SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
SCHEDULE 13E-3
(Rule 13e-100)
RULE 13-E TRANSACTION STATEMENT UNDER SECTION 13(e) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
INVESTORSBANCORP, INC.
(Name of the Issuer)
INVESTORSBANCORP, INC.
INVESTORS SUBSIDIARY, INC.
GEORGE R. SCHONATH, JENN SCHONATH, SARAH SCHONATH, EMILY SCHONATH,
THOMAS EVANS, EMILY A. SCHONATH IRREVOCABLE TRUST, DATED DECEMBER 31, 1996 AND
SARAH E. SCHONATH IRREVOCABLE TRUST, DATED DECEMBER 31, 1996
(Name of the Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
461833105
(CUSIP Number of Class of Securities)
John E. Freechack
Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLC
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
(312) 984-3100
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Person(s) Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an
information statement subject to Regulation 14A,
Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the
Securities Act of 1933.
c. [ ] A tender offer.
d. [X] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. [ ]
Check the following box if the filing is a final amendment reporting the results
of the transaction. [ ]
CALCULATION OF FILING FEE
=====================================================================
Transaction Valuation * Amount Of Filing Fee
- ---------------------------------------------------------------------
$5,697,817.80 $460.95
=====================================================================
* For purposes of calculating the filing fee only. Determined by (1) multiplying
398,259 shares of common stock, par value $.01 per share, of InvestorsBancorp,
Inc. by $14.20 per share, and (2) adding thereto $42,540.00 anticipated to be
paid to certain persons holding options to acquire shares of common stock in
consideration of cancellation of such options (assuming an aggregate of 6,200
options are cancelled in exchange for cash in the transaction).
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount previously paid $460.95 Filing party: InvestorsBancorp, Inc.
Form or registration no.: Schedule 13E-3 Date filed: May 19, 2003
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE
MERITS OR FAIRNESS OF THIS TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[INVESTORSBANCORP LETTERHEAD]
August 14, 2003
Dear Shareholder:
As previously announced, on March 25, 2003, InvestorsBancorp, Inc. entered
into a merger agreement with its wholly-owned subsidiary, Investors Subsidiary,
Inc., under which Investors Subsidiary will merge with and into
InvestorsBancorp. In the merger, each share of common stock (other than certain
shares owned by George R. Schonath, the Chief Executive Officer, and certain of
his family affiliates) will be converted into, and will represent the right to
receive, $14.20 in cash. This transaction will be a "going private" transaction
for InvestorsBancorp. Following its completion, you will no longer be a
shareholder of InvestorsBancorp, and InvestorsBancorp securities will no longer
be registered with the Securities and Exchange Commission
The boards of directors of each of InvestorsBancorp and Investors
Subsidiary have approved the merger agreement and the merger. You do not have
the right to vote on the merger, and InvestorsBancorp is not seeking a
shareholder vote on the merger.
In connection with this transaction, enclosed please find a Transaction
Statement describing in more detail the terms of the merger agreement and the
merger. We encourage you to read carefully the Transaction Statement and the
exhibits thereto.
InvestorsBancorp expects to complete the merger in the third quarter of
2003. Again, we encourage you to read carefully the enclosed materials for a
detailed explanation of the transaction and its effects.
