any material lease with respect to real property requiring
aggregate payments under any individual lease in excess of $250,000 annually; or
(s) agree
to take, make any commitment to take, or adopt any resolutions of its Board of Directors or similar governing body approving or authorizing, any of the foregoing
actions.
5.3
Information.
(a) Subject
to any applicable Legal Requirements, from time to time at Buyer's request upon reasonable prior notice and at reasonable times, the Company will provide to
representatives of Buyer and its financing parties and each of their agents, employees and accounting, tax, legal and other advisors (collectively, the "
Buyer Investigating
Parties
"):
(i) access
to the offices and assets of the Company;
(ii) access
to all books and records of the Company and its Subsidiaries (except employee medical records) and such other relevant information and materials as may be
reasonably requested (including the ability to make copies and abstracts thereof); and
(iii) the
opportunity to discuss the affairs of the Company with the current senior officers of the Company who would reasonably be presumed to have information which would
be relevant for the purposes of planning for the transition to Buyer's ownership, upon prior notice to and approval of the Company, which approval may not be unreasonably withheld, delayed or
conditioned except that the Company may require one of its representatives to be present for any such meeting.
Buyer
further agrees that all information derived by Buyer or any of the Buyer Investigating Parties as a result of the above shall be governed by the terms and conditions of that certain
Non-Disclosure Agreement between the Company and Buyer dated May 17, 2017 (the "
Buyer NDA
"). Without limiting the foregoing, Buyer acknowledges
and agrees that neither Buyer nor any Buyer Investigating Party may contact any customer, vendor, financing source, other related party or any employee of any of the Companies without the express
written permission of the Company, other than in the ordinary course of business.
(b) Notwithstanding
the foregoing, such access or investigation shall not interfere materially with the normal operations of the Companies. Upon request, the Company and
each of its Subsidiaries will furnish Buyer or its representatives such financial and operating data and other information reasonably requested by Buyer (provided, such disclosure would not result in
the waiver by the Company or any of its Subsidiaries of any claim of attorney-client privilege). This
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Section 5.3(b)
shall not require the disclosure of any information to Buyer the disclosure of which, in the Company's reasonable judgment: (i) would be prohibited
by any applicable Legal Requirement including the prohibitions on disclosure of confidential supervisory information; (ii) would result in the breach of any agreement with any third party in
effect on the date of this Agreement; or (iii) relate to pending or threatened litigation or investigations, if disclosure might affect the confidential nature of, or any privilege relating to,
the matters being discussed. If any of the restrictions in the preceding sentence shall apply, the Company and Buyer will make, to the extent legally permissible, appropriate alternative disclosure
arrangements, including adopting additional specific procedures to protect the confidentiality of sensitive material and to ensure compliance with any applicable Legal Requirement.
(c) From
the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, the Company shall promptly furnish to
Buyer: (i) a copy of each report, schedule, registration statement and other document filed, furnished or received by it during such period pursuant to the requirements of federal and state
banking laws or federal or state securities laws, which is not generally available on the SEC's EDGAR internet database; and (ii) a copy of each report filed by it or any of its Subsidiaries
with any Regulatory Authority; in each case other than portions of such documents relating to confidential supervisory or examination materials or the disclosure of which would violate any applicable
Legal Requirement.
5.4
Schedules.
(a)
Delivery of Company Schedules.
Contemporaneously with the execution and delivery of
this Agreement, the Company is delivering certain schedules described in this Agreement (collectively, the "
Company Schedules
") to Buyer. The Company
Schedules are incorporated by reference herein and are deemed to constitute an integral part of this Agreement and to modify the representations, warranties, covenants or agreements of the Company,
contained in this Agreement.
(b)
Disclosure on Company Schedules.
If a document or matter is disclosed in any Company
SEC Report filed with, or furnished to, the SEC prior to the date that is two business days prior to the date hereof (without giving effect to any amendment to any such Company SEC Report filed on or
after the date that is two business days prior to the date of this Agreement) and publicly available in full on the SEC's Edgar system (excluding any disclosures set forth in any such Company SEC
Report in any risk factor section, any forward-looking disclosure or any other statements that are similarly predictive or primarily cautionary in nature), or on any Company Schedule to this
Agreement, it shall be deemed to be disclosed for all purposes of this Agreement to which its relevance is reasonably apparent on its face, without necessity of specific repetition or cross-reference;
however, the disclosure of such document or matter is not intended as a representation or warranty as to the material nature of such document or matter nor does it establish any standard of
materiality upon which to judge the inclusion or omission of other documents or matters in any such schedule or constitute an admission of liability, guilt, violation or delinquency with respect to
any Contract, Legal Requirement or Authorization. All capitalized terms used in any Company Schedule shall have the definitions specified in this Agreement.
(c)
Notification.
Between the date of this Agreement and the Effective Time, the Company
will promptly notify Buyer of the occurrence of any event that would reasonably be expected to make the satisfaction of one or more of the conditions in
Sections 4.2 and
4.3
, as applicable, impossible or unlikely; provided that the delivery of any notice pursuant to this
Section 5.4(c)
will
not limit or otherwise affect the remedies available hereunder to the Party receiving such notice, or the representations or warranties of, or the conditions to the obligations of, the Parties.
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5.5
Company Shareholders' Meeting
.
(a) The
Company shall, as promptly as reasonably practicable after the date the Registration Statement is declared effective, take all action necessary, including as
required by and in accordance with the WBCL, the Restated Articles of Incorporation of the Company and the Bylaws of the Company to duly call, give notice of, convene and hold a meeting of the Company
Shareholders (the "
Company Shareholders Meeting
") for the purpose of obtaining the requisite approval of its shareholders (the
"
Company Shareholder Approval
"). The Company and the Company Board will use their reasonable best efforts to obtain from its shareholders the votes in
favor of the adoption of this Agreement required by the WBCL and otherwise, including by recommending that the Company Shareholders vote in favor of this Agreement, and the Company and the Company
Board will not withdraw, qualify or adversely modify (or publicly propose or resolve to withdraw, qualify or adversely modify) the Company Board's recommendation to the Company Shareholders that the
Company Shareholders vote in favor of the adoption and approval of this Agreement (an "
Adverse Recommendation
"). However, if, prior to the time the
Company Shareholder Approval is obtained, the Company Board, after consultation with its financial advisor and outside counsel, determines in good faith that (i) (A) an Acquisition Proposal
constitutes a Superior Proposal or (B) a change or effect has occurred following the date hereof, and (ii) in each case it is reasonably likely that to continue to recommend this
Agreement to its shareholders in light of such Acquisition Proposal or change or effect would result in a violation of its fiduciary duties under the WBCL, then, in submitting this Agreement at the
Company Shareholders Meeting, the Company Board may make an Adverse Recommendation or publicly propose or resolve to make an Adverse Recommendation (although the resolutions approving this Agreement
as of the date hereof may not be rescinded or amended);
provided
, that the Company Board may not take any actions under this sentence unless
(i) it gives Buyer at least three (3) business days' prior written notice of its intention to take such action and a reasonable description of the event or circumstances giving rise to
its determination to take such action (including, in the event such action is taken by the Company Board in response to an Acquisition Proposal, the latest material terms and conditions and the
identity of the third party in any such Acquisition Proposal, or any amendment or modification thereof, or, in the event such action is taken by the Company Board in response to a change or effect of
the type referred to above not involving an Acquisition Proposal, a description in reasonable detail such other change or effect) and (ii) at the end of such notice period, the Company Board
takes into account any amendment or modification to this Agreement proposed by Buyer and the Company Board, after consultation with its financial advisor and outside counsel, determines in good faith
that (A) in the case of an Acquisition Proposal, the Acquisition Proposal continues to constitute a Superior Proposal and (B) it remains reasonably likely that to continue to recommend
this Agreement (as it may be proposed to be amended) to its shareholders in light of such Acquisition Proposal or change or effect would result in a violation of its fiduciary duties under the WBCL.
Any material amendment to any Acquisition Proposal will be deemed to be a new Acquisition Proposal for purposes of this
Section 5.5
and will
require a new notice period as referred to in this
Section 5.5
.
(b) Except
in the case of an Adverse Recommendation, the Company shall adjourn or postpone the Company Shareholders Meeting, if, as of the time for which such meeting is
originally scheduled, there are insufficient shares of Company Common Stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of such meeting, or if
on the date of such meeting, the Company has not received proxies representing a sufficient number of shares necessary to obtain the Company Shareholder Approval. Notwithstanding anything to the
contrary herein, unless this Agreement has been terminated in accordance with its terms, the Company Shareholders Meeting shall be convened and this Agreement shall be submitted to the Company
Shareholders at the Company Shareholders Meeting, for the purpose of
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voting
on the adoption of this Agreement and the other matters contemplated hereby, and nothing contained herein shall be deemed to relieve the Company of such obligation.
5.6
Information Provided to Buyer
.
The
Company agrees that the information concerning the Company or any of its Subsidiaries that is provided or to be provided by the Company in writing to Buyer specifically for inclusion in the
Registration Statement or Proxy Statement and any other documents to be filed with any Regulatory Authority in connection with the Contemplated Transactions will: (i) at the respective times
such documents are filed and, in the case of the Registration Statement, when it becomes effective and, with respect to the Proxy Statement, when mailed, not 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, in light of the circumstances under which they were made, not misleading; or (ii) in the
case of the Proxy Statement or any amendment thereof or supplement thereto, at the time of the Company Shareholders Meeting, not 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 in connection with which the Proxy Statement shall
be mailed. The Company will have a duty to correct any material misleading statement specified by the Company for inclusion, and so included, in the Registration Statement or Proxy Statement and any
other documents filed with any Regulatory Authority. Notwithstanding the foregoing, the Company shall have no responsibility for the truth or accuracy of any information with respect to Buyer or any
of its Subsidiaries or any of their Affiliates contained in the Registration Statement or the Proxy Statement or in any document submitted to, or other communication with, any Regulatory Authority.
5.7
Operating Functions
.
The Company and
the Bank shall cooperate with Buyer in connection with planning for the efficient and orderly combination of the Parties;
provided, however
, that the
foregoing actions shall not unduly interfere with the business operations of the Company or its Subsidiaries.
5.8
Acquisition Proposals
.
(a) The
Company will immediately cease and cause to be terminated any activities, discussions or negotiations conducted before the date of this Agreement with any Persons
other than Buyer with respect to any Acquisition Proposal and will use its reasonable best efforts to enforce any confidentiality or similar agreement relating to an Acquisition Proposal. The Company
will within two (2) business days advise Buyer following receipt of any Acquisition Proposal and the substance thereof (including the identity of the Person making such Acquisition Proposal),
and will keep Buyer reasonably apprised of any related developments, discussions and negotiations (including the material terms and conditions of the Acquisition Proposal) on a reasonably current
basis.
(b) The
Company agrees that it will not, and will cause its Subsidiaries and its and its Subsidiaries' officers, directors, agents, advisors and affiliates not to, initiate,
solicit, encourage or knowingly facilitate inquiries or proposals with respect to, or engage in any negotiations concerning, or provide any confidential or nonpublic information or data to, or have
any discussions with, any Person relating to, any Acquisition Proposal (other than contacting a Person for the sole purpose of seeking clarification of the terms and conditions of an unsolicited bona
fide Acquisition Proposal received after the execution of this Agreement and prior to the receipt of the Company Shareholder Approval); provided that, in the event the Company receives an unsolicited
bona fide Acquisition Proposal, from a Person other than Buyer, after the execution of this Agreement and prior to the receipt of the Company Shareholder Approval, and the Company Board concludes in
good faith, after consultation with its financial advisor and outside counsel, that such Acquisition Proposal constitutes a Superior Proposal or would reasonably be likely to result in a Superior
Proposal and, after considering the advice of outside counsel, that failure to take such actions would be reasonably likely to result in a violation of the directors' fiduciary
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duties
under applicable law, the Company may: (i) furnish information with respect to it to such Person making such Acquisition Proposal pursuant to a customary confidentiality agreement
(subject to the requirement that any such information not previously provided to Buyer shall be promptly furnished to Buyer); and (ii) participate in discussions or negotiations regarding such
Acquisition Proposal; and (iii) subject to the provisions of
Section 5.5
, effect an Adverse Recommendation.
(c) Nothing
contained in this Agreement shall prevent the Company or the Company Board from complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act
with respect to an Acquisition Proposal,
provided
that such rules will in no way eliminate or modify the effect that any action pursuant to such rules
would otherwise have under this Agreement.
5.9
Section 16 Matters
.
The
Company will take such steps as may be necessary or appropriate to cause any disposition of Company Common Stock in connection with the consummation of the Contemplated Transactions to be exempt under
Rule 16b-3 promulgated under the Exchange Act.
ARTICLE VI
BUYER COVENANTS
6.1
Operation and Maintenance of the Buyer
Business
.
Prior to the Closing, unless the Company otherwise consents in writing, the Buyer will and will cause its Subsidiaries to use
commercially reasonable efforts, consistent with sound business practice, to keep in full force and effect its existence and all material rights, franchises, proprietary rights and contractual rights
relating or pertaining to their business, and will not and will cause its Subsidiaries not to:
(a) knowingly
take any action that is intended to or would reasonably be likely to adversely affect or materially delay the ability of the Parties to obtain any necessary
Requisite Regulatory Approval, the Company Shareholder Approval, or to perform its covenants and agreements under this Agreement or the Bank Merger Agreement or to consummate the transactions
contemplated hereby or thereby; and
(b) amend
its Amended and Restated Articles of Incorporation or its Amended and Restated Bylaws in a manner that would materially and adversely affect the holders of Company
Common Stock relative to other holders of Buyer Common Stock.
6.2
Information
.
(a) Subject
to any applicable Legal Requirements, from time to time at the Company's request upon reasonable prior notice and at reasonable times, Buyer will provide to
representatives of the Company
and its agents, employees and accounting, tax, legal and other advisors (collectively, the
"Company Investigating Parties"
):
(i) access
to the offices and assets of Buyer;
(ii) access
to all books and records of Buyer and its Subsidiaries (except employee medical records) and such other relevant information and materials as may be reasonably
requested (including the ability to make copies and abstracts thereof); and
(iii) the
opportunity to discuss the affairs of Buyer with the current senior officers of Buyer who would reasonably be presumed to have information which would be relevant
for the purposes of planning for the transition to the Buyer's ownership, upon prior notice to and approval of Buyer, which approval may not be unreasonably withheld, delayed or conditioned except
that Buyer may require one of its representatives to be present for any such meeting.
The
Company further agrees that all information derived by the Company or any of the Company Investigating Parties as a result of the above shall be governed by the terms and
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conditions
of the Buyer NDA. Without limiting the foregoing, the Company acknowledges and agrees that neither the Company nor any Company Investigating Party may contact any customer, vendor,
financing source, other related party or any employee of any of Buyer or its Subsidiaries without the express written permission of Buyer, other than in the ordinary course of business.
(b) Notwithstanding
the foregoing, such access or investigation shall not interfere materially with the normal operations of Buyer or any of its Subsidiaries. Upon request,
Buyer and each of its Subsidiaries will furnish the Company or its representatives such financial and operating data and other information reasonably requested by the Company (provided, such
disclosure would not result in the waiver by Buyer or any of its Subsidiaries of any claim of attorney-client privilege). This
Section 6.2(b)
shall not require the disclosure of any information to the Company the disclosure of which, in Buyer's reasonable judgment: (i) would be prohibited by any applicable Legal Requirement including
the prohibitions on disclosure of confidential supervisory information; (ii) would result in the breach of any agreement with any third party in effect on the date of this Agreement; or
(iii) relate to pending or
threatened litigation or investigations, if disclosure might affect the confidential nature of, or any privilege relating to, the matters being discussed. If any of the restrictions in the preceding
sentence shall apply, the Company and Buyer will make, to the extent legally permissible, appropriate alternative disclosure arrangements, including adopting additional specific procedures to protect
the confidentiality of sensitive material and to ensure compliance with any applicable Legal Requirement.
(c) From
the date hereof until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, Buyer shall promptly furnish to the
Company: (i) a copy of each report, schedule, registration statement and other document filed, furnished or received by it during such period pursuant to the requirements of federal and state
banking laws or federal or state securities laws, which is not generally available on the SEC's EDGAR internet database; and (ii) a copy of each report filed by it or any of its Subsidiaries
with any Regulatory Authority; in each case other than portions of such documents relating to confidential supervisory or examination materials or the disclosure of which would violate any applicable
Legal Requirement.
6.3
Schedules.
(a)
Delivery of Buyer Schedules
. Contemporaneously with the execution and delivery of
this Agreement, Buyer is delivering certain schedules described in this Agreement (collectively, the "
Buyer Schedules
") to the Company. The Buyer
Schedules are incorporated by reference herein and are deemed to constitute an integral part of this Agreement and to modify the representations, warranties, covenants or agreements of the Buyer,
contained in this Agreement.
(b)
Disclosure on Buyer Schedules
. If a document or matter is disclosed in any Buyer SEC
Report filed with, or furnished to, the SEC prior to the date that is two business days prior to the date hereof (without giving effect to any amendment to any such Buyer SEC Report filed on or after
the date that is two business days prior to the date of this Agreement) and publicly available in full on the SEC's Edgar system (excluding any disclosures set forth in any such Buyer SEC Report in
any risk factor section, any forward-looking disclosure or any other statements that are similarly predictive or primarily cautionary in nature), or on any Buyer Schedule to this Agreement, it shall
be deemed to be disclosed for all purposes of this Agreement to which its relevance is reasonably apparent on its face, without necessity of specific repetition or cross-reference; however, the
disclosure of such document or matter is not intended as a representation or warranty as to the material nature of such document or matter nor does it establish any standard of materiality upon which
to judge the inclusion or omission of other documents or matters in any such Schedule or constitute an admission of liability, guilt, violation or delinquency with respect to any Contract, Legal
Requirement or Authorization. All capitalized terms used in any Buyer Schedule shall have the definitions specified in this Agreement.
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(c)
Notification
. Between the date of this Agreement and the Effective Time, Buyer will
promptly notify the Company of the occurrence of any event that would reasonably be expected to make the satisfaction of one or more of the conditions in
Sections 4.2
and 4.3
, as applicable, impossible or unlikely; provided that the delivery of any notice pursuant to this
Section 6.3(c)
will not limit or otherwise affect the remedies available hereunder to the Party receiving such notice, or the representations or warranties of, or the conditions to the obligations of, the Parties.
6.4
Intentionally Omitted.
6.5
Information Provided to the Company.