Sincerely,
George R. Schonath
Chief Executive Officer
InvestorsBancorp, Inc.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE
MERITS OR FAIRNESS OF THIS TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
SUMMARY TERM SHEET.......................................................................... 1
The Parties.............................................................................. 1
Overview of The Merger................................................................... 1
Background of the Merger................................................................. 2
Reasons for the Merger; Fairness of the Merger........................................... 2
Valuation of Financial Advisor........................................................... 3
Purpose and Structure of the Merger...................................................... 4
Material Effects of the Merger........................................................... 4
Voting Requirements...................................................................... 5
Appraisal Rights......................................................................... 5
Interests of Certain Persons in the Merger............................................... 5
Financing of the Merger.................................................................. 6
Material Federal Income Tax Consequences................................................. 6
The Merger Agreement..................................................................... 7
INTRODUCTION................................................................................ 8
The Parties.............................................................................. 8
The Merger............................................................................... 9
SPECIAL FACTORS............................................................................. 10
Background of the Merger................................................................. 10
Reasons for the Merger; Fairness of the Merger........................................... 19
Valuation of Financial Advisor........................................................... 26
Purpose and Structure of the Merger...................................................... 34
Effects of the Merger; Plans or Proposals after the Merger............................... 34
Effects of the Merger on Shareholders of InvestorsBancorp................................ 36
Voting Requirements...................................................................... 38
Appraisal Rights......................................................................... 39
Interests of Certain Persons in the Merger............................................... 40
Financing of the Merger.................................................................. 41
Material Federal Income Tax Consequences of the Merger................................... 42
MATERIAL TERMS OF THE MERGER................................................................ 44
The Merger Agreement..................................................................... 44
Regulatory Requirements.................................................................. 48
Accounting Treatment..................................................................... 49
Fees and Expenses........................................................................ 49
FINANCIAL INFORMATION....................................................................... 49
Selected Historical Financial Data....................................................... 49
MARKET PRICE OF INVESTORSBANCORP COMMON STOCK AND DIVIDEND INFORMATION...................... 50
Comparative Market Price Data............................................................ 50
Dividends................................................................................ 51
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................. 51
COMMON STOCK PURCHASE INFORMATION........................................................... 52
Prior Stock Purchases.................................................................... 52
Recent Transactions...................................................................... 54
INFORMATION ABOUT THE DIRECTORS, OFFICERS AND SCHONATH SHAREHOLDERS......................... 54
Information about the Directors and Executive Officers of InvestorsBancorp............... 54
Information about the Directors and Executive Officers of Investors Subsidiary........... 56
Information about the Schonath Shareholders.............................................. 57
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................................. 58
Related Transactions..................................................................... 58
Agreements Involving InvestorsBancorp's Securities....................................... 59
OTHER MATTERS............................................................................... 59
Reports, Opinions, Appraisals and Negotiations........................................... 59
Forward Looking Statements............................................................... 59
Where You Can Find More Information...................................................... 60
Information Incorporated by Reference.................................................... 60
TRANSACTION STATEMENT....................................................................... 62
ii
SUMMARY TERM SHEET
This summary provides an overview of material information from this
transaction statement about the proposed merger between InvestorsBancorp, Inc.
and Investors Subsidiary, Inc. However, it is a summary only. To better
understand the merger and for a more complete description of the terms of the
merger, you should read this entire document and the documents to which it
refers carefully.
In this transaction statement, "InvestorsBancorp," "we," "our," "ours,"
"us" and the "company" refer to InvestorsBancorp, Inc. We use the term
"Investors Subsidiary" to refer to Investors Subsidiary, Inc., and "merger
agreement" to refer to the Agreement and Plan of Merger between InvestorsBancorp
and Investors Subsidiary, as amended by Amendment No. 1 to Merger Agreement
between InvestorsBancorp and Investors Subsidiary. The term "Schonath
shareholders" means George R. Schonath, Jenn Schonath, Sarah E. Schonath, Emily
A. Schonath, Thomas Evans, the Emily A. Schonath Irrevocable Trust and the Sarah
E. Schonath Irrevocable Trust. The term "non-continuing shareholders" of
InvestorsBancorp means all holders of common stock of InvestorsBancorp other
than the Schonath shareholders. References to "common stock" or "shares" refer
to InvestorsBancorp's common stock, par value $0.01 per share.
THE PARTIES
(see pages 8 and 9 and page 59)
The parties to the merger are:
- InvestorsBancorp, a Wisconsin corporation and a registered bank
holding company under the Bank Holding Company Act of 1956, as
amended, with a business address of W239 N1700 Busse Road, Waukesha,
Wisconsin, 53188-1160, and a business telephone number of (262)
523-1000; and
- Investors Subsidiary, a newly-formed Wisconsin corporation organized
as a wholly-owned subsidiary of InvestorsBancorp for the sole
purpose of the merger, with a business address of W239 N1700 Busse
Road, Waukesha, Wisconsin, 53188-1160, and a business telephone
number of (262) 523-1000.
In addition to InvestorsBancorp and Investors Subsidiary, the Schonath
shareholders, some of whom were involved in structuring the transaction and who
will remain shareholders of InvestorsBancorp following the merger, are filing
this Rule 13e-3 transaction statement on Schedule 13e-3. For more information
about the Schonath shareholders, please see "Information About the Directors,
Officers and Schonath Shareholders--Information about the Schonath Shareholders"
on page 59.
OVERVIEW OF THE MERGER
(see page 9)
On March 25, 2003, InvestorsBancorp and Investors Subsidiary entered
into the merger agreement, under which it is anticipated that Investors
Subsidiary will merge with and into InvestorsBancorp. In the merger,
- each share of common stock owned of record by non-continuing
shareholders of InvestorsBancorp will be converted into, and will
represent the right to receive, $14.20 in cash; and
- each share of common stock owned of record by the Schonath
shareholders will continue to represent one share of common stock of
InvestorsBancorp following the merger, except for
5,743 shares held in individual retirement accounts by certain of
the Schonath shareholders and 5,375 shares held by George Schonath
and Jenn Schonath, each of which will be converted into the right to
receive $14.20 in cash.
Currently, the Schonath shareholders own approximately 60.9% of our
outstanding common stock, and 64.3% of our common stock on a fully-diluted
basis. Following the merger, the Schonath shareholders will own 100% of our
outstanding common stock. Because all shareholders other than the Schonath
shareholders will receive cash in the amount of $14.20 in the merger, the
transaction will result in a "going private" transaction for InvestorsBancorp,
as our common stock will be held by fewer than 300 persons.
The merger is expected to be consummated in September 2003.
A copy of the Agreement and Plan of Merger, dated as of March 25, 2003,
between InvestorsBancorp and Investors Subsidiary, as amended, is attached as
Appendix A to this transaction statement.
BACKGROUND OF THE MERGER
(see pages 10 through 19)
For a description of the events leading to the approval of the merger
agreement by our board of directors and the reasons for their approval, you
should refer to "Special Factors--Background of the Merger," "--Reasons for the
Merger; Fairness of the Merger" and "--Purpose and Structure of the Merger" on
pages 10 through 26 and page 35. As we explain more fully in these sections,
although the board considered various alternative methods of effecting the going
private transaction, the board considered and rejected remaining an independent
publicly-owned company. In addition, noting that we had never received any
outside expressions of interest from any third parties seeking to acquire us and
that our majority shareholder, George Schonath, had unequivocally informed our
board of directors that he would not be interested in selling to a third party,
we did not consider a sale to a third party to be a viable option.
REASONS FOR THE MERGER; FAIRNESS OF THE MERGER
(see pages 20 through 26)
InvestorsBancorp's primary reasons for the merger include the
following:
- we will realize cost savings because we will no longer be required
to make periodic public reports under the Securities Exchange Act,
and will no longer incur the expenses relating to shareholder
communications;
- continuing as a public company offers few advantages to us or our
shareholders, in that there is little liquidity for our common
stock, and, because our earnings are sufficient to support growth,
we do not depend on raising capital in the public market;
- the merger allows the non-continuing shareholders to receive cash
for their shares in an illiquid market, in which the primary
available buyers have been the Schonath family and InvestorsBancorp;
- the merger allows the non-continuing shareholders to receive cash in
an amount that our board of directors has determined is a fair value
for their shares;
- following the merger, we will be able to make an election under
Subchapter S of the Internal Revenue Code;
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- management will be able to refocus time spent on shareholder
administrative duties to our banking subsidiary, InvestorsBank;
- operating as a private company will allow George Schonath, the
controlling shareholder and Chief Executive Officer of
InvestorsBancorp, to focus on financial and business goals that may
differ from those of the non-continuing shareholders;
- the merger will allow us to "go private" more quickly and less
expensively than other structures considered by our board of
directors; and
- after evaluating InvestorsBancorp's recent performance and
management's expectations as to future performance,
InvestorsBancorp and the Schonath shareholders considered that a
transaction could be completed at a lower cost now than if
InvestorsBancorp were to wait, and that therefore a transaction
conducted at this time had the greatest likelihood of being
completed.