Buyer agrees that the
information concerning Buyer or any of its Subsidiaries that is provided or to be provided by Buyer in writing to the Company specifically
for inclusion in the Registration Statement or Proxy Statement and any other documents to be filed with any Regulatory Authority in connection with the Contemplated Transactions will: (a) at
the respective times such documents are filed and, in the case of the Registration Statement, when it becomes effective and, with respect to the Proxy Statement, when mailed, not 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, in light of the circumstances under which they were made, not
misleading; or (b) in the case of the Proxy Statement or any amendment thereof or supplement thereto, at the time of the Company Shareholders Meeting, not 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 in connection with
which the Proxy Statement shall be mailed. Buyer will have a duty to correct any material misleading statement specified by Buyer for inclusion, and so included, in the Registration Statement or Proxy
Statement and any other documents filed with any Regulatory Authority. Notwithstanding the foregoing, Buyer shall have no responsibility for the truth or accuracy of any information with respect to
the Company or any of its Subsidiaries or any of their Affiliates contained in the Registration Statement or the Proxy Statement or in any document submitted to, or other communication with, any
Regulatory Authority.
6.6
Indemnification.
(a) From
and after the Effective Time, Buyer shall, to the fullest extent permitted under applicable Legal Requirements, indemnify and hold harmless (i) any person
who is or was a director, officer or employee of the Company or any Subsidiary of the Company, and (ii) any person who, while a director, officer or employee of the Company or any Subsidiary of
the Company, is or was serving an employee benefit plan because his or her duties to the Company or to such Subsidiary also imposed duties on, or otherwise involved services by, the person to the plan
or to participants in or beneficiaries of the plan (each, an "
Indemnified Party
"), against any and all Losses, reasonable fees (including reasonable
attorneys' fees), costs, charges, disbursements and other expenses actually and reasonably incurred by the Indemnified Party (collectively, "
Expenses
")
in connection with any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal, which involves
federal, state or local law and which is brought by or in the right of any Person (any such action, an "
Indemnification Proceeding
") to which the
Indemnified Party was made a party by virtue of his or her service in any of the capacities set forth above in clauses (i) and (ii) of this
Section 6.6(a),
to the extent that such
Indemnified Party has been successful on the merits or otherwise in the defense of such Indemnification
Proceeding.
(b) From
and after the Effective Time, Buyer shall, to the fullest extent permitted under applicable Legal Requirements, indemnify and hold harmless any Indemnified Party
against any obligation to pay a judgment, penalty, assessment, forfeiture or fine, or the agreement to pay any amount in settlement of an Indemnification Proceeding, and pre- and post-judgment
interest related thereto, and any Expenses incurred by such Indemnified Party in connection with an Indemnification Proceeding, unless it shall be proven by final judicial adjudication that such
person
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breached
or failed to perform a duty owed to the Company or to any Subsidiary of the Company which constituted: (i) a willful failure to deal fairly with the Company, any Subsidiary of the
Company, or the respective shareholders thereof in connection with a matter in which the Indemnified Party had a material conflict of interest, (ii) a violation of the criminal law, unless the
Indemnified Party had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful, (iii) a transaction from which the
Indemnified Party derived an improper personal benefit, or (iv) willful misconduct.
(c) Upon
written request by an Indemnified Party who has been made party to an Indemnification Proceeding, Buyer shall reimburse the Expenses of such Indemnified Party as
incurred if the Indemnified Party provides Buyer with all of the following: (i) a written affirmation of his or her good faith belief that he or she did not breach or fail to perform his or her
duties to the Company and (ii) a written undertaking, executed personally or on his or her behalf, to repay to Buyer such reimbursements if and to the extent that it is ultimately determined
that such Indemnified Party was not entitled to indemnification for such amounts under the terms of this Agreement.
(d) Notwithstanding
any other provision of this Agreement, in order for any Indemnified Party to be entitled to indemnification under this Agreement, such Indemnified Party
must make a written request to Buyer. This written request shall contain a declaration that Buyer shall have the right to exercise all rights and remedies available to such Indemnified Party against
any other party arising out of or related to the Indemnification Proceeding for which indemnification is being sought and that the Indemnified Party has assigned to Buyer all such rights and remedies.
Buyer shall have no obligation to indemnify any Indemnified Party under this Agreement if and to the extent that such Indemnified Party has previously received indemnification or allowance for
Expenses from any party in connection with the same Indemnification Proceeding.
(e) For
a period of six (6) years after the Effective Time or, if such term coverage is not available, such other maximum period of coverage available, Buyer shall
maintain a directors' and officers' liability insurance policy or policies covering each Indemnified Party covered by the Company's directors' and officers' liability insurance policy in effect as of
the date hereof, on and subject to terms and conditions no less advantageous to the insureds than the Company's directors' and officers' liability insurance policy in effect as of the date hereof, for
acts or omissions occurring prior to the Effective Time; provided, that in no event shall Buyer be required to expend in the aggregate an amount in excess of 300% of the amount of the aggregate
premiums paid by the Company for fiscal year 2017 for such purpose (which amount is set forth in
Schedule 6.6(e)
) and, if Buyer is unable to
maintain such policy (or substitute policy) as a result of this proviso, Buyer shall obtain a policy or policies of insurance with
substantially similar terms and conditions as may then be available, and with an equal or lesser claims reporting time period as may then be available for payment of such amount; provided further,
that in lieu of the obligations of this subsection, Buyer may request that the Company obtain, and upon such request the Company shall obtain, at Buyer's expense, such extended reporting period
coverage under the Company's existing insurance programs (to be effective as of the Effective Time).
(f) If
Buyer or any of its successors or assigns shall (i) consolidate with or merge into any other Person and is not the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfer all or substantially all its properties and assets to any Person, then, and in each such case, Buyer shall use commercially reasonable
efforts to cause proper provision to be made so that the successor and assign of Buyer assumes the obligations set forth in this
Section 6.6.
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(g) The
provisions of this
Section 6.6
shall survive consummation of the Merger and are intended to be for the benefit
of, and will be enforceable by, each Indemnified Party, his or her heirs, and his or her legal representatives.
6.7
Board Representation.
On or prior to the Effective Time, Buyer
shall cause the number of directors that will comprise the full board of directors of the Surviving Corporation and Buyer
Bank at the Effective Time to increase by one. Such new position shall be filled Michael T. Crowley, Jr. (the "
Designated Director
") and, assuming
satisfactory performance, nominate the Designated Director for election at the next succeeding annual meeting of Buyer shareholders following the Designated Director joining such boards. The
appointment of the Designated Director to the boards of directors of the Surviving Corporation and Buyer Bank shall be subject to the bylaws of the Surviving Corporation and Buyer Bank, respectively,
and the Designated Director must satisfy and comply with the requirements regarding service as a member of the board of directors of the Surviving Corporation and Buyer Bank, as applicable, provided
under applicable Legal Requirements and the practices and policies of such board that are generally applicable to its members.
6.8
Authorization and Reservation of Buyer Common Stock.
Buyer
Board shall, as of the date hereof, authorize and reserve the maximum number of shares of Buyer Common Stock to be issued pursuant to this Agreement and
take all other necessary corporate action to consummate the Contemplated Transactions.
6.9
Stock Exchange Listing.
Buyer shall cause all shares of Buyer
Common Stock issuable or to be reserved for issuance under this Agreement to be approved for listing on the Exchange prior
to the Closing Date.
6.10
Section 16 Matters.
Buyer will take such steps as may be
necessary or appropriate to cause any acquisition of Buyer Common Stock in connection with the consummation of the
Contemplated Transactions to be exempt under Rule 16b-3 promulgated under the Exchange Act.
ARTICLE VII
COVENANTS OF ALL PARTIES
7.1
Regulatory Approvals.
Buyer and the Company and their respective
Subsidiaries will cooperate and use all reasonable best efforts to as promptly as possible prepare, file, effect and
obtain all Regulatory Approvals, and the Parties will comply with the terms of such Regulatory Approvals. Each of Buyer and the Company will have the right to review in advance, and to the extent
practicable each will consult with the other, in each case subject to applicable Legal Requirements relating to the exchange of information, with respect to all substantive written information
submitted to any Regulatory Authority in connection with the Regulatory Approvals (other than any confidential supervisory information and other similar proprietary information filed under a claim of
confidentiality). In exercising the foregoing right, each of the Parties will act reasonably and as promptly as practicable. Each Party agrees that it will consult with the other Party with respect to
obtaining all permits, consents, approvals and authorizations of all Regulatory Authorities necessary or advisable to consummate the Contemplated Transactions, and each Party will keep the other Party
apprised of the status of material matters relating to completion of the Contemplated Transactions. Buyer and the Company will, upon request, furnish the other Party with all information concerning
itself, its Subsidiaries, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on
behalf of such other Party or any of its Subsidiaries with or to any Regulatory Authority in connection with the Contemplated Transactions.
7.2
SEC Registration.
As soon as practicable following the date of
this Agreement, the Company and Buyer shall prepare and file with the SEC the Proxy Statement and Buyer shall prepare
and file
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with
the SEC the Registration Statement, in which the Proxy Statement will be included. Buyer shall use its reasonable best efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the Merger and the Contemplated Transactions. The
Company will use its reasonable best efforts to cause the Proxy Statement to be mailed to the Company Shareholders as promptly as practicable after the Registration Statement is declared effective
under the Securities Act. Buyer will advise the Company, promptly after it receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification of Buyer Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or any request by
the SEC to amend the Proxy Statement or the Registration Statement or comments thereon and responses thereto or requests by the SEC for additional information, and the Company will advise Buyer,
promptly after it receives notice thereof, of any request by the SEC to amend the Proxy Statement or comments thereon and responses thereto or requests by the SEC for additional information. The
Parties shall use reasonable best efforts to respond (with the assistance of the other Party) as promptly as practicable to any comments of the SEC with respect thereto. If prior to the Effective Time
any event occurs with respect to the Company, Buyer or any Subsidiary of the Company or Buyer, respectively, or any change occurs with respect to information supplied by or on behalf of the Company or
Buyer, respectively, for inclusion in the Proxy Statement or the Registration Statement that, in each case, is required to be described in an amendment of, or a supplement to, the Proxy Statement or
the Registration Statement, the Company or Buyer, as applicable, shall promptly notify the other of such event, and the Company or Buyer, as applicable, shall cooperate in the prompt filing with the
SEC of any necessary amendment or supplement to the Proxy Statement and the Registration Statement and, as required by applicable Legal Requirements, in disseminating the information contained in such
amendment or supplement to the Company Shareholders.
7.3
Publicity.
Neither the Company nor Buyer shall, and neither
Party shall permit any of its Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement or, except as otherwise specifically provided in this Agreement, any disclosure of nonpublic information to a third party,
concerning, the Contemplated Transactions without the prior consent (which shall not be unreasonably withheld or delayed) of the other Party;
provided,
however
, that either Party may, without the prior consent of the other Party (but after prior consultation with the other Party to the extent practicable under the
circumstances), issue or cause the publication of any press release or other public announcement to the extent required by applicable Legal Requirements or by stock exchange rules. Subject to the
foregoing, the Parties agree that the press release announcing the execution and delivery of this Agreement shall be a joint press release of the Parties, mutually agreed upon. Thereafter, and subject
to the limitations of this paragraph, the Parties shall each use their reasonable best efforts to develop a joint communications plan with respect to the Contemplated Transactions and to ensure that
all press releases and other public statements with respect to the Contemplated Transactions shall be consistent with such joint communications plan.
7.4
Reasonable Best Efforts; Cooperation; Takeover Statutes.
(a) Each
of Buyer and the Company agrees to exercise good faith and use its reasonable best efforts to satisfy the various covenants and conditions to Closing in this
Agreement, and to consummate the Contemplated Transactions as promptly as practicable. Neither Party will intentionally take or intentionally permit to be taken any action that would be a breach of
the terms or provisions of this Agreement. Between the date of this Agreement and the Closing Date, each Party will, and will cause each Subsidiary of that Party, respectively, and all of their
respective Affiliates and representatives to, cooperate with respect to all filings that any Party is required by any applicable Legal Requirements to make in connection with the Contemplated
Transactions.
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(b) Subject
to applicable Legal Requirements and the instructions of any Regulatory Authority, each Party shall keep the other Party reasonably apprised of the status of
matters relating to the completion of the Contemplated Transactions, including promptly furnishing the other Party with copies of notices or other written communications received by it or any of its
Subsidiaries from any Regulatory Authority with respect to such transactions.
(c) Without
limiting the foregoing, none of Buyer, the Company or their respective boards of directors shall take any action that would cause any Takeover Statute to become
applicable to this Agreement or
the Contemplated Transactions, and each shall take all necessary steps to exempt (or ensure the continued exemption of) the Contemplated Transactions from any applicable Takeover Statute now or
hereafter in effect. If any Takeover Statute may become, or may purport to be, applicable to the Contemplated Transactions, each Party and the members of their respective boards of directors will
grant such approvals and take such actions as are necessary so that the Contemplated Transactions may be consummated as promptly as practicable on the terms contemplated hereby and thereby and
otherwise act to eliminate or minimize the effects of any Takeover Statute on any of the Contemplated Transactions, including, if necessary, challenging the validity or applicability of any such
Takeover Statute.
7.5
Reorganization.
(a) The
Parties intend that the Merger qualify as a "reorganization" within the meaning of Section 368(a) of the Code and that this Agreement constitute a "plan of
reorganization" for purposes of Sections 354 and 361 of the Code. From and after the date of this Agreement and until the Effective Time, each Party shall use its reasonable best efforts to
cause the Merger to qualify as a "reorganization" within the meaning of Section 368(a) of the Code, and will not knowingly take any action, cause any action to be taken, fail to take any action
or cause any action to fail to be taken which action or failure to act could reasonably be expected to prevent the Merger from so qualifying. Following the Effective Time, neither Buyer nor any
Affiliate of Buyer knowingly shall take any action, cause any action to be taken, fail to take any action, or cause any action to fail to be taken, which action or failure to act could prevent the
Merger from qualifying as a "reorganization" within the meaning of Section 368(a) of the Code.
(b) As
of the date hereof, the Company does not know of any reason why it would not be able to deliver to counsel, as of the date of the tax opinion referred to in
Section 4.3(g)
, a certificate
substantially in compliance with IRS published advance ruling guidelines, with reasonable or customary exceptions
and modifications thereto (the "
IRS Guidelines
"), to enable counsel to deliver such legal opinion, and the Company hereby agrees to deliver to counsel
such certificate effective as of the date of such opinion.
(c) As
of the date hereof Buyer does not know of any reason why it would not be able to deliver to its counsel, as of the date of the tax opinion referred to in
Section 4.3(g),
a certificate substantially
in compliance with the IRS Guidelines, to enable counsel to deliver such legal opinion contemplated,
and Buyer hereby agrees to deliver to counsel such certificate effective as of the date of such opinion.
(d) Buyer
will continue at least one significant historic business line of the Company, or use at least a significant portion of the Company's historic business assets in a
business, in each case within the meaning of regulations under the Code.
7.6
Employees and Employee Benefits.
(a) All
individuals employed by the Company or any of its Subsidiaries immediately prior to the Closing (the "
Covered
Employees
") shall automatically become employees of Buyer as of the Closing. As of the Closing, Buyer shall cause the Surviving Corporation (or as appropriate a Subsidiary
thereof) to assume and honor all Company Plans,
provided
that subject to the provisions
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of
this Agreement and the Company Plans, the Surviving Corporation may amend or terminate the Company Plans as and to the extent permitted in accordance with their terms; provided, however, that any
such amendment or termination shall not adversely affect benefits that have vested under any such plan. Until the first anniversary of the Closing, for so long as the Covered Employee remains employed
by Buyer or its Subsidiaries, Buyer shall maintain employee benefit plans and compensation opportunities for the benefit of Covered Employees that provide employee benefits and compensation
opportunities that, in the aggregate, are no less favorable than the employee benefits and compensation opportunities that are at that time made available to similarly-situated employees of Buyer
under the benefit plans maintained by Buyer or its Subsidiaries (the "
Buyer Benefit Plans
");
provided,
however,
that until such time as Buyer shall cause Covered Employees to participate in the Buyer Benefit Plans, continued participation in the Company Plans shall be deemed to
satisfy the foregoing provisions of this sentence (it being understood that participation in the Buyer Benefit Plans may commence at different times with respect to each Buyer Benefit Plan).
(b) For
all purposes (other than purposes of benefit accruals) under the Buyer Benefit Plans providing benefits to the Covered Employees, each Covered Employee shall be
credited with his or her years of service with the Company and its Subsidiaries and their respective predecessors to the same extent as such Covered Employee was entitled to credit for such service
under any applicable Company Plan in which such Covered Employee participated or was eligible to participate immediately prior to the Transition Date;
provided
,
however
, that the foregoing shall not apply (i) to the extent that its application
would result in a duplication of benefits with respect to the same period of service or (ii) for purposes of any defined benefit pension plan, any benefit plan that provides post-employment
welfare benefits or any benefit plan that is a frozen plan or provides grandfathered benefits.
(c) In
addition, and without limiting the generality of the foregoing, as of the Transition Date, Buyer shall use commercially reasonable efforts to provide that:
(i) for purposes of each Buyer Benefit Plan
providing medical, dental, pharmaceutical, vision or similar benefits to any Covered Employee, all pre-existing condition exclusions and actively-at-work requirements of such Buyer Benefit Plan shall
be waived for such Covered Employee and his or her covered dependents, unless such conditions would not have been waived under the Company Plan in which such Covered Employee, as applicable,
participated or was eligible to participate immediately prior to the Transition Date; and (ii) any eligible expenses incurred by such Covered Employee and his or her covered dependents during
the portion of the plan year of the Company Plan ending on the Transition Date shall be taken into account under such Buyer Benefit Plan to the extent such eligible expenses were incurred during the
plan year of the Buyer Benefit Plan in which the Transition Date occurs for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Covered
Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such Buyer Benefit Plan.
(d) For
one year following the Closing Date, the Surviving Corporation shall provide severance benefits to any Covered Employee whose position is terminated by the Surviving
Corporation or its Subsidiaries (other than for cause) as a result of the Transaction in accordance with Buyer's severance policy in effect for similarly situated employees of Buyer, or, if
applicable, the Surviving Corporation shall provide severance benefits to such Covered Employee in accordance with any agreement between the Covered Employee and the Company listed on
Schedule 8.16(a)
. Further, the Parties shall determine and establish a retention bonus program, consulting arrangements or similar arrangements
for certain Covered Employees who remain employed through the Closing or at Buyer for an interim period following Closing, subject to the terms set forth on
Schedule 7.6(d)
. The Parties shall
mutually agree as to each employee eligible
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to
receive a retention bonus or consulting arrangement, the amount of each such retention bonus or consulting arrangement, and the terms and conditions of each such retention bonus or consulting
arrangement. Buyer shall honor all existing employment agreements or similar agreements of the Company and the Bank listed on
Schedule 8.16(a)
.
(e) If
requested by Buyer in writing at least thirty (30) business days prior to the Effective Time, the Company shall cause any 401(k) plan sponsored or maintained
by the Company (the "
Company 401(k) Plan
") to be terminated effective as of the day immediately prior to the Effective Time and contingent upon the
occurrence of the Closing. In the event that Buyer requests that the Company 401(k) Plan be terminated, the Covered Employees shall be eligible to participate, effective as of the Effective Time, in a
401(k) plan sponsored or maintained by Buyer or one of its Subsidiaries, taking into account the service crediting provisions set forth in
Section 7.6(b)
. The Company shall provide Buyer with
evidence that the Company 401(k) Plan has been terminated or amended, as applicable, in
accordance with this
Section 7.6(e)
;
provided
, that prior to amending or terminating the Company
401(k) Plan, the Company
shall provide the form and substance of any applicable resolutions or amendments to Buyer for review and approval (which approval shall not be unreasonably withheld, conditioned or delayed).
(f) Nothing
in this Agreement shall obligate Buyer, the Surviving Corporation or any of its Affiliates to retain, or continue the employment of, any employee, director or
independent contractor of the Companies. Nothing in this Agreement shall be deemed to (i) establish, amend, or modify any Company Plan, Buyer Benefit Plan or any other benefit or employment
plan, program, agreement or arrangement, or (ii) alter or limit the ability of Buyer, the Surviving Corporation or any Subsidiary or Affiliate thereof to amend, modify or terminate any
particular Company Plan, Buyer Benefit Plan or any other benefit or employment plan, program, agreement or arrangement after the Effective Time in accordance with the terms of any such plan, program,
agreement or arrangement. Without limiting the generality of the final sentence of
Section 12.10
, nothing in this Agreement, express or implied,
is intended to or shall confer upon any person, including any current or former employee, officer, director or consultant of the Company or any of its Subsidiaries or affiliates, any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
7.7
Dividends.
After the date of this Agreement, each of the
Company and Buyer shall coordinate with the other the declaration of any dividends in respect of Company Common
Stock and Buyer Common Stock and the record dates and payment dates relating thereto, it being the intention of the Parties hereto that holders of Company Common Stock shall not receive two dividends,
or fail to receive one dividend, in any quarter with respect to their shares of Company Common Stock and the shares of Buyer Common Stock any such holder receives in exchange therefor in the Merger.
7.8
Shareholder Litigation.
Each of the Parties shall promptly
notify the other Party in writing of any action, arbitration, audit, hearing, investigation, litigation, suit, subpoena or
summons issued, commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Entity or arbitrator pending or, to the knowledge of Buyer or the Company, as applicable,
threatened against Buyer, the Company or any of their respective Subsidiaries that (a) questions or would reasonably be expected to question the validity of this Agreement, the Bank Merger
Agreement or the other agreements contemplated hereby or thereby or any actions taken or to be taken by Buyer, the Company, or their respective Subsidiaries with respect hereto or thereto, or
(b) seeks to enjoin or otherwise restrain the transactions contemplated hereby or thereby. The Company shall apprise Buyer of developments related to, and give Buyer the opportunity to monitor
at its own expense, the defense or settlement of any shareholder litigation against the Company and/or its directors or affiliates relating to the transactions contemplated by this Agreement, and no
such settlement shall be agreed without Buyer's prior written consent (such consent not to be unreasonably withheld, conditioned or delayed).
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to Buyer to enter into this Agreement, the Company hereby represents and warrants the following:
8.1
Corporate Organization, Power and Authorizations.
(a) The
Company is a corporation duly organized and validly existing under the laws of the State of Wisconsin. The Company has all requisite corporate power and authority to
own and operate its properties, to carry on its business as now conducted and to carry out the transactions contemplated by this Agreement. True and complete copies of the Restated Articles of
Incorporation of the Company and the Bylaws of the Company, as in effect as of the date of this Agreement, have previously been made available by the Company to Buyer.
(b) The
Bank is a validly existing federally chartered savings bank. The Bank has all requisite corporate power and authority to own and operate its properties, to carry on
its business as now conducted.
(c) Each
other Subsidiary of the Company is a corporation duly organized, validly existing and in good standing (or the equivalent) of its state of incorporation. Each such
Subsidiary of the Company has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted. No Subsidiary of the Company other than the Bank
is an insured depository institution.
(d) The
Company, the Bank and each other Subsidiary of the Company is duly licensed or qualified to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, reasonably be likely to have a Material Adverse Effect on the Company.
8.2
Authorization of Transaction.
The Company has full power and
authority to execute and deliver this Agreement and all other Transaction Documents to which it is a party and to perform its
obligations hereunder and thereunder and to consummate the transactions contemplated hereby. Except for obtaining the requisite Company Shareholder Approval and for obtaining the Requisite Regulatory
Approvals, (i) the Company has full power and authority to execute and deliver all other Transaction Documents to which the Company is a party and to perform its obligations hereunder and
thereunder, and (ii) no other corporate proceeding or action on the part of the Company is necessary to approve and authorize the Company's execution and delivery of any other Transaction
Document to which the Company is a party or the performance of the Company's obligations hereunder or thereunder. This Agreement has been, and all other Transaction Documents to which the Company is a
party will be at Closing, duly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof and thereof by the parties thereto other than the Company,
constitute the valid and binding agreements of the Company, enforceable against the Company in accordance with their terms, except as enforceability hereof or thereof may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights generally and limitations on the availability of equitable remedies. The Board of Directors of the Company has duly and validly approved the
execution and delivery of this Agreement and determined that the Merger, on the terms and conditions set forth in this Agreement, is in the best interests of the Company and has directed that this
Agreement and the transactions contemplated hereby be submitted to the Company's shareholders for adoption at a meeting of such shareholders and has adopted resolutions to the foregoing effect.
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8.3
Capital Stock and Related Matters.
(a) The
authorized capital stock of the Company consists of Two Hundred Twenty Million (220,000,000) shares, consisting of Twenty Million (20,000,000) shares of preferred
stock, $0.01 par value, none of which is issued and outstanding, and Two Hundred Million (200,000,000) shares of common stock, $0.01 par value, of which 45,932,253 shares were issued and outstanding
as of July 20, 2017, including 334,902 shares of Company Common Stock granted in respect of outstanding restricted shares of Company Common Stock. Except for 1,175,100 shares of the Company
Common Stock reserved for issuance upon the exercise of outstanding the Company Stock Options, there are no outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable or
convertible securities or other commitments or agreements obligating the Company to issue, transfer, sell, purchase, redeem or otherwise acquire any Company Common Stock. No bonds, debentures, notes
or other indebtedness that have the right to vote on any matters on which shareholders of the Company may vote are issued or outstanding. No trust preferred or subordinated debt securities of the
Company are issued or outstanding. The Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock. All of the
outstanding shares of Company
Common Stock are validly issued, fully paid and nonassessable, and such shares were not issued in violation of any preemptive rights.
(b) The
Company does not have any Subsidiaries except as set forth on
Schedule 8.3
. Except as set forth on
Schedule 8.3
, the Company (or a Company
Subsidiary) owns, free and clear of any Liens, all of the issued and outstanding equity interests in each
of such Subsidiaries. No Company Subsidiary has any outstanding stock or securities convertible into or exchangeable for any shares of its capital stock, nor does any have outstanding any
subscriptions, options, warrants, puts, calls, rights, or other commitments or agreements obligating any Company Subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire its capital
stock or any stock or securities convertible into or exchangeable into its capital stock. No Company Subsidiary is subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock. All of the outstanding shares of each of the Company Subsidiaries' capital stock are validly issued, fully paid and non-assessable, and such shares
were not issued in violation of any preemptive rights. Except for such Subsidiaries of the Company, the Company does not own, directly or indirectly, any stock, partnership interest, membership
interest or joint venture interest in, or any security issued by, any other Person except for publicly traded securities that do not represent an ownership interest greater than one percent (1%) of a
class of securities of the subject company or shares held on behalf of customers in such customers' accounts.
There
are no voting trusts, shareholder agreements, proxies or other agreements in effect pursuant to which the Company or any of the Company Subsidiaries has a contractual obligation
with respect to the voting or transfer of the Company Common Stock or other equity interests of the Company or its Subsidiaries. Other than the Company Restricted Stock Awards or the Company Stock
Options, no equity-based awards (including any cash awards where the amount of payment is determined in whole or in part based on the price of any capital stock of the Company or any of its
Subsidiaries) are outstanding.
8.4
Absence of Conflicts.
(a) Except
for the Regulatory Approvals or as set forth in
Schedule 8.4
, and subject to the Company Shareholder
Approval, neither the execution, delivery and performance of this Agreement or any other Transaction Document by the Company nor the consummation by the Company of the transactions contemplated hereby
or thereby, do or will: (i) conflict with or cause any breach, or an event which, with notice or lapse of time, or both, would constitute a breach, of any of the provisions of,
(ii) constitute a default or an event which, with notice or lapse of time, or
A-26
both,
would constitute a default under, (iii) violate, alone or with notice or lapse of time, or both, (iv) result in the termination, modification or acceleration of, or give any third
party the right to terminate, modify or accelerate, any obligation under, (v) result in the loss of any benefit under, or (vi) create any Lien upon any asset, in each case under
(A) the articles or certificate of incorporation, bylaws, operating agreement or other organizational document of any of the Companies, or (B) the provisions of any Contract or any
current Legal Requirement by which any of the Companies is bound or by which any of the Company assets may be affected, except (in the case of clause (B)) for such violations, conflicts,
breaches, defaults, terminations, cancellations, accelerations or creations which, either individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect on the
Company.
(b) Except
for (i) the filing of applications, filings and notices, as applicable, with the NASDAQ and the New York Stock Exchange (the
"
NYSE
"), (ii) the filing of applications, filings and notices, as applicable, with the FRB under the BHC Act and approval of such applications,
filings and notices, (iii) the filing of applications, filings and notices, as applicable, with the Office of the Comptroller of the Currency in connection with the Bank Merger, including under
the Bank Merger Act, and approval of such applications, filings and notices, (iv) the filing with the SEC of the Registration Statement (including the Proxy Statement contained therein) and
declaration of effectiveness thereof, (v) the filing of the Articles of Merger with the WDFI, (vi) the filing of applications, filings and notices, as applicable, with the WDFI under
Wis. Stats. Chapter 221 and approval of such applications, filings and notices, (vii) the filing of any notices or other filings under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "
HSR Act
"), if necessary, and (viii) such filings and approvals as are required to be made or obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of the shares of Buyer Common Stock pursuant to this Agreement and the approval of the listing of such Buyer Common Stock on the NYSE, no
consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with (A) the execution and delivery by the Company of this Agreement or
(B) the consummation by the Company of the Merger and the other transactions contemplated hereby (including the Bank Merger).
8.5
Financial Statements; SEC Reports.
(a) The
audited consolidated balance sheet of the Company and the related consolidated statements of income and cash flows as of or for the fiscal year ended
December 31, 2016, and the unaudited consolidated interim balance sheet of the Company dated March 31, 2017 and the related unaudited consolidated interim statements of income and cash
flows for the 3-month period ended on March 31, 2017 (including the notes thereto) (collectively, the "
Company Financial Statements
"), as filed
in the Company SEC Reports, were prepared from the books and records of the Company (which are
accurate and complete in all material respects) and in accordance with GAAP (except as may be indicated in the notes thereto, or, in the case of interim or unaudited financial statements, normal
year-end adjustments and the absence of notes). The Company Financial Statements fairly present, in all material respects, the consolidated statement of income, statement of equity, cash flows and
consolidated financial condition of the Company and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to
year-end audit adjustments normal in nature and amount).
(b) Except
as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on the Company, neither the Company nor any of its
Subsidiaries has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or
reserved against on the consolidated balance sheet of the Company included in its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017 (including any notes thereto)
and for liabilities incurred in the
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ordinary
course of business consistent with past practice since March 31, 2017, or in connection with this Agreement and the transactions contemplated hereby.
(c) An
accurate and complete copy of each Company SEC Report is publicly available on the SEC Edgar system. No such Company SEC Report, at the time filed, furnished or
communicated, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of
the circumstances in which they were made, not false or misleading, as of such time. As of their respective dates, all Company SEC Reports complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto. As of the date of this Agreement, no executive officer of the Company has failed in any respect to make the certifications required of
him or her under Section 302 or 906 of the Sarbanes-Oxley Act.
(d) The
records, systems, controls, data and information of the Company and its Subsidiaries are recorded, stored, maintained and operated under means (including any
electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or its Subsidiaries or accountants (including all
means of access thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be likely to have, either individually or in the aggregate, a Material
Adverse Effect on the Company. The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material
information relating to the Company,
including its Subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities as appropriate to allow timely decisions
regarding required disclosures and to make the certifications required by the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (the
"
Sarbanes-Oxley Act
"), and (ii) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company's outside auditors
and the audit committee of the Company's Board of Directors (x) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as
defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information, and
(y) to the knowledge of the Company, any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over
financial reporting. These disclosures were made in writing by management to the Company's auditor and audit committee and a copy has been previously made available to Buyer. To the knowledge of the
Company, there is no reason to believe that the Company's outside auditors and its chief executive officer and chief financial officer will not be able to give the certifications and attestations
required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act, without qualification, when next due.
(e) Since
January 1, 2014, (i) neither the Company nor any of its Subsidiaries, nor, to the knowledge of the Company, any director, officer, auditor,
accountant or representative of the Company or any of its Subsidiaries, has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written
or, to the knowledge of the Company, oral, regarding the accounting or auditing practices, procedures, methodologies or methods (including with respect to loan loss reserves, write-downs, charge-offs
and accruals) of the Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or written claim that the Company or
any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing the Company or any of its Subsidiaries, whether or not employed by the
Company or any of its Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors or
employees to the Board of Directors of the Company or any committee thereof or, to the knowledge of the Company, to any director or officer of the Company.
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8.6
Recent Developments.
Other than pursuant to this Agreement or
as described in the Company SEC Reports, since January 1, 2017:
(a) no
event or events have occurred that have had or would reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on the Company;
(b) none
of the Companies has sold, leased, assigned or transferred any material asset or any material portion of its assets (other than in the ordinary course of business);
(c) except
with respect to the transactions contemplated hereby or as expressly required or permitted by this Agreement, none of the Companies has carried on their
respective businesses other than in the ordinary course of business in all material respects;
(d) none
of the Companies has waived any right of material value except in the ordinary course of business and consistent with past practice; or
(e) none
of the Companies has made or granted any bonus or any wage, salary, benefit or compensation increase other than in the ordinary course of business to any senior
executive, except pursuant to the terms of any Contract described on
Schedule 8.6
.
8.7
Title to, Condition and Sufficiency of Assets
.
(a)
Real Property.
The Companies do not own any real estate or any ownership interest
therein except for the Real Property and real estate owned as "other real estate owned" acquired in connection with the collection of indebtedness in the ordinary course of business. Except as set
forth on
Schedule 8.7(a)
, none of the Companies is a party to any agreement (whether oral or written) pursuant to which it leases real estate
(either as lessee or lessor). Except as set forth on
Schedule 8.7(a)
none of the Companies has occupied any real estate other than the Real
Property during the two (2) year period preceding the date of this Agreement. To the Company's Knowledge, neither the whole nor any portion of the Real Property has been condemned,
requisitioned or otherwise taken by any public authority, no written notice of such condemnation, requisition or taking has been served upon any of the Companies and no such condemnation, requisition
or taking is threatened or contemplated. All water, sewer, gas, electric, telephone and drainage facilities are available to and located at the Real Property in a capacity so as to adequately serve
the improvements currently located thereon in a manner consistent with the normal operation of the Companies' businesses.
(b)
Title to Real Property.
Each of the Companies has good and marketable title to the
Real Property owned by it, free and clear of all Liens, except for Permitted Liens.
(c)
Ownership of Assets.
Other than with respect to the Real Property (which is
addressed above), except as set forth on
Schedule 8.7(a)
, each of the Companies has good and marketable title to, or a valid leasehold interest
in, all of the assets and properties material to its operations, free and clear of all Liens, except Permitted Liens.
(d)
Sufficiency of Assets.
The buildings, plants, structures, furniture, fixtures,
machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by the Companies, together with all other properties and assets of the Companies, are sufficient
for the continued conduct of the Companies' business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets
necessary to conduct the business of the Companies as currently conducted, except, in each such case, where the failure to own such assets would not reasonably be expected to have a Material Adverse
Effect.
(e)
Condition of Assets.
The buildings, plants, structures, furniture, fixtures,
machinery, equipment, vehicles and other items of tangible personal property of the Companies are structurally sound, are in good operating condition and repair, and are adequate for the uses to
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which
they are being put, except where the failure to be in such condition would not reasonably be expected to have a Material Adverse Effect.
8.8
Taxes.
Except
as set forth on
Schedule 8.8:
(a) For
all periods open under the applicable statute of limitations, each of the Companies has timely filed all federal, state, local and foreign income, information and
other Tax Returns which are required to be filed by it with respect to any material amount of Taxes and all such Tax Returns have been prepared in material compliance with all applicable Legal
Requirements and are true, complete and accurate in all material respects;
(b) All
material Taxes imposed for all periods open under the applicable statute of limitations upon any of the Companies or upon any of their assets, income or franchises
have been timely paid (or are being contested in good faith) or, if not yet due and payable, such Company has made provisions for such Tax liability;
(c) There
are no material outstanding Tax deficiencies, assessments or adjustments with respect to the Companies, and no consent has been recently given with respect to any
of the Companies to extend the time in which any Tax may be assessed or collected by any Taxing authority; and
(d) There
are no ongoing Tax audits by any Taxing authority against any of the Companies and no material written claim has been received by any of the Companies from a
Taxing authority in a jurisdiction where any of the Companies does not pay Taxes or file Tax Returns to the effect that it is or may be subject to Taxes assessed by such jurisdiction.
(e) Within
the past two years, the Companies have not distributed stock of another Person, nor had its equity distributed by another Person, in a transaction that was
purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code.
(f) None
of the Companies have not engaged in any transaction that is subject to disclosure under present or former Treasury Regulations Sections 1.6011-4 or
1.6011-4T, as applicable.
8.9
Contracts and Commitments.
(a)
Listing.
Except for the Transaction Documents or any Contract filed as an exhibit to
any Company SEC Report filed prior to the date that is two business days prior to the date hereof (without giving effect to any amendment to any such Company SEC Report filed on or after the date that
is two business days prior to the date of this Agreement) and publicly available in full on the SEC's Edgar system, or listed on
Schedule 8.16(a)
,
Schedule 8.9
sets forth a complete and correct list of all Material
Contracts.
(b)
Absence of Breach, Cancellation or Repudiation.
Except as described on
Schedule 8.9
: (i) all Material
Contracts are in full force and effect; (ii) since March 31, 2017, no Contract has been
materially breached, cancelled (other than any termination in the ordinary course of business in accordance with the terms of such Contract) or repudiated by the Company or any Subsidiary that is a
party thereto, or, to the Company's Knowledge, any other party thereto, and to the Company's Knowledge no event or condition exists which constitutes or, after notice or lapse of time or both, will
constitute, a default on the part of the Company or any of its Subsidiaries under any Material Contract; (iii) since March 31, 2017, each of the Companies has performed all material
obligations required to be performed by it in connection with the Material Contracts to which it is a party and to the Company's Knowledge, none has received any written claim of default under any
such Contract; and (iv) none of the Companies has any present expectation or intention of not fully performing any obligation pursuant to any Contract to which it is a party.