The board also considered that some shareholders may prefer to continue
as shareholders of InvestorsBancorp as a public company, and noted that the
$14.20 merger consideration was slightly below the $14.40 trading price of our
common stock on the day the board determined the $14.20 per share price and we
entered into the merger agreement. However, the board did not feel that these
factors, which may weigh against the transaction, were sufficient to outweigh
the factors outlined above, which weigh in favor of the transaction.
With the exception of George Schonath, who recused himself from voting
on any matters relating to InvestorsBancorp's going private transaction, the
board of directors of InvestorsBancorp unanimously determined that the merger
agreement and the merger are in the best interests of InvestorsBancorp's
shareholders, including the non-continuing shareholders, and unanimously
approved the merger agreement and the merger. However, because the four members
of our board other than Mr. Schonath are fully independent, with no conflict of
interest with respect to the transaction other than their interest as holders of
an aggregate of less than 1% of our common stock, the transaction was not
reviewed by a special committee of the board of directors.
In the course of determining that the merger agreement and the merger
are in the best interests of InvestorsBancorp's shareholders, including the
non-continuing shareholders, the board, after consulting with legal and
financial advisors, considered a number of positive and negative factors in
making their determination. To review the reasons for the merger in greater
detail, please see pages 20 through 25.
In addition, under the federal securities laws, Investors Subsidiary
and the Schonath shareholders are required to join in the filing of this
transaction statement. All of those persons adopt the analyses and conclusions
of the InvestorsBancorp board of directors. Please see pages 25 through 26.
VALUATION OF FINANCIAL ADVISOR
(see pages 26 through 35)
In contemplation of the merger, our board of directors retained and
considered a valuation of our common stock prepared by Wipfli Ullrich Bertelson
LLP, a financial advisory and consulting firm that, among other things,
regularly provides valuations to financial institutions. InvestorsBancorp
retained Wipfli because of its expertise in providing valuations to financial
institutions and because of its familiarity with and understanding of the local
markets in which InvestorsBancorp does business. Wipfli was retained to provide
a valuation only, and did not provide an opinion as to the fairness, from a
financial point of view, of the merger consideration to be paid to the
non-continuing shareholders.
After considering all relevant factors, Wipfli concluded that, in its
opinion, the fair value of InvestorsBancorp as a going concern was approximately
$14.5 million, or $13.71 per share, as of January 3, 2003, and approximately
$15.0 million, or $14.20 per share, as of March 19, 2003. The Wipfli valuation
is not a fairness opinion, and, further, addresses the "fair value" of
InvestorsBancorp based on
3
Wisconsin's statutory concept of fairness, which may or may not be the same as
alternative calculations of fair value.
On April 16, 2003, Wipfli provided a corrected valuation to the board,
which indicated that the fair value of InvestorsBancorp as a going concern as of
January 3, 2003 was approximately $14.1 million, or $13.37 per share. This
correction was required because two mistakes were inadvertently included in the
underlying analyses. Wipfli had inadvertently used an incorrect price-to-book
value multiple in the guideline companies' method, and had also incorrectly
calculated one of the guideline company's price-to-book value multiple. The
corrected valuation had no effect on the fair value of InvestorsBancorp as of
March 19, 2003.
Aside from the Wipfli valuation, the board of directors did not obtain
any independent valuation analysis of InvestorsBancorp.
We have attached Wipfli's valuation and corrected valuation to this
transaction statement as Appendix B-1 and Appendix B-2, respectively. You should
read them completely to understand the assumptions made, matters considered and
limitations of the review made by Wipfli in providing its valuation.