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8.10
Proprietary Rights.
(a)
Listing.
Schedule 8.10
sets
forth a complete and correct list of: (i) all material registered Proprietary Rights and all pending applications for registration of Proprietary Rights owned, filed or used by the Companies,
and (ii) all material licenses or similar agreements or arrangements to which any of the Companies is a party either as licensee or licensor for Proprietary Rights. The registered Proprietary
Rights and pending applications described in clause (i) above together with all material unregistered Proprietary Rights owned by the Companies are referenced herein as the
"
Company Proprietary Rights
".
(b)
Ownership; Infringement.
Except as set forth on
Schedule 8.10
, each of the Companies owns and possesses all
right, title and interest in and to each of the registered Proprietary Rights shown
on
Schedule 8.10
as being owned by it and, to the Company's Knowledge, has a valid and enforceable right to use all Proprietary Rights shown on
Schedule 8.10
to be licensed to it, free and clear of all Liens (other than Permitted Liens). To the Company's Knowledge, each of the registered
Company Proprietary Rights is currently subsisting and in full force, and the Companies have taken all steps necessary to maintain and keep in force such Company Proprietary Rights (excluding any
Company Proprietary Rights that any of the Companies has reasonably determined are not material to the business of the Companies as it is currently conducted). Each of the Companies has taken
commercially reasonable steps necessary to protect all trade secrets and other confidential Company Proprietary Rights that are material to the business of the Companies as it is currently conducted.
Except as set forth on
Schedule 8.10
, to the Company's Knowledge, (i) no claim by any third party contesting the validity, enforceability,
use or ownership of any of the Company Proprietary Rights has been made since January 1, 2014, or is currently outstanding or is threatened, (ii) no loss or expiration of any such
Company Proprietary Right is pending or threatened except in accordance with its normal terms, (iii) since January 1, 2014, none of the Companies has received written notice of any
infringement or misappropriation by, or any conflict with, any third party with respect to any such Company Proprietary Rights, including any written demand that any of the Companies license rights
from a third party, and (iv) since January 1, 2014 to the Company's Knowledge, none of the Companies have infringed upon, misappropriated or otherwise conflicted with any valid
Proprietary Rights of any third party.
8.11
Litigation; Proceedings.
Except
as set forth in
Schedule 8.11
, there are no actions, suits, proceedings, orders, judgments, decrees or investigations
pending or, to the Company's Knowledge, threatened against or affecting any of the Companies at law or in equity, or before or by any Governmental Entity, which if adversely determined would have a
Material Adverse Effect. There are no pending or, to the Company's Knowledge, threatened actions that relate to an attempt to prohibit or restrain the transactions contemplated by this Agreement.
There is no injunction, order, judgment, decree, or regulatory restriction imposed upon the Company, any of its Subsidiaries or the assets of the Company or any of its Subsidiaries (or that, upon
consummation of the Mergers, would apply to Buyer or any of its affiliates) that would reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole.
8.12
Brokerage.
Except
as set forth on
Schedule 8.12
, neither the Company nor any of its Subsidiaries nor any of their respective officers or
directors has employed any broker, finder or financial advisor or incurred any liability for any broker's fees, commissions or finder's fees in connection with the Merger or related transactions
contemplated by this Agreement other than RBC Capital Markets, LLC ("
RBC Capital Markets
"). The Company has made available to Buyer a true,
correct and complete copy of any engagement letter or other Contract with RBC Capital Markets, in connection with the Merger or related transactions contemplated by this Agreement.
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8.13
Governmental Licenses and Permits; Reports.
(a)
Schedule 8.13
contains a complete listing of all material permits, licenses, and registrations of foreign,
federal, state and local governments (collectively, the
"Authorizations"
), currently held by any of the Companies in the conduct of their businesses.
Each of the Companies holds all of the Authorizations which are necessary to conduct its business as currently conducted, except where the failure to hold such Authorizations would not lead to a
Material Adverse Effect. No loss or expiration of any Authorization which would have a Material Adverse Effect is pending or, to the Company's Knowledge, threatened except in accordance with its
normal terms (including as a result of the transactions contemplated by this Agreement).
(b) The
Company and each Company Subsidiary have timely filed (or otherwise submitted) all reports, notices and similar communications, together with any amendments required
to be made with respect thereto, that they were required to file since January 1, 2014 with (i) the FRB, (ii) the OCC, (iii) the FDIC, and (iv) the WDFT and any
other any applicable state regulatory agency, and have paid all fees and assessments due and payable in connection therewith, except where the failure to file such report, registration or statement or
to pay such fees and assessments, either individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect on the Company.
8.14
Regulatory Matters.
(a) The
Company is a savings and loan holding company supervised by the FRB.
(b) The
Bank is a federal savings bank supervised by the OCC. The deposit accounts of the Bank are insured by the FDIC to the fullest extent permitted by law. The Bank has
paid or properly reserved or accrued for all current premiums and assessments with respect to such deposit insurance, all premiums and assessments required to be paid in connection therewith have been
paid when due, and no proceedings for the termination of such insurance are pending or, to the Company's Knowledge, threatened. The Bank received a rating of at least "satisfactory" in its most recent
examination or interim review under the Community Reinvestment Act.
(c) Neither
the Company nor any of its Subsidiaries is party to, or the subject of, any cease-and-desist order, consent order, written agreement, order for civil money
penalty, prompt corrective action directive, memorandum of understanding, supervisory letter, individual minimum capital requirement, operating agreement, or any other formal or informal enforcement
action issued by, or entered into with, any Regulatory Authority. Except as set forth in
Schedule 8.14
, none of the Companies has made, adopted,
or implemented any currently effective commitment, board resolution, policy, or procedure at the request or recommendation of any Regulatory Authority that limits in any material respect the conduct
of its business or that in any material manner relates to its capital adequacy, its payment of dividends or distribution of capital, its credit or risk management, its compliance program, its
management, its growth, or its business.
(d) Except
for examinations of the Companies conducted by their respective primary regulators in the ordinary course of business, no Regulatory Authority has initiated or
has pending any proceeding or, to the Company's Knowledge, any inquiry or investigation into the business or operations of the Companies, except where such proceeding, inquiry, or investigation would
not reasonably be likely to be, either individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole. There is no unresolved violation, apparent violation,
criticism, matter requiring attention, recommendation, or exception cited, made, or threatened by any Regulatory Authority in any report of examination, report of inspection, supervisory letter or
other communication that would reasonably be likely to be, either individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole.
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8.15
Investment Securities.
(a) Each
of the Companies has good title to all securities owned by it (except those sold under repurchase agreements or held in any fiduciary capacity), free and clear of
any Lien, except (i) as set forth in the Company Financial Statements and (ii) to the extent such securities are pledged in the ordinary course of business to secure obligations of the
Companies. Such securities are valued on the books of the Company in accordance with GAAP in all material respects.
(b) All
interest rate swaps, caps, floors, option agreements, futures and forward contracts and other similar derivative transactions and risk management arrangements,
whether entered into for the account of any of the Companies or for the account of a customer, were entered into in the ordinary course of business and in accordance with applicable rules, regulations
and policies of any Regulatory Authority and with counterparties believed to be financially responsible at the time and are legal, valid and binding obligations of the Parties thereto, subject to
Customary Exceptions, and are in full force and effect. The Companies have duly performed in all material respects all of their material obligations thereunder to the extent that such obligations to
perform have accrued, and, to the Company's
Knowledge, there are no material breaches, violations or defaults or allegations or assertions of such by any party thereunder.
(c) The
Company and its Subsidiaries and their respective businesses employ, and since January 1, 2014 have been in compliance with in all material respects,
investment, securities, commodities, risk management and other policies, practices and procedures that the Company believes are prudent and reasonable in the context of such businesses
8.16
Employee Benefit Plans.
(a)
Schedule 8.16(a)
lists all material Company Plans. The Company has made available to Buyer true and complete
copies of each material Company Plan and the following related documents, to the extent applicable: (i) all summary plan descriptions and amendments to any Company Plan, (ii) the most
recent annual report on Form 5500, if any, filed with the IRS for the last plan year, (iii) the most recently received IRS determination letter, if any, relating to such Company Plan and
(iv) the most recently prepared actuarial report for each such Company Plan.
(b) None
of the Companies nor any of their ERISA Affiliates has, at any time during the last six years, contributed to or been obligated to contribute to (or incurred any
other liability, including current or potential withdrawal liability, with respect to) any
"multiemployer plan"
(as that term is defined in
Section 3(37) of ERISA) or any plan that has two or more contributing sponsors, at least two of whom are not under common control (within the meaning of Section 4063 of ERISA).
(c) Except
as set forth on
Schedule 8.16(c)
, none of the Companies sponsors, has sponsored or has any obligations with
respect to any plan or arrangement, whether or not terminated, which provides medical, health, life insurance or other welfare-type benefits beyond termination of service or retirement for current
employees or current or future retired or terminated employees (except for limited continued medical benefit coverage required to be provided under Section 4980B of the Code or as required
under applicable state law).
(d) All
Company Plans (and related trusts and insurance contracts) comply in all material respects in form and in operation with applicable Law, including the requirements
of ERISA and the Code. Since January 1, 2014, with respect to each Company Plan, all contributions, premiums or payments which are due on or before the date hereof have been paid to such Plan.
Each Company Plan that is a "
nonqualified deferred compensation plan
" (as defined in Section 409A(d)(1) of the Code) and any award thereunder has
(i) since January 1, 2005, been maintained and operated, in all material respects, in good faith compliance with Section 409A of the Code and IRS Notice 2005-1 and
(ii) since January 1, 2009, been, in all material respects, in
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documentary
and operational compliance with Section 409A of the Code. The IRS has issued a favorable determination or opinion letter with respect to each Company Plan that is intended to be
qualified under Section 401(a) of the Code and, to the Company's Knowledge, there are no circumstances or events that have occurred that would adversely affect the qualified status of any such
Company Plan.
(e) With
respect to each Title IV Company Plan, (i) there is no accumulated funding deficiency within the meaning of ERISA or the Code, (ii) no reportable
event, as defined in ERISA, has occurred in connection with such Title IV Company Plans, (iii) no such Title IV Company Plan is in "at risk" status for purposes of Section 430 of the
Code and (iv) the most recent actuarial reports for such Title IV Company Plans are accurate and complete in all material respects and no event has occurred that would reasonably expected to
impact the liabilities contained in such reports. None of the Companies nor their ERISA Affiliates has incurred any liability to the Pension Benefit Guaranty Corporation
("
PBGC
"), the Internal Revenue Service, any multiemployer plan or otherwise with respect to any employee pension benefit plan or with respect to any
employee pension benefit plan currently or previously maintained by any controlled group of companies (as defined in Section 414 of the Tax Code) that includes any of the Companies (the
"
Controlled Group
") that has not been satisfied in full, other than liability for premiums due the PBGC. No action, suit, proceeding or investigation
with respect to the Company Plans (other than routine claims for benefits) is pending, except where the action, suit, proceeding or investigation would not result in material liability to the Company.
(f) Except
as noted on
Schedule 8.16(f),
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (either alone or in conjunction with any other event) result in, cause the vesting, exercisability, funding, payment or delivery of, or increase the amount or
value of, any payment, right or other benefit to any employee, officer, director or independent contractor of the Companies, or result in any limitation on the right of the Companies or ERISA
Affiliates to amend, merge, terminate or receive a reversion of assets from any Company Plan or related trust. Without limiting the generality of the foregoing, to the Company's knowledge, no amount
paid or payable (whether in cash, in property, or in the form of benefits) by the Companies in connection with the transactions contemplated hereby (either solely as a result thereof or as a result of
such transactions in conjunction with any other event) will be an "excess parachute payment" within the meaning of Section 280G of the Code. The transactions contemplated by this Agreement will
not cause or require the Companies to establish any rabbi trust following the date hereof or make any contribution to a rabbi trust or similar funding vehicle following the date hereof. No Company
Plan provides for the gross-up or reimbursement of Taxes under Section 409A or 4999 of the Code, or otherwise.
8.17
Insider Transactions.
Other
than as described on
Schedule 8.17
or in any Company SEC Report, no Insider of the Company (a) is a party to any
agreement, contract, commitment or transaction with any of the Companies or which pertains to the business or operations of any of the Companies (other than in such Insider's capacity as an employee
of any of the Companies), or (b) has any interest in any asset of any of the Companies.
8.18
Compliance with Laws.
Except
as set forth on
Schedule 8.18
, since January 1, 2014, to the Company's Knowledge, each of the Companies has complied
in all material respects with all applicable Legal Requirements which affect its business, operations or assets, and to which it is subject, and no claim has been filed against any of the Companies
since January 1, 2014 alleging a violation of any such Legal Requirement.
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8.19
Environmental Matters.
Except
as referenced on
Schedule 8.19:
(a)
Compliance Generally.
To the Company's Knowledge, since January 1, 2010, each
of the Companies has materially complied and is in material compliance with all applicable Environmental and Safety Requirements.
(b)
Permits.
To the Company's Knowledge, each of the Companies has obtained and is in
material compliance with all material permits, licenses and other authorizations that are required pursuant to applicable Environmental and Safety Requirements for the occupation of its facilities and
the operation of its business (all of which are listed on
Schedule 8.19
hereto).
(c)
Claims.
Since January 1, 2010, to the Company's Knowledge, none of the
Companies has received any written claim, complaint, citation, report or other written notice regarding any liabilities, including any investigatory, remedial or corrective obligations, arising under
applicable Environmental and Safety Requirements.
(d)
Storage Tanks, Asbestos, PCBs.
To the Company's Knowledge, no above-ground or
underground storage tank, asbestos, polychlorinated biphenyls (PCBs) above fifty (50) parts per million in electrical equipment owned by any of the Companies, or landfill, exists on the Real
Property.
(e)
Hazardous Materials Liabilities.
To the Company's Knowledge, none of the Companies
has since January 1, 2010, stored, disposed of, arranged for or permitted the disposal of, transported, handled or released any Hazardous Materials, or owned or operated any facility or
property (and no such facility or property is contaminated by any such material above Environmental and Safety Requirements action levels), in a fashion not otherwise in material compliance with
applicable Environmental and Safety Requirements.
(f)
Environmental Liens.
To the Company's Knowledge, no Environmental Lien has attached
since January 1, 2014 to the Real Property arising out of any action or omission of any of the Companies.
8.20
Employees.
Since
January 1, 2014, to the Company's Knowledge, each of the Companies has complied in all material respects with applicable Legal Requirements for each such entity relating to
the employment of personnel and labor, including provisions thereof relating to wages, hours, equal opportunity, classification of service providers and employees, collective bargaining and the
payment of social security and other taxes and the Worker Adjustment and Retraining Act (other than in connection with the transactions contemplated herein). Since January 1, 2014, none of the
Companies has experienced any strike, unfair labor practice claim or other material employee or labor dispute except as set forth on
Schedule 8.20.
To the Company's Knowledge, there is no
organizational effort presently being made or threatened by or on behalf of any labor
union with respect to the employees of any of the Companies.
8.21
Insurance.
The
Companies have insurance contracts in full force and effect as set forth on
Schedule 8.21.
Such policies are valid, outstanding
and enforceable policies subject to the terms, conditions, exclusions and limitations contained therein. All premiums with respect to such policies covering all periods up to and including the date
hereof have been paid, and no written notice of cancellation or termination has been received with respect to any such policy.
8.22
Loan Portfolio.
(a) As
of the date hereof, except as set forth in
Schedule 8.22
, none of the Companies is a party to any written or
oral (i) Loan in which any of the Companies is a creditor which as of March 31, 2017, had an outstanding balance of $5,000,000 or more and under the terms of which the obligor was, as of
March 31, 2017, over 90 days or more delinquent in payment of principal or interest, or (ii) Loans with any director, executive officer or 5% or greater shareholder of any of
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the
Companies, or to the Company's Knowledge, any Affiliate of any of the foregoing.
Schedule 8.22
sets forth a true, correct and complete list
of all of the Companies' Loans that, as of March 31, 2017, had an outstanding balance of $5,000,000 or more and were classified as "Pass," "Watch," "Special Mention," "Substandard," "Doubtful,"
"Loss," or "Classified," or similar status, together with the principal amount of and accrued and unpaid interest on each such Loan and the aggregate principal amount of and accrued and unpaid
interest on such Loans as of March 31, 2017.
(b) Each
Loan of any of the Companies (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be,
(ii) to the extent carried on the books and records of the Company as secured Loans, has been secured by valid charges, mortgages, pledges, security interests, restrictions, claims, Liens or
encumbrances, as applicable, which have been perfected and (iii) subject to Customary Exceptions, is the legal, valid and binding obligation of the obligor named therein.
(c) Each
outstanding Loan of the Companies was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant Loan files are
being maintained, in all material respects in accordance with the relevant notes or other credit or security documents, the written underwriting standards of the Company and with all applicable Legal
Requirements.
(d) There
are no outstanding Loans made by any of the Companies to any Insider of any of the Companies, other than Loans that are subject to and that were made and continue
to be in compliance with Regulation O or that are exempt therefrom.
8.23
State Takeover Laws.
The
Company Board has approved this Agreement and the transactions contemplated hereby as required to render inapplicable to this Agreement and the transactions contemplated hereby any
applicable provisions of any Takeover Statutes.
8.24
Opinion.
Prior
to the execution of this Agreement, the Board of Directors of the Company has received an opinion (which, if initially rendered verbally, has been or will be confirmed by a written
opinion, dated the same date) from RBC Capital Markets, to the effect that, as of the date thereof, and based upon and subject to the factors, assumptions and limitations set forth therein, the
Exchange Ratio is fair, from a financial point of view, to the holders of the Company Common Stock. Such opinion has not been amended or rescinded in any material respect as of the date of this
Agreement.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Company to enter into this Agreement, Buyer hereby represents and warrants the following:
9.1
Organization and Power.
(a) Buyer
is (i) a corporation which is validly existing and in good standing (or has comparable active status) under the laws of Wisconsin, and (ii) is
qualified to do business in every jurisdiction in which the execution, delivery and performance of its obligations under this Agreement require it to be so qualified. True and complete copies of the
Amended and Restated Articles of Incorporation of Buyer and the Amended and Restated Bylaws of Buyer, as in effect as of the date of this Agreement, have previously been made available by Buyer to the
Company.
(b) Buyer
Bank is a validly existing national banking association. Buyer Bank has all requisite corporate power and authority to own and operate its properties, to carry on
its business as now conducted.
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(c) Each
other Subsidiary of Buyer is a corporation (or other entity) duly organized, validly existing and in good standing (or the equivalent) of its state of incorporation
or organization. Each such Subsidiary of Buyer has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted.
(d) Buyer,
Buyer Bank and each other "significant subsidiary" (as such term is defined in Rule 1-02 of Regulation S-X promulgated under the Exchange Act) of
Buyer is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to be so licensed or qualified would not, either individually or in the aggregate, reasonably be likely to have a Material
Adverse Effect on Buyer.
9.2
Authorization of Transaction.
Buyer
has full power and authority to execute and deliver this Agreement and all other Transaction Documents to which it is a party and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been approved by the requisite vote of the Buyer Board. No other corporate
proceedings or actions on the part of Buyer or its shareholders are necessary to approve and authorize Buyer's execution and delivery of this Agreement or any other Transaction Documents to which it
is a party or the performance of Buyer's obligations hereunder or thereunder. This Agreement constitutes, and each of the other Transaction Documents to which Buyer is a party will when executed
constitute, a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.
9.3
Capital Stock and Related Matters.
(a) The
authorized capital stock of Buyer consists of 750,000 shares of preferred stock, of which 165,000 shares were issued and outstanding as of July 17, 2017, and
250,000,000 shares of Buyer Common Stock, of which 152,393,774 shares were issued and outstanding as of July 17, 2017. Shares of Buyer Common Stock are duly listed to trade on the Exchange.
Except as set forth in the Buyer SEC Reports, Buyer does not have outstanding any stock or securities convertible into or exchangeable for any shares of its capital stock, nor does it have outstanding
any rights or options to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable into its capital stock. Buyer is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock. All of the outstanding shares of Buyer Common Stock are validly issued, fully paid and
nonassessable, and such shares were not issued in violation of any preemptive rights.
(b) Buyer
does not have any Subsidiaries except as set forth in the Buyer SEC Reports; except as set forth therein, Buyer (or a Subsidiary of Buyer) owns all of the issued
and outstanding equity interests in each of such Subsidiaries. No Subsidiary of Buyer has any outstanding stock or securities convertible into or exchangeable for any shares of its capital stock, nor
does any have outstanding any rights or options to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable into its capital stock. Except for such
Subsidiaries of Buyer, Buyer does not own, directly
or indirectly, any stock, partnership interest, membership interest or joint venture interest in, or any security issued by, any other Person except for publicly traded securities that do not
represent an ownership interest greater than one percent (1%) of a class of securities of the subject company or shares held on behalf of customers in such customers' accounts.
9.4
Absence of Conflicts.
(a) Except
pursuant to the Regulatory Approvals, neither the execution, delivery and performance of this Agreement or any other Transaction Document by Buyer, nor the
consummation by Buyer, of the transactions contemplated hereby or thereby, do or will: (i) conflict
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with
or cause any breach, or an event which, with notice or lapse of time, or both, would constitute a breach, of any of the provisions of, (ii) constitute a default or an event which, with
notice or lapse of time, or both, would constitute a default under, (iii) violate, alone or with notice or lapse of time, or both, (iv) result in the termination, modification or
acceleration of, or give any third party the right to terminate, modify or accelerate, any obligation under, (v) result in the loss of any benefit under, or (vi) create any Lien upon any
asset, in each case under (A) the articles or certificate of incorporation, bylaws, operating agreement or other organizational document of Buyer or any of its Subsidiaries, or (B) the
provisions of any Material Contract or any current Legal Requirement by which Buyer or any of its Subsidiaries is bound or by which any Buyer assets may be affected, except (in the case of
clause (B)) for such violations, conflicts, breaches, defaults, terminations, cancellations, accelerations or creations which, either individually or in the aggregate, would not reasonably be
likely to have a Material Adverse Effect on Buyer.
(b) Except
for (i) the filing of applications, filings and notices, as applicable, with the NASDAQ and the NYSE, (ii) the filing of applications, filings and
notices, as applicable, with the FRB under the BHC Act and approval of such applications, filings and notices, (iii) the filing of applications, filings and notices, as applicable, with the
Office of the Comptroller of the Currency in connection with the Bank Merger, including under the Bank Merger Act, and approval of such applications, filings and notices, (iv) the filing with
the SEC of the Registration Statement (including the Proxy Statement contained therein) and declaration of effectiveness thereof, (v) the filing of the Articles of Merger with the WDFI,
(vi) the filing of applications, filings and notices, as applicable, with the WDFI under Wis. Stats. Chapter 221 and approval of such applications, filings and notices, (vii) the
filing of any notices or other filings under the HSR Act, if necessary, and (viii) such filings and approvals as are required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares
of Buyer Common Stock pursuant to this Agreement and the approval of the listing of such Buyer Common Stock on the NYSE, no consents or approvals of or filings or registrations with any Governmental
Entity are necessary in connection with (A) the execution and delivery by Buyer of this Agreement or (B) the consummation by Buyer of the Merger and the other transactions contemplated
hereby (including the Bank Merger).
9.5
Brokerage.
Except
for Goldman, Sachs & Co., neither Buyer nor any of its Subsidiaries nor any of their respective officers or directors has employed any broker, finder or financial
advisor or incurred any liability for any broker's fees, commissions or finder's fees in connection with the Merger or related transactions contemplated by this Agreement.
9.6
Financial Statements; SEC Reports.
(a) The
audited consolidated balance sheet of Buyer and the related consolidated statements of income and cash flows as of or for the fiscal year ended December 31,
2016, and the unaudited consolidated interim balance sheet of Buyer dated March 31, 2017 and the related unaudited consolidated interim statements of income and cash flows for the 3-month
period ended on March 31, 2017 (including the notes thereto) (collectively, the "
Buyer Financial Statements
"), as filed in the Company SEC
Reports, were prepared from the books and records of Buyer (which are accurate and complete in all material respects) and in accordance with GAAP (except as may be indicated in the notes thereto, or,
in the case of interim or unaudited financial statements, normal year-end adjustments and the absence of notes). The Buyer Financial Statements fairly present, in all material respects, the
consolidated statement of income, changes in stockholders' equity, cash flows and consolidated financial condition of Buyer and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth (subject in the case of unaudited statements to year-end audit adjustments normal in nature and amount).
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(b) Except
as would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on Buyer, neither Buyer nor any of its Subsidiaries
has any liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due), except for those liabilities that are reflected or reserved against on
the consolidated balance sheet of Buyer included in its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017 (including any notes thereto) and for liabilities
incurred in the ordinary course of business consistent with past practice since March 31, 2017, or in connection with this Agreement and the transactions contemplated hereby
(c) An
accurate and complete copy of each Buyer SEC Report is publicly available on the SEC Edgar system. No such Buyer SEC Report, at the time filed, furnished or
communicated, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of
the circumstances in which they were made, not false or misleading, as of such time. As of their respective dates, all Buyer SEC Reports complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto. As of the date of this Agreement, no executive officer of Buyer has failed in any respect to make the certifications required of him or her under
Section 302 or 906 of the Sarbanes-Oxley Act.
(d) The
records, systems, controls, data and information of Buyer and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic,
mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Buyer or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct control that would not reasonably be likely to have, either individually or in the aggregate, a Material Adverse Effect on
Buyer. Buyer (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to
Buyer, including its Subsidiaries, is made known to the chief executive officer and the chief financial officer of Buyer by others within those entities as appropriate to allow timely decisions
regarding required disclosures and to make the certifications required by the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act, and (ii) has disclosed, based on its most
recent evaluation prior to the date hereof, to Buyer's outside auditors and the audit committee of Buyer's Board of Directors (x) any significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect Buyer's ability to record,
process, summarize and report financial information, and (y) to the knowledge of Buyer, any fraud, whether or not material, that involves management or other employees who have a significant
role in Buyer's internal controls over financial reporting. These disclosures were made in writing by management to Buyer's auditor and audit committee and a copy has been previously made available to
the Company. To the knowledge of Buyer, there is no reason to believe that Buyer's outside auditors and its chief executive officer and chief financial officer will not be able to give the
certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act, without qualification, when next due.
(e) Since
January 1, 2014, (i) neither Buyer nor any of its Subsidiaries, nor, to the knowledge of Buyer, any director, officer, auditor, accountant or
representative of Buyer or any of its Subsidiaries, has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or, to the knowledge
of Buyer, oral, regarding the accounting or auditing practices, procedures, methodologies or methods (including with respect to loan loss reserves, write-downs, charge-offs and accruals) of Buyer or
any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or written claim that Buyer or any of its Subsidiaries has engaged in
questionable accounting or
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auditing
practices, and (ii) no attorney representing Buyer or any of its Subsidiaries, whether or not employed by Buyer or any of its Subsidiaries, has reported evidence of a material
violation of securities laws, breach of fiduciary duty or similar violation by Buyer or any of its officers, directors or employees to the Board of Directors of Buyer or any committee thereof or, to
the knowledge of Buyer, to any director or officer of Buyer.
9.7
Recent Developments.
Other
than pursuant to this Agreement or as described in the Buyer SEC Reports, since January 1, 2017, no event or events have occurred that have had or would reasonably be likely
to have, either individually or in the aggregate, a Material Adverse Effect on Buyer.
9.8
Title to, Condition and Sufficiency of Assets.
(a)
Real Property
. Buyer and its Subsidiaries do not own any real estate or any
ownership interest therein except as reflected in the Buyer SEC Reports.
(b)
Ownership of Assets
. Each of Buyer and its Subsidiaries has good and marketable
title to, or a valid leasehold interest in, all of the assets and properties material to its operations, free and clear of all Liens, except Permitted Liens.
(c)
Sufficiency of Assets
. The buildings, plants, structures, furniture, fixtures,
machinery, equipment, vehicles and other items of tangible personal property currently owned or leased by Buyer and its Subsidiaries, together with all other properties and assets of Buyer and its
Subsidiaries, are sufficient for the continued conduct of Buyer's and its Subsidiaries' business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all
of the rights, property and assets necessary to conduct the business of Buyer and its Subsidiaries as currently conducted, except, in each such case, where the failure to own such assets would not
reasonably be expected to have a Material Adverse Effect on Buyer.
(d)
Condition of Assets
. The buildings, plants, structures, furniture, fixtures,
machinery, equipment, vehicles and other items of tangible personal property of Buyer and its Subsidiaries are structurally sound, are in good operating condition and repair, and are adequate for the
uses to which they are being put, except where the failure to be in such condition would not reasonably be expected to have a Material Adverse Effect on Buyer.
9.9
Litigation.
There are no actions, suits, proceedings, orders or
investigations pending (or, to Buyer's Knowledge, threatened) against or affecting Buyer or its Subsidiaries
at law or in equity, or before or by any Governmental Entity, which could reasonably be expected to adversely affect Buyer's performance under this Agreement or the other agreements contemplated
hereby to which Buyer is a party or the consummation of the transactions contemplated hereby or thereby. There is no injunction, order, judgment, decree, or regulatory restriction imposed upon Buyer,
any of its Subsidiaries or the assets of Buyer or any of its Subsidiaries that would reasonably be expected to be material to Buyer and its Subsidiaries, taken as a whole.
9.10
Taxes.
Except as set forth on
Schedule 9.10
:
(a) For
all periods open under the applicable statute of limitations, each of Buyer and its Subsidiaries has timely filed all federal, state, local and foreign income,
information and other Tax Returns which are required to be filed by it with respect to any material amount of Taxes and all such Tax Returns have been prepared in material compliance with all
applicable Legal Requirements and are true, complete and accurate in all material respects;
(b) All
material Taxes imposed for all periods open under the applicable statute of limitations upon any of Buyer and its Subsidiaries or upon any of their assets, income or
franchises have been timely paid (or are being contested in good faith) or, if not yet due and payable, Buyer has made provisions for such Tax liability;
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(c) There
are no material outstanding Tax deficiencies, assessments or adjustments with respect to Buyer or any of its Subsidiaries, and no consent has been recently given
with respect to any of Buyer and its Subsidiaries to extend the time in which any Tax may be assessed or collected by any Taxing authority;
(d) There
are no ongoing Tax audits by any Taxing authority against any of the Companies and no material written claim has been received by Buyer or any of its Subsidiaries
from a Taxing authority in a jurisdiction where any of Buyer or its Subsidiaries do not pay Taxes or file Tax Returns to the effect that it is or may be subject to Taxes assessed by such jurisdiction;
and
(e) None
of the Buyer or any of its Subsidiaries has engaged in any transaction that is subject to disclosure under present or former Treasury Regulations
Sections 1.6011-4 or 1.6011-4T, as applicable.
9.11
Regulatory Matters.
(a) Buyer
is a bank holding company supervised by the FRB.
(b) The
Buyer Bank is a national banking association supervised by the OCC. The deposit accounts of the Buyer Bank are insured by the FDIC to the fullest extent permitted by
law. The Buyer Bank has paid or properly reserved or accrued for all current premiums and assessments with respect to such
deposit insurance, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or, to Buyer's
Knowledge, threatened. The Buyer Bank received a rating of at least "satisfactory" in its most recent examination or interim review under the Community Reinvestment Act.
(c) Neither
Buyer nor any of its Subsidiaries is party to, or the subject of, any cease-and-desist order, consent order, written agreement, order for civil money penalty,
prompt corrective action directive, memorandum of understanding, supervisory letter, individual minimum capital requirement, operating agreement, or any other formal or informal enforcement action
issued by, or entered into with, any Regulatory Authority. None of Buyer or any of its Subsidiaries has made, adopted, or implemented any currently effective commitment, board resolution, policy, or
procedure at the request or recommendation of any Regulatory Authority that limits in any material respect the conduct of its business or that in any material manner relates to its capital adequacy,
its payment of dividends or distribution of capital, its credit or risk management, its compliance program, its management, its growth, or its business.
(d) Except
for examinations of Buyer and its Subsidiaries conducted by their respective primary regulators in the ordinary course of business, no Regulatory Authority has
initiated or has pending any proceeding or, to Buyer's Knowledge, any inquiry or investigation into the business or operations of Buyer or any of its Subsidiaries, except where such proceeding,
inquiry, or investigation would not reasonably be likely to be, either individually or in the aggregate, material to Buyer and its Subsidiaries, taken as a whole. There is no unresolved violation,
apparent violation, criticism, matter requiring attention, recommendation, or exception cited, made, or threatened by any Regulatory Authority in any report of examination, report of inspection,
supervisory letter or other communication that would reasonably be likely to be, either individually or in the aggregate, material to Buyer and its Subsidiaries, taken as a whole.
9.12
Insider Transactions.
Other than as described in any Buyer SEC
Report or as set forth on
Schedule 9.12
, no Insider of Buyer
(a) is a party to any agreement, contract, commitment or transaction with Buyer or any of its Subsidiaries or which pertains to the business or operations of Buyer or any of its Subsidiaries
(other than in such Insider's capacity as an employee of Buyer or any of its Subsidiaries), or (b) has any interest in any asset of Buyer or any of its Subsidiaries.
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9.13
Compliance with Laws.
Since January 1, 2014, to Buyer's
Knowledge, each of Buyer and its Subsidiaries has complied in all material respects with all applicable Legal
Requirements which affect its business, operations or assets, and to which it is subject, and no claim has been filed against Buyer or any of its Subsidiaries since January 1, 2014 alleging a
violation of any such Legal Requirement. Without limitation, to Buyer's Knowledge, since January 1, 2014, each of Buyer and its Subsidiaries has materially complied and is in material
compliance with all applicable Environmental and Safety Requirements and has obtained and is in material compliance with all material permits, licenses and other authorizations that are required
pursuant to applicable Environmental and Safety Requirements for the occupation of its facilities and the operation of its business.
ARTICLE X
TERMINATION
10.1
Termination.
This Agreement may be terminated at any time prior to
the Closing:
(a) by
mutual written agreement of the Company and Buyer;
(b) by
either the Company or Buyer, by written notice to the other Party, if the Closing has not occurred on or before June 30, 2018 (the
"
Termination Date
"); provided, however, that the right to terminate this Agreement under this
Section 10.1(b)
shall not be available to any Party
whose breach of any provision of this Agreement has resulted in the failure of the Closing to
occur on or before the Termination Date;
(c) by
either Buyer or the Company if any Governmental Entity that must grant a Requisite Regulatory Approval has denied approval of the Merger or the Bank Merger and such
denial has become final and nonappealable or any Governmental Entity of competent jurisdiction shall have issued a final nonappealable order, injunction or decree permanently enjoining or otherwise
prohibiting or making illegal the consummation of the Merger or the Bank Merger, unless the failure to obtain a Requisite Regulatory Approval shall be due to the failure of the Party seeking to
terminate this Agreement to perform or observe the covenants and agreements of such Party set forth herein;
(d) by
either Buyer or the Company (
provided
, that the terminating Party is not then in material breach of any
representation, warranty, covenant or other agreement contained herein) if there shall have been a breach of any of the covenants or agreements or any of the representations or warranties (or any such
representation or warranty shall cease to be true) set forth in this Agreement on the part of the Company, in the case of a termination by Buyer, or Buyer, in the case of a termination by the Company,
which breach or failure to be true, either individually or in the aggregate with all other breaches by such Party (or failures of such representations or warranties to be true), would constitute, if
occurring or continuing on the Closing Date, the failure of a condition set forth in
Section 4.2
or
Section 4.3
, as the case may be, and which is
not cured within the earlier of the Termination Date and 30 days following written notice to
the Company, in the case of a termination by Buyer, or Buyer, in the case of a termination by the Company, or by its nature or timing cannot be cured during such period; or
(e) by
Buyer, if (i) prior to such time as the Company Shareholder Approval is obtained, the Company or the Company Board (A) submits this Agreement to its
shareholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies (or discloses its intention to withdraw or materially and adversely modify) its
recommendation as contemplated by
Section 5.5
, recommends to its shareholders an Acquisition Proposal other than the Merger, or otherwise makes
an Adverse Recommendation, whether or not permitted hereunder, (B) materially breaches its obligations under
Section 5.5
or
Section 5.8
; or
(ii) a tender offer or exchange offer for 25% or more of the outstanding shares of the Company Common
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Stock
is commenced (other than by Buyer or a Subsidiary thereof), and the Company Board recommends that the shareholders of the Company tender their shares in such tender or exchange offer or
otherwise fails to recommend that such shareholders reject such tender offer or exchange offer within the ten (10) business day period specified in Rule 14e-2(a) under the Exchange Act.
The
Party desiring to terminate this Agreement pursuant to clause (b), (c), (d) or (e) of this
Section 10.1
shall give
written notice of such termination to the other Party in accordance with
Section 12.2
, specifying the provision or provisions hereof pursuant to
which such termination is effected.
10.2
Effect of Termination.