PURPOSE AND STRUCTURE OF THE MERGER
(see page 35)
The primary purpose of the merger is to consolidate ownership of all of
the common stock of InvestorsBancorp in the Schonath shareholders, which will
discontinue InvestorsBancorp's SEC reporting requirements, allow
InvestorsBancorp to make an election under Subchapter S of the Internal Revenue
Code, and allow InvestorsBancorp management to refocus time spent on shareholder
administrative duties to operational and business goals.
The going private transaction has been structured as a
parent/subsidiary merger because InvestorsBancorp's board of directors believes
that this structure represents the most cost-effective and efficient way of
achieving its objectives in going private and consolidating the stock ownership
of InvestorsBancorp in the Schonath shareholders, because it can be completed
more quickly and less expensively than the alternative methods considered by the
board. For example, consummation of a reverse stock split or a merger structured
in another fashion would require the solicitation of shareholder votes and the
holding of a shareholders' meeting, which would increase the expense and time
required to close a transaction. In addition, to achieve the going private goals
of this transaction, a self tender offer might require a second step merger,
again increasing the cost and time involved in the transaction. See Background
of the Merger" beginning on page 10.
MATERIAL EFFECTS OF THE MERGER
(see pages 35 through 39)
The merger is a going private transaction for InvestorsBancorp. As a
result of the merger, among other things:
- the non-continuing shareholders will receive $14.20 in cash per
share of InvestorsBancorp's common stock;
- because of the reduction of the total number of holders of the
shares of common stock to less than 300, InvestorsBancorp will
terminate its status as a reporting company with the SEC;
4
- InvestorsBancorp's common stock will no longer be traded over the
OTC Bulletin Board;
- the non-continuing shareholders will no longer have an interest in
or be shareholders of InvestorsBancorp, and, therefore, will not be
able to participate in InvestorsBancorp's future earnings and
growth, if any; and
- InvestorsBancorp's regulatory capital will be reduced from
approximately $15.5 million as of June 30, 2003 on a historical
basis to approximately $8.8 million on a pro forma basis;
For a further description of how the merger will affect the
shareholders of InvestorsBancorp, including the different effects on the
non-continuing shareholders and the Schonath shareholders, please see "Special
Factors--Effects of the Merger on Shareholders of InvestorsBancorp" on pages
37 through 39.
VOTING REQUIREMENTS
(see pages 39 through 40)
The boards of directors of each of InvestorsBancorp and Investors
Subsidiary have approved the merger agreement and the merger. You do not have
the right to vote on the merger, and InvestorsBancorp is not seeking a
shareholder vote on the merger. The board of directors has received an opinion
of counsel to the effect that there is no provision of the Wisconsin Business
Corporation Act that would require the approval of InvestorsBancorp's
shareholders for the merger.
APPRAISAL RIGHTS
(see pages 40 through 41)
You do not have appraisal rights in connection with the merger. For a
description of Wisconsin law governing this transaction see pages 40 through 41.
Although you will not have appraisal rights in connection with the merger, you
may pursue all available remedies under applicable law.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
(see pages 41 through 42)
You should be aware that InvestorsBancorp's directors, executive
officers and controlling shareholders have interests in the merger that may
present actual or potential, or the appearance of actual or potential, conflicts
of interest in connection with the merger, including the following:
- as of August 1, 2003, Donald E. Menefee and Donald E. Sydow, two
members of our board of directors, collectively owned 325 and 4,201
shares, respectively, of our outstanding common stock, which will
entitle them to receive approximately $4,600 and $59,700,
respectively, in merger consideration
- as of August 1, 2003, Susan Hauke, Greg Mieske, and Kim De Martino,
three of our executive officers, collectively owned 3,045 shares of
the outstanding common stock, excluding options, which entitles them
to receive an aggregate of approximately $43,300 in merger
consideration;
- as of August 1, 2003, the executive officers of InvestorsBancorp
were entitled to purchase an aggregate of 6,200 shares of common
stock upon the exercise of options having exercise prices ranging
from $6.75 to $8.10, and are therefore entitled to receive an
aggregate of approximately $42,500 in cash in exchange for their
options;
- the Chief Executive Officer and controlling shareholder of
InvestorsBancorp, George Schonath, and various of his family members
and affiliates will continue as the sole
5
shareholders of InvestorsBancorp following the merger, and therefore
will continue to have the opportunity to participate in any future
growth and earnings of InvestorsBancorp; and
- George Schonath, who will continue to own stock in InvestorsBancorp
following the merger as a Schonath shareholder, in his capacity as
Chief Executive Officer of InvestorsBancorp was involved in
structuring the transaction, although he recused himself from all
board votes taken with respect to the going-private transaction.