If this Agreement is terminated as
provided in
Section 10.1
, then this Agreement will forthwith become void
and there will be no liability on the part of any Party to any other Party or any other Person in respect hereof; provided that the obligations of the Parties described in
Section 7.3, Section 10.2,
Article XI
, and
Section 11.3
(but, with respect
to
Section 11.3
, only as to any surviving obligation described in this
Section 10.2
, in
Article XII
and in the Buyer NDA) will survive any such termination; provided further that nothing contained herein shall relieve any Party from
any liabilities or damages arising out of its fraud or willful and material breach of this Agreement.
ARTICLE XI
ADDITIONAL AGREEMENTS
11.1
Expenses.
Except as otherwise expressly provided herein, the Company,
Buyer, and the Surviving Corporation will each pay all of their own (and their respective
Subsidiaries') fees, costs and expenses (including fees, costs and expenses of legal counsel, investment bankers, accountants, brokers or other representatives and consultants and appraisal fees,
costs and expenses), incurred in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Transaction Documents, the performance of their respective
obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby. Notwithstanding the foregoing, costs and expenses of printing and mailing the Proxy
Statement and all filing and other fees paid to the SEC in connection with the Merger shall be borne by Buyer.
11.2
Termination Fee.
(a) In
the event that after the date of this Agreement a bona fide Acquisition Proposal shall have been made known to the Company Board or shall have been made directly to
the Company Shareholders generally or any person shall have publicly announced (and not withdrawn) an Acquisition Proposal with respect to the Company and (i) (A) thereafter this Agreement is
terminated by either Party pursuant to
Section 10.1(b)
without the requisite vote of the Company Shareholders having been obtained or
(B) thereafter this Agreement is terminated by Buyer pursuant to
Section 10.1(b)
or
10.1(d),
and, in either case, (ii) prior to the date
that is twelve (12) months after the date of such termination, the Company enters
into a definitive agreement or consummates a transaction with respect to an Acquisition Proposal (whether or not the same Acquisition Proposal as that referred to above), then the Company shall, on
the date of consummation of such transaction pay Buyer, by wire transfer of
same day funds, a fee equal to $17,000,000 (the "
Termination Fee
"); provided, that for purposes of this
Section 11.2
, all references in the definition
of Acquisition Proposal to "25%" shall instead refer to "50%".
(b) In
the event that this Agreement is terminated by Buyer pursuant to
Section 10.1(e)
, then the Company shall pay
Buyer, by wire transfer of same day funds, the Termination Fee as promptly as reasonably practicable after the date of termination (and in any event, within three (3) business days thereafter).
(c) Notwithstanding
anything to the contrary herein, but without limiting the right of either Party to recover liabilities or damages arising out of the other Party's
willful and material breach of
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any
provision of the Agreement, the maximum aggregate amount of fees, expenses or other amounts payable by the Company in respect of any failure to consummate the Merger shall be equal to the
Termination Fee.
(d) Each
of Buyer and the Company acknowledges that the agreements contained in this
Section 11.2
are an integral part
of the transactions contemplated by this Agreement, and that, without these agreements, the other Party would not enter into this Agreement. If the Company fails to pay the amounts payable pursuant to
this
Section 11.2
, then the Company shall pay interest on such overdue amounts (for the period commencing as of the date that such overdue amount
was originally required to be paid and ending on the date that such overdue amount is actually paid in full) at a rate per annum equal to the "prime rate" (as announced by JPMorgan
Chase & Co. or any successor thereto) in effect on the date on which such payment was required to be made for the period commencing as of the date that such overdue amount was originally
required to be paid.
11.3
Specific Performance.
The Parties agree that the assets and
businesses of the Companies as a going concern, and the consideration to be received pursuant to this Agreement, constitute
unique property. There is no adequate remedy at law for the damage which any Party might sustain for failure of the other Parties to consummate any of the transactions contemplated by this Agreement
and, accordingly, each Party shall be entitled, at its option, to the remedy of specific performance to enforce the consummation of each transaction described in this Agreement.
11.4
Nonsurvival of Representations and Warranties.
None of the
representations or warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Closing.
ARTICLE XII
MISCELLANEOUS
12.1
Amendment and Waiver.
This Agreement may only be amended if such
amendment is set forth in a writing executed by the Company and Buyer; provided that no amendment may be made which
materially adversely affects the Company's Shareholders without their prior approval. No waiver of any provision of this Agreement shall be binding unless such waiver is in writing and signed by the
Party against whom such waiver is to be enforced. No failure by any Party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right
or remedy consequent upon a breach thereof will constitute a waiver of any such breach or any other covenant, duty, agreement or condition.
12.2
Notices.
All notices, demands and other communications given
or delivered under this Agreement will be in writing and will be deemed to have been given when personally
delivered, or sent by fax transmission or other electronic means of transmitting written documents, or sent to the Parties at the respective addresses indicated herein by registered or certified U.S.
mail, return receipt requested and postage prepaid, or sent by private overnight mail courier service. Notices, demands and communications sent by fax transmission or other electronic means must also
be sent by regular U.S. mail or by private overnight mail courier service to the Parties no later than the next business day in order for such notice to be effective. Notices, demands and
communications to the Company, Buyer or
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the
Surviving Corporation must, unless another address is specified in writing, be sent to the address indicated below:
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If to the Company Prior
to the Effective Time:
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Personal & Confidential
Bank Mutual Corporation
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Attention: Michael W. Dosland
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Chief Financial Officer
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4949 W. Brown Deer Rd.
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Milwaukee, WI 53223
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Fax (414) 362-6195
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with a copy (which copy shall not constitute notice to the Company) via e-mail to:
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michael.crowleyjr@bankmutual.com
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with a copy (which copy shall not constitute notice to the Company) to:
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Quarles & Brady LLP
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Attention: Kenneth V. Hallett
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411 East Wisconsin Avenue, Suite 2400
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Milwaukee, WI 53202-4497
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Fax (414) 978-8945
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If to Buyer or the Surviving Corporation:
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Associated Banc-Corp
Attention: Randall J. Erickson
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433 Main Street
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Green Bay, Wisconsin 54301
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with a copy (which copy shall not constitute notice to the Buyer or the Surviving Corporation) to:
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Wachtell, Lipton, Rosen & Katz
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Attention: Edward Herlihy and Matthew Guest
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51 West 52
nd
Street
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New York, NY 10019
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Fax (212) 403-2000
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12.3
Binding Agreement; Assignment.
This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the Parties and their respective successors and permitted
assigns; provided that prior to the Effective Time, neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by either Party without the prior written consent
of the other Party.
12.4
Severability.
Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
12.5
No Strict Construction.
The language used in this Agreement
will be deemed to be the language chosen by the Parties to express their mutual intent. In the event an ambiguity or question
of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Person by virtue
of the authorship of any of the provisions of this Agreement.
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12.6
Captions.
The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and will not be deemed to limit,
characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement will be enforced and construed as if no caption had been used in this Agreement.
12.7
Entire Agreement.
This Agreement (including the Exhibits, the
Company Schedules, and the Buyer Schedules), the documents referred to herein, the Buyer NDA contain the entire
agreement between the Parties and supersede any prior understandings, agreements or representations by or between the Parties, written or oral, which may have related to the subject matter hereof in
any way. In furtherance of the foregoing, the Parties acknowledge that the execution of this Agreement is the culmination of extensive negotiations between them, all of which were intended to be
non-binding upon the Parties until memorialized in the executed copy of this Agreement and none of which should be construed as having created any type of oral agreement between the Parties.
12.8
Counterparts.
This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which taken together will constitute one and the
same instrument.
12.9
Governing Law; Jurisdiction and Venue.
All questions concerning the construction, validity enforcement and interpretation of this Agreement shall be governed by the internal law
of the State of Wisconsin, without giving effect to any choice of law of conflict of law provision or rule (whether of the State of Wisconsin or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Wisconsin. Each Party irrevocably and unconditionally submits to the exclusive jurisdiction of the Courts of Wisconsin or federal
court within the State of Wisconsin), in any action or proceeding arising out of or relating to this Agreement and each Party irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such court. Each Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Each Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, (a) any
objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in this Section, and (b) the
defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
12.10
Parties in Interest.
Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the Parties and their respective successors and assigns any rights
or remedies under or by virtue of this Agreement; provided that the provisions of
Sections 6.6
may be enforced by any Indemnified Party.
12.11
Other Definitional Provisions.
Any term used but not defined
in this Agreement shall have the meaning given to such term in
Exhibit A
,
which
Exhibit A
is hereby incorporated herein by reference. The terms "
hereof,
"
"
herein
" and "
hereunder
" and terms of similar import will refer to this Agreement as a whole and not to
any particular provision of this Agreement unless specifically stated otherwise. Article, section, clause, subsection, exhibit, and schedule references contained in this Agreement are references to
Articles, sections, clauses, subsections, exhibits, and schedules in or attached to this Agreement, unless otherwise specified. Each defined term used in this Agreement has a comparable meaning when
used in its plural or singular form. Each gender-specific term used in this Agreement has a comparable meaning whether used in a masculine, feminine or gender-neutral form. Whenever the terms
"
include
" or "
including
" are used in this Agreement (whether or not such terms are followed by the
phrase "but not limited to" or "without limitation" or words of similar effect) in connection with a listing of items within a particular classification, that listing will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or an exclusive listing of, the items within that classification. Each reference in this Agreement to any Legal Requirement will be
deemed to include such Legal Requirement as it hereafter may be amended, supplemented or modified from time
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to
time and any successor thereto, unless such treatment would be contrary to the express terms of this Agreement. Whenever any amount is stated in this Agreement in
"
Dollars
" or by reference to the "
$
" symbol, such amount shall be United States dollars. Whenever the
term "ordinary course of business" is used it shall be deemed followed by "consistent with past practice."
[Signature page follows.]
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IN WITNESS WHEREOF
, the Parties have executed this Agreement and Plan of Merger as of the date first written above.
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BANK MUTUAL CORPORATION
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By:
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/s/ DAVID A. BAUMGARTEN
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Name:
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David A. Baumgarten
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Title:
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President and Chief Executive Officer
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ASSOCIATED BANC-CORP
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By:
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/s/ PHILIP B. FLYNN
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Name:
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Philip B. Flynn
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Title:
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President and Chief Executive Officer
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EXHIBIT A
DEFINED TERMS
As used in the Agreement and Plan of Merger to which this
Exhibit A
is attached and
incorporated by reference therein, the following terms will have the meanings specified:
"Acquisition Proposal"
means, other than the transactions contemplated by this Agreement, any offer, or proposal relating to, or any third
party indication of interest in, (i) any acquisition or purchase, direct or indirect, of 25% or more of the consolidated assets of the Company or 25% or more of any class of equity or voting
securities of the Company or any Company Subsidiary whose assets, individually or in the aggregate, constitute 25% or more of the consolidated assets of the Company, (ii) any tender offer
(including a self-tender offer) or exchange offer that, if consummated, would result in such third party beneficially owning 25% or more of any class of equity or voting securities of the Company or
any Company Subsidiaries whose assets, individually or in the aggregate, constitute 25% or more of the consolidated assets of the Company, or (iii) a merger, consolidation, share exchange or
other business combination involving any of the Companies whose assets, individually or in the aggregate, constitute 25% or more of the consolidated assets of the Company.
"Affiliate"
means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person, and the term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
"Bank"
means Bank Mutual, a federal chartered savings bank, wholly owned by the Company.
"BHC Act"
means the Bank Holding Company Act of 1956, as amended.
"
Buyer Bank
" means Associated Bank, National Association, a national banking association, wholly owned by Buyer.
"Buyer Common Stock"
means the common stock, $0.01 par value, of Buyer.
"Buyer Common Stock Price"
means the volume weighted average sale price of Buyer Common Stock on the NYSE over the five (5) full
trading days ending on the day preceding the Closing Date.
"Buyer SEC Report"
means any annual, quarterly or current report or proxy material filed or furnished by Buyer with the SEC pursuant to
the Exchange Act on or after January 1, 2014.
"Closing"
means the closing to be held on the Closing Date at the offices of Quarles & Brady LLP, 411 East Wisconsin Avenue,
Milwaukee, Wisconsin, or such other place as may be agreed to by Buyer and the Company, at which the transactions described in the Agreement shall be effected.
"
Commercial Tax Agreement
" means customary commercial agreements not primarily related to Taxes that contain agreements or arrangements
relating to the apportionment, sharing, assignment or allocation of Taxes (such as financing agreements with Tax gross-up obligations or leases with Tax escalation provisions).
"Companies"
means collectively the Company, the Bank and the other Company Subsidiaries.
"Company Common Stock"
means the Common Stock, $0.01 par value, of the Company.
"Company Equity Plan"
means the Company's 2004 Stock Incentive Plan and 2014 Incentive Compensation Plan.
"Company Plan"
means all employee benefit plans (as defined in Section 3(3) of ERISA), whether or not subject to ERISA, and all
bonus, stock option, stock purchase, restricted stock, incentive,
A-50
deferred
compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all retention, bonus, employment, termination or
severance plans, programs or arrangements or other contracts or agreements to or with respect to which the Company or any Subsidiary or any ERISA Affiliate, is a party or has any current or future
obligation or that are maintained, contributed to or sponsored by the Company or any of its Subsidiaries or any ERISA Affiliate for the benefit of any current or former employee, officer, director or
independent contractor of the Company or any of its Subsidiaries or any ERISA Affiliate.
"
Company Restricted Stock Award"
means each award of shares of Company Common Stock subject to vesting, repurchase or other lapse
restriction granted under a Company Equity Plan.
"
Company Stock Option
" means each option to purchase shares of Company Common Stock granted under a Company Equity Plan.
"Company SEC Report"
means any annual, quarterly or current report or proxy material filed or furnished by the Company with the SEC
pursuant to the Exchange Act on or after January 1, 2014.
"Company Shareholders"
means the holders of the Company Common Stock at any relevant point of time.
"Company Subsidiaries"
means the Bank and any Subsidiary.
"Consent"
means any consent, order, approval, authorization or other action of, or any filing with or notice to or other action with
respect to, any Governmental Entity or any other Person which is required for any of the execution, delivery or performance of the Agreement or any other Transaction Document, the consummation of the
Merger, the Bank Merger or other transaction contemplated hereby or thereby, or the conduct of the businesses or operation of the Companies after the Effective Time, whether such requirement arises
pursuant to any Legal Requirement or Contract, including any of the foregoing which is required in order to prevent a breach of or a default under or a termination
or modification of any Contract, which right of breach, default, termination or modification results from the consummation of the Closing Transactions.
"Contemplated Transactions"
shall mean the Merger, the Bank Merger and the other transactions and actions contemplated by this Agreement.
"Contract"
means any agreement, instrument, document, lease, employee benefit or welfare plan or other business or commercial arrangement
(in each case, including any extension, renewal, amendment or other modification thereof), to which any of the Companies is a party or by which any of the Companies is bound or to which any of the
Companies is subject or which pertains to the business or properties of any of the Companies.
"Customary Exceptions"
means laws relating to bankruptcy, insolvency, reorganization or other similar provisions affecting creditors'
rights generally and general principles of equity.
"Environment"
means surface or subsurface soil or strata, surface waters and sediments, navigable waters, groundwater, drinking water
supply and ambient air. The term also includes indoor air to the extent it is regulated under any Environmental and Safety Requirements.
"Environmental and Safety Requirements"
means all Legal Requirements concerning public health and safety, worker health and safety, or
pollution or protection of the Environment, including all those relating to the presence, use, production, generation, handling, transport, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup of any Hazardous Materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos, or polychlorinated biphenyls. This includes, without limitation, laws referenced in the definition of "Hazardous Materials"
herein and any other international, federal, state or local laws relating to releases or threatened
A-51
releases
of Hazardous Materials or otherwise relating to the manufacture, generation, processing, distribution, use, advertising, packaging, labeling, sale, treatment, storage, management, disposal,
cleanup, transportation or handling of Hazardous Materials.
"Environmental Lien"
means any Lien, either recorded or unrecorded, in favor of any Governmental Entity and relating to any liability
arising under Environmental and Safety Requirements.
"ERISA"
means the Employee Retirement Income Security Act of 1974, as amended.
"
ERISA Affiliate
" means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the
relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade
or business, or that is, or was at the relevant time, a member of the same "controlled group" as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
"Exchange"
means the NYSE, the securities exchange on which shares of Buyer Common Stock are listed.
"Exchange Act"
means the U.S. Securities Exchange Act of 1934, as amended.
"FDIC"
means the Federal Deposit Insurance Corporation.
"FRB"
means the Board of Governors of the Federal Reserve System.
"GAAP"
means United States generally accepted accounting principles as consistently applied by the Company.
"Governmental Entity"
means any government, agency, governmental department, commission, board, bureau, court, arbitration panel or
instrumentality of the United States of America or any state or other political subdivision thereof (whether now or hereafter constituted and/or existing), any self-regulatory authority and any entity
exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
"Hazardous Materials"
means any chemicals, materials, wastes or substances that are defined, regulated, determined or identified as toxic
or hazardous under any Environmental and Safety Requirements (including, without limitation, substances defined as "hazardous substances", "hazardous materials", "hazardous waste", "pollutant or
contaminant", "petroleum" or "natural gas liquids" in CERCLA, the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, or comparable state and local statutes or in the
regulations pursuant to said statutes).
"Insider"
means any Affiliate, director or executive officer of a Party.
"Knowledge"
(and any derivation thereof, whether or not capitalized) means only the current, actual knowledge and awareness (and shall not
include any deemed or constructive knowledge or awareness) of the individuals specified in clause (a) or (b) below, as the case may be: (a) in the case of Buyer, Philip B. Flynn,
Christopher J. Del Moral-Niles, James S. Payne, Judith M. Docter, Randall J. Erickson and James K. Simons, after reasonable inquiry, and (b) in the case of the Company, David Baumgarten,
Michael Dosland, Joseph Fikejs and Michael Crowley Jr., after reasonable inquiry.
"Legal Requirements"
means all federal, state, foreign and local laws, statutes, codes, rules, regulations, ordinances, judgments, orders,
decrees and the like of any Governmental Entity, including common law.
"Lien"
means any mortgage, pledge, hypothecation, lien (statutory or otherwise), preference, priority, security agreement, easement,
covenant, restriction or other encumbrance of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any lease
A-52
having
substantially the same effect as any of the foregoing and any assignment or deposit arrangement in the nature of a security device).
"Loan"
means any loan, loan agreement, note or borrowing arrangement (including leases, credit enhancements, letters of credit, interest
rate swaps, commitments, guarantees, interest-bearing assets, and other extensions of credit).
"Losses"
means all claims, demands, suits, proceedings, judgments, losses, liabilities, damages, Taxes, costs and expenses of every kind
and nature (including without limitation reasonable attorneys' fees).
"Material Adverse Effect"
means a material adverse effect on: (a) the businesses, operations, financial condition or results of
operations of the applicable Party and its Subsidiaries, taken as a whole; or (b) the ability of a Party to perform its material obligations under the Agreement or any other Transaction
Document; provided that, for purposes of clause (a) of this definition, Material Adverse Effect shall not include the impact of (i) a change (after the date hereof) in or the enactment
of any Legal Requirement or any change in the interpretation thereof, (ii) any change or event (after the date hereof) relating to the general economy of any nation or region in which the Party
operates, (iii) any change or event (after the date hereof) relating to the financial institution industry generally, (iv) taking any action specifically required by this Agreement or
with the prior written consent of Buyer, (v) the
identity of Buyer or Buyer's plans for the customers, suppliers, employees, businesses, operations or assets of the Company or any of its Subsidiaries, or (vi) the announcement of the
transactions contemplated by this Agreement, except, with respect to subclauses (i), (ii), or (iii), to the extent that the effects of such change or event are disproportionately adverse to the
businesses, operations, financial condition or results of operations of such Party and its Subsidiaries, taken as a whole, as compared to other companies in the industry, and in the geographical area,
in which such Party and its Subsidiaries operate.
"Material Contract"
means any of the following, except for any Transaction Document: (a) any employment or severance agreement with
any officer, individual employee or other Person on a current fulltime or consulting basis; (b) a Contract relating to debt, or a Contract under which any of the Companies is bound to make
annual payments in excess of Three Hundred Thousand Dollars ($300,000) or pursuant to which a Lien other than a Permitted Lien was placed on any material asset of any of the Companies; (c) a
guaranty by any of the Companies of the performance or payment obligation of any third party; (d) any lease under which any of the Companies is lessor of or permits any third party to hold or
operate any property, real or personal, for which the annual rental exceeds Two Hundred Thousand Dollars ($200,000); (e) any Contract with a vendor, consultant, or independent contractor for
the purchase of products or services under which the undelivered balance of such products and services in the next twelve (12) months has a sales price in excess of Three Hundred Sixty Thousand
Dollars ($360,000); (f) any Contract relating to the leasing, licensing, disposition or acquisition of assets or any interest in any business enterprise outside the ordinary course of any of
the Companies' businesses in an amount which exceeds Three Hundred Sixty Thousand Dollars ($360,000); (g) any Contract which imposes any non-compete or client or customer non-solicit
requirement or any other provision that imposes any material geographic or other restriction upon the ability of any of the Companies (or, after the Merger, Buyer and its Subsidiaries) to freely
engage in any line of business anywhere in the world other than any confidentiality agreement entered into by any of the Companies; (h) any agreement relating to the ownership of, investments
in or (other than ordinary course lending relationships) loans to any Person, other than investments, loans or other financing made in the ordinary course of business,; (i) any power of
attorney or similar agreement or grant of agency; (j) any partnership or joint venture agreement; (k) any contract relating to capital expenditures that involves total remaining payments
by any of the Companies of more than Three Hundred Sixty Thousand Dollars ($360,000); (l) any contract that grants any right of first refusal, right of first offer or similar
A-53
right
with respect to any material assets, rights or properties of the Company or its Subsidiaries; or (m) contains exclusive dealing, most favored nations or minimum purchase requirements.
"OCC"
means the Office of the Comptroller of the Currency.
"Parties"
means Buyer and the Company.
"Permitted Liens"
means (a) Liens for Taxes, assessments or government charges or levies not yet delinquent, (b) statutory
and contractual Liens granted by the Companies to any landlord, lessor or licensor, (c) Liens reflected in the Company Financial Statements, (d) Liens on other real estate owned junior
to a Party's or Subsidiary's original Lien on such property; (e) those Liens reflected on
Schedule 8.7
as of Closing, and (f) with
respect to any Real Property, in addition to (a) - (e) above, (i) zoning, entitlement, building and other land use and similar laws or regulations imposed by any Governmental Entity having
jurisdiction over such Real Property and any agreements entered into with respect to the same which do not materially impair the use or occupancy of such Real Property in the current operation of the
Companies' businesses, and (ii) easements, covenants, conditions, restrictions and other similar matters of record affecting title to the Real Property which do not materially impair the use or
occupancy of such Real Property in the current operation of the Companies' businesses.
"Person"
means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or any Governmental Entity.
"Proprietary Rights"
means all of the following items, along with all income, royalties, damages and payments due or payable with respect
thereto, including damages and payments for past, present or future infringements or misappropriations thereof, the right to sue and recover for past infringements or misappropriations thereof and any
and all corresponding rights that, now or hereafter, may be secured throughout the world: patents, patent applications, patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice) and any reissue, continuation, continuation-in-part, division, revision, extension or reexamination thereof; trademarks, service marks, trade dress, logos, domain names, trade
names and corporate names together with all goodwill associated therewith; copyrights registered or unregistered and copyrightable works; mask works; and all registrations, applications and renewals
for any of the foregoing; trade secrets and confidential information (including ideas, know-how, research and development information, drawings, specifications, designs, plans, proposals, technical
data, financial, business and marketing plans, and customer and supplier lists and related information); computer software and software systems (including data, databases and related documentation)
(except for software which is "shrinkwrapped"); licenses or other agreements to or from third parties regarding the foregoing; and all copies and tangible embodiments of the foregoing (in whatever
form or medium).
"Proxy Statement"
means the definitive proxy statement relating to the Company Shareholders Meeting to be held in connection with this
Agreement and the transactions contemplated hereby (including any amendments or supplements thereto).
"Real Property"
means those certain parcels of real estate described on
Schedule 8.7(a)
, including the improvements thereon or thereto.
"Registration Statement"
means the registration statement on Form S-4 in which the Proxy Statement will be included as a
prospectus, to be filed with the SEC by Buyer in connection with the transactions contemplated by this Agreement.
"Regulatory Approvals"
means the requisite approvals of the FRB, the OCC, the WDFI and any other Regulatory Authority whose approval of
the Merger or the Bank Merger is required for the Merger under any Legal Requirement, and the registration of the Buyer Common Stock pursuant to the Registration Statement.
A-54
"Regulatory Authority"
means the FDIC, the FRB, the OCC and the WDFI.
"SEC"
means the United States Securities and Exchange Commission.
"Securities Act"
means the U.S. Securities Act of 1933, as amended.
"Subsidiary"
means any subsidiary company that is majority owned, directly or indirectly, by any Party.
"Superior Proposal"
means a bona fide written Acquisition Proposal (except the references therein to "25%" shall be replaced by "50%")
which the Company Board reasonably concludes in good faith to be more favorable from a financial point of view to the Company Shareholders than the Merger and the other transactions contemplated
hereby.
"Takeover Statute"
means any provisions of any potentially applicable "control share," "fair price," "business combination," "takeover,"
"interested shareholder" or other similar provisions of the WBCL or other applicable law.
"Tax"
(and
"Taxes,"
and with correlative meaning,
"Taxable"
and
"Taxing"
)
means, with respect to any Person, (a) all federal, state, municipal,
local, domestic, foreign or other taxes, imposts, assessments, levy or other similar governmental charge, including ad valorem, alternative or add-on minimum, built-in-gains, capital, capital stock,
customs and import duties, disability, documentary stamp, employment, environmental (including taxes under Section 59A of the Code), estimated, excise, franchise, gains, goods and services,
gross income, gross receipts, income, intangible, inventory, license, mortgage recording, net income, occupation, payroll, personal premium, property, production, profits, property, real property,
recording, registration, rent, sales, severance, social security, stamp, transfer, transfer gains, unemployment, use, value added and withholding or other tax of any kind whatsoever,
together with any interest, additions, fines or penalties with respect thereto or in respect of any failure to comply with any requirement regarding Tax Returns and any interest in respect of such
additions, fines or penalties; (b) liability of any Person for the payment of any amounts of the type described in clause (a) arising as a result of being (or ceasing to be) a member of
any "affiliated group" (as that term is defined in Section 1504(a) of the Code) or any combined, consolidated or unitary group under any similar provision of foreign, state or local law (or
being included in any Tax Return relating thereto); and (c) liability for the payment of any amounts of the type described in clauses (a) or (b) as a result of any express or
implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person, in each case, other than pursuant to any Commercial Tax Agreement.
"Tax Return"
means any return, declaration, report, claim for refund or credit, information return or other document (including any
related or supporting schedules, statements or information) filed or required to be filed in connection with the determination assessment or collection of Taxes or the administration of any Legal
Requirement relating to any Taxes.
"
Title IV Company Plan
" means each Company Plan and any other ongoing, frozen or terminated "single employer plan" within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by the Companies, any of their Subsidiaries or any of their ERISA Affiliates that is subject to Title IV or Section 302 of
ERISA or Section 412, 430 or 4971 of the Code.
"Transaction Documents"
means the Agreement and the other agreements and instruments delivered pursuant hereto or thereto, including the
Bank Merger Agreement.
"Transition Date"
means, with respect to any Covered Employee, the date on which such Covered Employee became eligible to participate in a
Buyer Benefit Plan.
A-55
EXHIBIT B
VOTING AND SUPPORT AGREEMENT
This Voting and Support Agreement (this "
Agreement
"), dated as of July 20, 2017, is
entered into by and among ASSOCIATED BANC-CORP, a Wisconsin corporation (
"Buyer"
), BANK MUTUAL CORPORATION, a Wisconsin corporation (the
"
Company
"), and [ ], a shareholder of the Company (the
"
Shareholder
").
WHEREAS,
pursuant to the terms of the Agreement and Plan of Merger (as the same may be amended or supplemented, the "
Merger Agreement
"),
dated as of the date hereof, by and between Buyer and the Company, the Company will be merged with and into Buyer, with Buyer as the surviving corporation (the
"
Merger
");
WHEREAS,
the Shareholder beneficially owns the number of shares of Common Stock, $0.01 par value, of the Company ("
Company Common Stock
")
as set forth in the Company's proxy statement for its 2017 annual meeting of shareholders (the "2017 Proxy Statement") together with changes in ownership, if any, thereto reflected on any subsequently
filed Form 4 (the "
Existing Shares
"); and
WHEREAS,
as an inducement and a condition to Buyer and the Company to entering into the Merger Agreement, Buyer and the Company have required that the Shareholder, in his or her capacity
as a shareholder of the Company, enter into this Agreement.
NOW
THEREFORE, in consideration of the foregoing, the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agrees as follows:
1.
Definitions
.
Capitalized terms not defined in this Agreement
have the meaning assigned to those terms in the Merger Agreement.
2.
Voting Agreement
.
From the date hereof until the earlier of
(a) the Closing Date, (b) the termination of the Merger Agreement in accordance with its terms, (c) the date at the Company Board validly makes an Adverse Recommendation pursuant
to the Merger Agreement, and (d) the date of any amendment to, or waiver or modification of, the Merger Agreement that reduces the amount of the consideration payable to holders of Company
Common Stock in the Merger pursuant to the Merger Agreement if, in the case of this clause (d), the Shareholder has voted against such matter in the Shareholder's capacity as a director of the
Company (the "
Support Period
"), the Shareholder irrevocably and unconditionally hereby agrees, that at any meeting (whether annual or special and each
adjourned or postponed meeting) of the Company's shareholders, however called, or in connection with any written consent of the Company's shareholders, the Shareholder shall (i) appear at such
meeting or otherwise cause all of his or her Existing Shares and other shares of Company Common Stock over which he or she has acquired beneficial ownership after the date hereof (including any shares
of Company Common Stock acquired by means of purchase, dividend or distribution, or issued upon the exercise of any stock options to acquire Company Common Stock or otherwise) (collectively, the
"
New Shares
" and, together with the Existing Shares, the "
Shares
"), which he or she owns or controls as
of the applicable record date, to be counted as present thereat for purposes of calculating a quorum and (ii) vote or cause to be voted (including by proxy or written consent, if applicable)
all such Shares (A) in favor of the adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger, (B) in favor of any proposal to
adjourn or postpone such meeting of the Company's shareholders to a later date if there are not sufficient votes to adopt the Merger Agreement, (C) against any action or proposal in favor of an
Acquisition Proposal, without regard to the terms of such Acquisition Proposal, and (D) against any action, proposal, transaction or agreement that would reasonably be likely to
(1) result in a material breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the Merger Agreement, or of the Shareholder
contained in this Agreement, or (2) prevent, materially
Exhibit B-1
impede
or materially delay the Company's or Buyer's ability to consummate the transactions contemplated by the Merger Agreement, including the Merger;
provided
, that the foregoing applies solely to Shareholder
in his or her capacity as a shareholder or as a trustee or a limited general partner
in any entity holding Shares, and, to the extent the Shareholder serves as a member of the board of directors or officer of the Company, nothing in this Agreement shall limit or affect any actions or
omissions taken by the Shareholder in Shareholder's capacity as such a director or officer, including in exercising rights under the Merger Agreement, and no such actions or omissions shall be deemed
a breach of this Agreement or shall be construed to prohibit, limit or restrict Shareholder from exercising Shareholder's fiduciary duties as a director or officer to the Company or its shareholders.
For the avoidance of doubt, the foregoing commitments apply to any Shares held by any trust, limited partnership or other entity holding Shares for which the Shareholder serves in any partner,
shareholder or trustee capacity. To the extent the Shareholder does not control, by himself or herself, the determinations of such shareholder entity, the Shareholder agrees to exercise all voting or
other determination rights he or she has in such shareholder entity to carry out the intents and purposes of his or her support and voting obligations in this paragraph and otherwise set forth in this
Agreement. The Shareholder covenants and agrees that, except for this Agreement, he or she (x) has not entered into, and shall not enter during the Support Period, any voting agreement or
voting trust with respect to the Shares and (y) has not granted, and shall not grant during the Support Period, a proxy, consent or power of attorney with respect to the Shares except any proxy
to carry out the intent of this Agreement.
3.
GRANT OF IRREVOCABLE PROXY
.
IN THE EVENT OF A FAILURE BY THE
SHAREHOLDER TO ACT IN ACCORDANCE WITH THE SHAREHOLDER'S OBLIGATIONS AS TO VOTING PURSUANT TO
SECTION 2
DURING THE SUPPORT PERIOD, THE SHAREHOLDER
HEREBY IRREVOCABLY (DURING THE SUPPORT PERIOD) GRANTS TO AND APPOINTS BUYER AS THE SHAREHOLDER'S PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION), FOR AND IN THE NAME, PLACE AND STEAD OF
STOCKHOLDER, TO REPRESENT, VOTE AND OTHERWISE ACT (BY VOTING AT ANY MEETING OF THE COMPANY'S SHAREHOLDERS, HOWEVER CALLED, OR IN CONNECTION WITH ANY WRITTEN CONSENT OF THE COMPANY'S SHAREHOLDERS, WITH
RESPECT TO THE SHARES REGARDING THE MATTERS REFERRED TO IN
SECTION 2
DURING THE SUPPORT PERIOD, TO THE SAME EXTENT AND WITH THE SAME EFFECT AS
THE SHAREHOLDER MIGHT OR COULD DO UNDER APPLICABLE LAW, RULES AND REGULATIONS. THE PROXY GRANTED PURSUANT TO THIS
SECTION 2
IS COUPLED WITH AN
INTEREST AND SHALL BE IRREVOCABLE DURING THE SUPPORT PERIOD. DURING THE SUPPORT PERIOD, THE SHAREHOLDER WILL TAKE SUCH FURTHER ACTION AND WILL EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO
EFFECTUATE THE INTENT OF THIS PROXY. THE SHAREHOLDER HEREBY REVOKES ANY AND ALL PREVIOUS PROXIES OR POWERS OF ATTORNEY GRANTED WITH RESPECT TO ANY OF THE SHARES THAT MAY HAVE HERETOFORE BEEN APPOINTED
OR GRANTED WITH RESPECT TO THE MATTERS REFERRED TO IN
SECTION 2
AND THIS
SECTION 3
.
4.
Transfer Restrictions prior to Merger
.
The Shareholder hereby
agrees that he or she will not, during the Support Period, without the written consent of Buyer, sell, transfer, assign, tender in any tender or exchange offer, pledge, encumber, hypothecate or
similarly dispose of (by merger, by testamentary disposition, by operation of law or otherwise), either voluntarily or involuntarily, enter into any swap or other arrangements that transfers to
another, in whole or in part, any of the economic consequences of ownership of, enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment,
pledge, lien, hypothecation or other disposition of (by merger, by testamentary disposition, by operation of law or otherwise) or otherwise convey or dispose of, any of the Shares, or any interest
therein, including the right to vote any Shares, as applicable
Exhibit B-2
(a "
Transfer
"); provided that the Shareholder may Transfer Shares (a) for philanthropic purposes, (b) for estate planning purposes
so long as the transferee, prior to the date of Transfer, agrees in a signed writing to be bound by and comply with the provisions of this Agreement, (c) upon the death of the Shareholder,
(d) for funds for the payment of the exercise price and/or income tax withholding or estimated tax payment obligations in connection with the exercise of stock options or the vesting of
restricted stock, or (e) transfers of shares held as a trustee or administrator from a trust or estate to a beneficiary thereof pursuant to the terms of such trust or estate.
5.
Representations of the Shareholder
. The Shareholder represents and warrants to Buyer
as follows: (a) the Shareholder has full legal right, capacity and authority to execute and deliver this Agreement, to perform the Shareholder's obligations hereunder and to consummate the
transactions contemplated hereby, (b) this Agreement has been duly and validly executed and delivered by the Shareholder and constitutes a valid and legally binding agreement of the
Shareholder, enforceable against the Shareholder in accordance with its terms, and no other action is necessary to authorize the execution and delivery by the Shareholder or the performance of his or
her obligations hereunder; (c) the execution and delivery of this Agreement by the Shareholder does not, and the consummation of the transactions contemplated hereby and the compliance with the
provisions hereof will not, conflict with or violate any Laws or agreement binding upon the Shareholder or the Existing Shares, nor require any authorization, consent or approval of, or filing with,
any Governmental Entity, (d) as of the date hereof, the Shareholder beneficially owns (as such term is used in Rule 13d-3 of the Exchange Act) the Existing Shares, (e) as of the
date hereof, the Shareholder beneficially owns the Existing Shares free and clear of any proxy, voting restriction, adverse claim or other Lien (other than any restrictions created by this Agreement,
under applicable federal or state securities laws or pursuant to any written policies of the Company with respect to the trading of securities in connection with insider trading restrictions,
applicable securities laws and similar considerations or as disclosed in the 2017 Proxy Statement).
6.
Effectiveness
.
This Agreement shall be effective upon signing
and delivery. If the Merger Agreement is terminated for any reason in accordance with its terms, this Agreement (other than
Sections 7
through
12
)
shall automatically terminate and be null and void and of no effect.
7.
Entire Agreement; Assignment
.
This Agreement is irrevocable.
The recitals are incorporated as a part of this Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. 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. This Agreement shall not be assigned by operation of law or otherwise and shall be binding
upon and inure solely to the benefit of each party hereto;
provided
,
however
, that the rights under this
Agreement are assignable by Buyer to a majority-owned affiliate or any successor-in-interest of Buyer, but no such assignment shall relieve Buyer of its obligations hereunder.