The board of directors, throughout its consideration of the
going-private transaction, recognized that the interests of the non-continuing
shareholders and the Schonath shareholders are different and possibly in
conflict. The non-continuing shareholders may wish to remain shareholders of a
public company in order to share in future growth and, in the merger, may have
the goal of obtaining the highest value for their shares, while the Schonath
shareholders, as continuing shareholders, may have the goal of retaining cash
for the future operation of InvestorsBancorp. In addition, some non-continuing
shareholders may wish to seek a sale of InvestorsBancorp to a third party,
whereas the Schonath shareholders have unequivocally indicated to our board of
directors that they would not be interested in selling their shares to a third
party. See "Special Factors--Background of the Merger" and "--Reasons for the
Merger; Fairness of the Merger" for a discussion of how the board of directors
addressed this situation.
FINANCING OF THE MERGER
(see page 43)
We estimate that the total funds required to fund the payment of the
merger consideration to the non-continuing shareholders and to pay fees and
expenses relating to the merger will be approximately $5,956,000.
InvestorsBancorp is financing the merger through a $5.0 million private
offering of subordinated securities and through the infusion of $1.0 million in
capital by two of the Schonath shareholders, which was a condition to the
subordinated debt offering. On March 25, 2003, the Emily A. Schonath Irrevocable
Trust and the Sarah E. Schonath Irrevocable Trust together purchased an
aggregate of 70,422 shares of newly-issued InvestorsBancorp common stock at a
price of $14.20 per share, for total consideration of approximately $1.0
million. InvestorsBancorp received the proceeds of the $5.0 million subordinated
debt issuance on April 10, 2003.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
(see pages 43 through 45)
The merger will be a taxable transaction to the non-continuing
shareholders. For United States federal income tax purposes, you will generally
recognize gain or loss in the merger in an amount determined by the difference
between the cash you receive and your tax basis in InvestorsBancorp common
stock.
BECAUSE DETERMINING THE TAX CONSEQUENCES OF THE MERGER CAN BE
COMPLICATED, YOU SHOULD CONSULT YOUR OWN TAX ADVISOR IN ORDER TO UNDERSTAND
FULLY HOW THE MERGER WILL AFFECT YOU.
6
THE MERGER AGREEMENT
STRUCTURE OF THE MERGER
(see page 45)
Under the terms and conditions of the merger agreement, Investors
Subsidiary, a wholly-owned subsidiary of InvestorsBancorp, will be merged with
and into InvestorsBancorp, with InvestorsBancorp continuing as the surviving
corporation.
MERGER CONSIDERATION
(see page 45)
Upon completion of the merger, in general, each share of
InvestorsBancorp common stock held by non-continuing shareholders will be
converted into the right to receive $14.20 in cash, without interest. Shares of
common stock held by the Schonath shareholders will continue to represent shares
of common stock of InvestorsBancorp as the surviving corporation, except for
5,743 shares held in individual retirement accounts by certain of the Schonath
shareholders and 5,375 shares held by George Schonath and Jenn Schonath, each of
which will be converted into the right to receive $14.20 in cash, without
interest.
EXCHANGE OF SHARES
(see pages 46 through 47)
As soon as practicable after completion of the merger, LaSalle Bank
National Association, as paying agent, will mail a letter of transmittal with
instructions as to the procedure for surrendering share certificates in exchange
for the $14.20 per share cash merger consideration to all non-continuing
shareholders as of the time of completion of the merger. YOU SHOULD NOT SEND US
YOUR CERTIFICATES UNTIL YOU HAVE RECEIVED THE LETTER OF TRANSMITTAL AND
INSTRUCTIONS.