8.
Remedies/Specific Enforcement
.
Each of the parties hereto
agrees that this Agreement is intended to be legally binding and specifically enforceable pursuant to its terms and that Buyer would be irreparably harmed if any of the provisions of this Agreement
are not performed in accordance with its specific terms and that monetary damages would not provide adequate remedy in such event. Accordingly, in the event of any breach or threatened breach by the
Shareholder of any covenant or obligation contained in this Agreement, in addition to any other remedy to which Buyer may be entitled (including monetary damages), Buyer shall be entitled to seek
injunctive relief to prevent breaches of this Agreement and to specifically enforce the terms and provisions hereof. The Shareholder further agrees that neither Buyer nor any other person or entity
shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining
Exhibit B-3
any
remedy referred to in this paragraph, and the Shareholder irrevocably waives any right he or she may have to require the obtaining, furnishing or posting of any such bond or similar instrument.
9.
Governing Law; Jurisdiction and
Venue
.
All questions concerning the construction, validity enforcement and interpretation of this Agreement shall
be governed by the internal law of the State of Wisconsin, without giving effect to any choice of law of conflict of law provision or rule (whether of the State of Wisconsin or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the State of Wisconsin. Each Party irrevocably and unconditionally submits to the exclusive jurisdiction of the Courts of
Wisconsin or federal court within the State of Wisconsin), in any action or proceeding arising out of or relating to this Agreement and each Party irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined in such court. Each Party agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each Party irrevocably and unconditionally waives, to the fullest extent permitted by applicable law,
(a) any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in this
Section 12, and (b) the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
10.
Severability
. If any provision of this Agreement (or any portion thereof) or the
application of any such provision (or any portion thereof) to any Person or circumstance is unenforceable, such provision shall be fully severable, and this Agreement shall be construed and enforced
as if such unenforceable provision had never comprised a part of this Agreement, the remaining provisions of this Agreement shall remain in full force and effect, and the court construing this
Agreement shall add as a part of this Agreement, a provision as similar in terms and effect to such unenforceable provision as may be enforceable, in lieu of the unenforceable provision.
11.
Amendments; Waivers
. Any provision of this Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed (a) in the case of an amendment, by Buyer and the Shareholder, and (b) in the case of a waiver, by the party against whom
the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
12.
Counterparts
.
The parties may execute this Agreement in one
or more counterparts, including by facsimile or other electronic signature. All the counterparts will be construed together and will constitute one Agreement.
[Signature pages follow]
Exhibit B-4
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SIGNED as of the date first set forth above:
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ASSOCIATED BANC-CORP
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BANK MUTUAL CORPORATION
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Additional Signatures on Next Page
[Signature Page to Voting and Support Agreement]
[Signature Page to Voting and Support Agreement]
Annex B
July 20,
2017
The
Board of Directors
Bank Mutual Corporation
4949 West Brown Deer Road
Milwaukee, Wisconsin 53223
Members
of the Board:
You
have requested RBCCM's opinion as to the fairness, from a financial point of view, to the holders (the "
Shareholders
") of the common
stock, par value $0.01 per share ("
Company Common Stock
"), of Bank Mutual Corporation, a Wisconsin corporation (the
"
Company
"), of the Exchange Ratio (as defined below) provided for under the terms of the proposed Agreement and Plan of Merger (the
"
Agreement
") by and between Associated Banc-Corp, a Wisconsin corporation (the "
Buyer
"), and the
Company. Capitalized terms used herein shall have the meanings used in the Agreement unless otherwise defined herein.
The
Agreement provides, among other things, that the Company will merge with and into the Buyer (the "
Merger
") and, at the Effective Time,
each share of Company Common Stock (a "
Share
") issued and outstanding immediately prior to the Effective Time (other than any Shares owned directly or
indirectly by the Buyer or held in the Company's treasury, all of which will be cancelled for no consideration) will be converted into the right to receive 0.422 shares (the
"
Exchange Ratio
") of common stock, par value $0.01 per share ("
Buyer Common Stock
"), of the Buyer. The
terms and conditions of the Merger are set forth more fully in the Agreement.
RBC
Capital Markets, LLC ("
RBCCM
"), as part of its investment banking services, is regularly engaged in the valuation of businesses
and their securities in connection with mergers and acquisitions, corporate restructurings, underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations
for corporate and other purposes.
RBCCM
is acting as financial advisor to the Board of Directors of the Company (the "
Company Board
") in connection with the Merger, and
RBCCM will receive a fee for its services upon delivery of this opinion, which is not contingent upon the successful completion of the Merger. In addition, for RBCCM's services as financial advisor to
the Company in connection with the Merger, if the Merger is successfully completed RBCCM will receive an additional substantially larger fee. In addition, the Company has agreed to indemnify RBCCM for
certain liabilities that may arise out of its engagement.
In
the ordinary course of business, RBCCM and its affiliates may act as a market maker and broker in the publicly traded securities of the Company and/or the Buyer and receive customary
compensation, and may also actively trade securities of the Company and/or the Buyer for its own account and the accounts of its customers, and, accordingly, RBCCM and its affiliates, may hold a long
or short position in such securities.
RBCCM
and its affiliates have provided investment banking and financial advisory services to the Company in the past, for which they received customary fees, although they have not
received fees for any such services during the prior two years. RBCCM and its affiliates have provided investment banking services to the Buyer in the past, for which they received customary fees,
including, in the past two years, executing certain securities market transactions for the Buyer and providing certain cash
B-1
management
services. In addition, in the past two years prior to the date hereof and prior to RBCCM's engagement by the Company, certain of its representatives, including certain senior members of the
deal team representing the Company in connection with the Merger, have from time to time participated in discussions with management of the Buyer regarding potential acquisition and capital markets
transactions unrelated to the Merger. In light of RBCCM's relationship with the Buyer, RBCCM anticipates that it may be selected by the Buyer to provide investment banking and financial advisory
and/or financing services that may be required by the Buyer in the future, regardless of whether the Merger is successfully completed.
For
the purposes of rendering its opinion, RBCCM has undertaken such review and inquiries as RBCCM deemed necessary or appropriate under the circumstances, including the following:
(i) RBCCM reviewed the financial terms of the draft Agreement dated July 19, 2017 (the "
Latest Draft Agreement
"); (ii) RBCCM
reviewed and analyzed certain publicly available financial and other data with respect to the Company and the Buyer and certain other relevant historical operating data relating to the Company and the
Buyer made available to us from published sources and from the internal records of the Company and the Buyer; (iii) RBCCM reviewed and analyzed internal projections of the Company;
(iv) RBCCM reviewed Wall Street research estimates regarding the potential future performance of the Buyer; (v) RBCCM reviewed selected market valuation metrics of the Company, the Buyer
and other comparable publicly traded companies for each, as well as the financial metrics implied by the Exchange Ratio; (vi) RBCCM reviewed the financial metrics of selected precedent
transactions, as well as the financial metrics implied by the Exchange Ratio; (vii) RBCCM conducted discussions with members of (a) the senior management of (1) the Company with
respect to the business prospects and financial outlook of the Company as a standalone entity, (2) the Buyer with respect to the business prospects and financial outlook of the Buyer as a
standalone entity, and (b) the senior managements of each of the Company and the Buyer with respect to the business prospects and financial outlook of the Buyer pro forma for the Merger;
(viii) RBCCM reviewed the reported prices and trading activity for Company Common Stock and Buyer Common Stock; and (ix) RBCCM reviewed such other financial and other information as it
deemed appropriate.
In
rendering its opinion, RBCCM has assumed and relied upon the accuracy and completeness of all the information that was publicly available to RBCCM and all of the financial, legal,
tax, operating and other information provided to or discussed with RBCCM by the Company and the Buyer (including, without limitation, the financial statements and related notes thereto of each of the
Company and the Buyer), and has not assumed responsibility for independently verifying and have not independently verified such information. RBCCM has assumed, with the Company's consent, that all
projections and
forecasts provided to it by the Company or the Buyer, as the case may be (including forecasts provided to it by the Buyer and the Company with respect to certain cost synergies expected to be realized
from the Merger, together with certain pro forma adjustment assumptions relating to the Merger provided to RBCCM by the Buyer), were reasonably prepared on bases reflecting the best currently
available estimates and good faith judgments of the management of the Company of the future financial performance of the Company as a standalone entity (or, in the case of the projected cost
synergies, the best currently available estimates and good faith judgments of the managements of each of the Company and the Buyer of the future financial performance of the Buyer pro forma for the
Merger), that the Merger will be a tax-free transaction, and any projected cost synergies will be achieved. In addition, RBCCM has assumed, with the consent of the Company, that the Wall Street
research estimates reviewed by it were reasonably prepared on bases not materially different from the best currently available estimates and good faith judgments of the management of the Buyer of the
future financial performance of the Buyer as a standalone entity. RBCCM expresses no opinion as to such projections and forecasts or the assumptions upon which they were based.
In
rendering its opinion, RBCCM has not assumed any responsibility to perform, and has not performed, an independent evaluation or appraisal of any of the assets or liabilities of either
the
B-2
Company
or the Buyer, and RBCCM has not been furnished with any such valuations or appraisals. RBCCM has not assumed any obligation to conduct, and has not conducted, any physical inspection of the
property or facilities of either the Company or the Buyer. RBCCM is not an expert in the evaluation of allowances for loan and lease losses and has not independently verified such allowances or
reviewed or examined any individual loan or credit files. RBCCM assumed, with your consent, that the aggregate allowances for loan and lease losses set forth in the financial statements of the Company
and the Buyer are adequate to cover such losses. RBCCM has not investigated, and makes no assumption regarding, any litigation or other claims affecting either the Company or the Buyer.
RBCCM
has assumed, in all respects material to its analysis, that all regulatory and other third-party consents will be obtained, all representations and warranties will be true and
correct in accordance with the Agreement, and all other conditions to the consummation of the Merger will be satisfied without waiver thereof. RBCCM has further assumed that the executed version of
the Agreement will not differ, in any respect material to its opinion, from the Latest Draft Agreement.
RBCCM's
opinion speaks only as of the date hereof, is based on the conditions as they exist and information which RBCCM has been supplied as of the date hereof, and is without regard to
any market, economic, financial, legal, or other circumstances or event of any kind or nature which may exist or occur after such date. RBCCM has not undertaken to reaffirm or revise this opinion or
otherwise comment upon events occurring after the date hereof and does not have an obligation to update, revise or reaffirm this opinion. RBCCM is not expressing any opinion herein as to the prices at
which Buyer Common Stock or Company Common Stock has traded or will trade following the
announcement of the Merger nor the prices at which Buyer Common Stock will trade following the consummation of the Merger.
The
opinion expressed herein is provided for the information and assistance of the Company Board, in its capacity as such, in connection with the Merger. RBCCM expresses no opinion and
makes no recommendation to the Company Board or any Shareholder of the Company as to how any Company Board member or such Shareholder should vote with respect to the Merger. All advice and opinions
(written and oral) rendered by RBCCM are intended for the use and benefit of the Company Board, in its capacity as such. Such advice or opinions may not be reproduced, summarized, excerpted from or
referred to in any public document or given to any other person without the prior written consent of RBCCM. If required by applicable law, such opinion may be included in any disclosure document filed
by the Company with the Securities and Exchange Commission with respect to the Merger;
provided however
, that such opinion must be reproduced in full
and that any description of or reference to RBCCM be in a form reasonably acceptable to RBCCM and its counsel. RBCCM shall have no responsibility for the form or content of any such disclosure
document, other than the opinion itself.
RBCCM's
opinion does not address the merits of the underlying decision by the Company to engage in the Merger or the relative merits of the Merger compared to any alternative business
strategy or transaction in which the Company might engage.
RBCCM's
opinion addresses solely the fairness of the Exchange Ratio, from a financial point of view, to the Shareholders. RBCCM's opinion does not in any way address other terms or
arrangements of the Merger or the Agreement, including, without limitation, the financial or other terms of any other agreement contemplated by, or to be entered into in connection with, the
Agreement. Further, in rendering its opinion, RBCCM expresses no opinion about the fairness of the amount or nature of the compensation to any of the Company's officers, directors or employees, or
class of such persons, relative to the compensation to be paid to the public Shareholders of the Company.
RBCCM's
opinion has been approved by RBCCM's Fairness Opinion Committee.
B-3
Based
on RBCCM's experience as investment bankers and subject to the foregoing, including the various assumptions and limitations set forth herein, it is RBCCM's opinion that, as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to the Shareholders.
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Very truly yours,
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/s/ RBC Capital Markets, LLC
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RBC CAPITAL MARKETS, LLC
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B-4
Table of Contents
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Sections 180.0851 and 180.0852 of the WBCL provide that a corporation shall indemnify a director or officer, to the extent that he or she
has been successful on the merits or otherwise in the defense of a proceeding, for all reasonable expenses incurred in the proceeding if the director or officer was a party because he or she is a
director or officer of the corporation. Otherwise, a corporation shall indemnify a director or officer against liability incurred by the director or officer in
a proceeding to which the director or officer was a party because he or she is a director or officer of the corporation, unless liability was incurred because the director or officer breached or
failed to perform a duty that he or she owes to the corporation and the breach or failure to perform constitutes any of the following:
-
1.
-
A
willful failure to deal fairly with the corporation or its shareholders in connection with a matter in which the director or officer has a material conflict of
interest.
-
2.
-
A
violation of the criminal law, unless the director or officer had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe
that his or her conduct was unlawful.
-
3.
-
A
transaction from which the director or officer derived an improper personal profit.
-
4.
-
Willful
misconduct.
A
corporation may, in its articles of incorporation or bylaws, limit its obligation to indemnify.
Article XI,
Section 2 of the Associated bylaws provide that Associated shall indemnify a director, officer, employee, or agent to the extent he or she has been successful
on the merits or otherwise in the defense of any proceeding, for all reasonable expenses. Otherwise, Associated shall indemnify a director, officer, employee, or agency against liability unless a
final judicial adjudication determines that such person breached a duty owed to Associated which constituted a willful failure to deal fairly in a matter with a conflict of interest, violated criminal
law, derived improper personal profit from a transaction, or engaged in willful misconduct.
The
foregoing is only a general summary of certain aspects of Wisconsin law and Associated's articles of incorporation and bylaws dealing with indemnification of directors and officers,
and does not purport to be complete. It is qualified in its entirety by reference to the detailed provisions of those Sections of the WBCL referenced above and the Associated charters and bylaws.
Certain
rules of the Federal Deposit Insurance Corporation limit the ability of certain depository institutions, their subsidiaries and their affiliated depository institution holding
companies to indemnify affiliated parties, including institution directors. In general, subject to the ability to purchase directors' and officers' liability insurance and to advance professional
expenses under certain circumstances, the rules prohibit such institutions from indemnifying a director for certain costs incurred with regard to an administrative or enforcement action commenced by
any federal banking agency that results in a final order or settlement pursuant to which the director is assessed a civil money penalty, removed from office, prohibited from participating in the
affairs of an insured depository institution or required to cease and desist from or take an affirmative action described in Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C.
§ 1818(b)).
II-1
Table of Contents
Item 21. Exhibits and Financial Statement Schedules
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Exhibit
No.
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Description
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2.1
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Agreement and Plan of Merger, dated as of July 20, 2017, by and between Associated Banc-Corp and Bank Mutual Corporation (included as Annex A to the proxy statement/prospectus which forms part of this
registration statement).
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3.1
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Amended and Restated Articles of Incorporation of Associated Banc-Corp (incorporated by reference to Exhibit (3) to Report on Form 10-Q of Associated filed on May 8, 2006).
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3.2
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Articles of Amendment to the Amended and Restated Articles of Incorporation of Associated Banc-Corp with respect to its 8.00% Perpetual Preferred Stock, Series B, dated September 12, 2011 (incorporated by
reference to Exhibit (3.1) to Report on Form 8-K filed on September 15, 2011).
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3.3
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Articles of Amendment to the Amended and Restated Articles of Incorporation of Associated Banc-Corp with respect to its 6.125% Non-Cumulative Perpetual Preferred Stock, Series C, dated June 4, 2015
(incorporated by reference to Exhibits (3.1 and 4.1) to Report on Form 8-K filed on June 8, 2015).
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3.4
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Articles of Amendment to the Amended and Restated Articles of Incorporation of Associated Banc-Corp regarding the rights and preferences of preferred stock, effective April 25, 2012 (incorporated by reference to
Exhibits (3.1 and 4.1) to Report on Form 8-K filed on April 25, 2012).
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3.5
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Articles of Correction of Articles of Amendment to the Amended and Restated Articles of Incorporation of Associated Banc-Corp filed with the Wisconsin Department of Financial Institutions on June 14, 2016
(incorporated by reference to Exhibit (3) to Report on Form 10-Q filed on July 28, 2016).
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3.6
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Certificate Related to Series A Preferred Stock dated August 15, 2016 (incorporated by reference to Exhibit (3.1) to Report on Form 8-K filed on August 16, 2016).
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3.7
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Articles of Amendment to the Amended and Restated Articles of Incorporation of Associated Banc-Corp with respect to its 5.375% Non-Cumulative Perpetual Preferred Stock, Series D, dated September 12, 2016
(incorporated by reference to Exhibits (3.1 and 4.1) to Report on Form 8-K filed on September 15, 2016).
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3.8
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Amended and Restated Bylaws of Associated Banc-Corp (incorporated by reference to Exhibit (3) to Report on Form 10-Q filed on November 1, 2013).
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3.9
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Amended and Restated Bylaws of Associated Banc-Corp (incorporated by reference to Exhibit (3.1) to Report on Form 8-K filed on October 26, 2016).
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5.1
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Form of Opinion of Randall J. Erickson as to validity of the securities being registered.
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8.1
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Form of Opinion of Wachtell, Lipton, Rosen & Katz regarding certain tax matters.*
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8.2
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Form of Opinion of Quarles & Brady LLP regarding certain tax matters.*
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23.1
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Consent of KPMG LLP.
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23.2
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Consent of Deloitte & Touche LLP.
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23.3
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Consent of Randall J. Erickson (included in Exhibit 5.1 hereto).
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23.4
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Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 8.1 hereto).*
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23.5
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Consent of Quarles & Brady LLP (included in Exhibit 8.2 hereto).*
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II-2
Table of Contents
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Exhibit
No.
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Description
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24.1
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Power of Attorney.
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99.1
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Form of Bank Mutual Proxy Card.*
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99.2
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Consent of RBC Capital Markets, LLC
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*
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To
be filed by amendment.
Item 22. Undertakings
The undersigned registrant hereby undertakes:
To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
-
•
-
to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
-
•
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to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more
than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
-
•
-
to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
The
undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
The
undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the registrant undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the
applicable form.
II-3
Table of Contents
The
registrant undertakes that every prospectus (i) that is filed pursuant to the paragraph immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
The
undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of
this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
The
undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when it became effective.
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Table of Contents