CONDITIONS TO THE MERGER
(see page 49)
The completion of the merger depends on the satisfaction or waiver of
the following conditions:
- receipt of any required regulatory clearances and consents;
- no material inaccuracies in the representations and warranties of
either InvestorsBancorp or Investors Subsidiary;
- compliance by InvestorsBancorp and Investors Subsidiary in all
material respects with all of their respective obligations under the
merger agreement;
- no legal proceedings brought or threatened against InvestorsBancorp
or Investors Subsidiary that challenge the merger, that would
reasonably be expected to have the effect of preventing or delaying
the merger, or that would be reasonably likely to have a material
adverse effect on InvestorsBancorp or Investors Subsidiary; and
- no regulatory action or injunction prohibiting the merger.
7
TERMINATION OF THE MERGER AGREEMENT
(see page 49)
InvestorsBancorp and Investors Subsidiary may mutually agree to
terminate the merger agreement at any time prior to its consummation.
MARKET PRICE OF INVESTORSBANCORP COMMON STOCK
(see page 52)
On March 25, 2003, the day we announced the merger, the last reported
trading price of our common stock was $14.40 per share. On August 12, 2003, the
last reported trading price of our common stock was $13.85 per share.
INTRODUCTION
This transaction statement on Schedule 13E-3 is being filed jointly by
InvestorsBancorp, Inc., a Wisconsin corporation, Investors Subsidiary, Inc., a
Wisconsin corporation and a wholly-owned subsidiary of InvestorsBancorp, George
R. Schonath, Jenn M. Schonath, Emily A. Schonath, Sarah E. Schonath, Thomas
Evans, the Emily A. Schonath Irrevocable Trust and the Sarah E. Schonath
Irrevocable Trust pursuant to Section 13(e) of the Securities Exchange Act of
1934, as amended, and Rule 13e-3 thereunder. In addition, this transaction
statement has been filed with the Division of Securities of the Wisconsin
Department of Financial Institutions in accordance with the requirements of
Section 6.05 of Chapter DFI of the Wisconsin Administrative Code.
This transaction statement is being filed in connection with the
Agreement and Plan of Merger by and between InvestorsBancorp and Investors
Subsidiary, as amended by Amendment No. 1 to Agreement and Plan of Merger. A
copy of the merger agreement, together with the amendment, is attached as
Appendix A to this transaction statement.
THE PARTIES
INVESTORSBANCORP, INC.
InvestorsBancorp is a Wisconsin corporation and a registered bank
holding company, and was organized on June 12, 1996 to be the holding company of
InvestorsBank, a Wisconsin state bank located in Pewaukee, Wisconsin.
InvestorsBank commenced business on September 8, 1997. On September 6, 1997, The
Middleton Doll Company, which was formerly known as Bando McGlocklin Capital
Corporation and was the former principal shareholder of InvestorsBancorp,
distributed all of the 880,000 shares of InvestorsBancorp common stock it held
to its shareholders. In connection with the distribution, InvestorsBancorp filed
a Form 10-SB with the Securities and Exchange Commission to register its shares
of common stock under the Securities Exchange Act of 1934.
InvestorsBancorp's banking subsidiary, InvestorsBank, offers a complete
line of financial services to small businesses and individuals in the community
of Waukesha and in southeastern Wisconsin. Some of InvestorsBank's additional
services are as follows:
- Pursuant to a management services agreement, InvestorsBank manages
the commercial loan and leased properties portfolio of Bando
McGlocklin Small Business Lending Corporation, a subsidiary of The
Middleton Doll Company;
8
- InvestorsBank offers a broad range of deposit services, including
checking accounts, money market accounts and certificates of
deposit, as well as a full range of short to intermediate term
personal and commercial loans;
- InvestorsBank makes personal loans directly to individuals for
various purposes, including first mortgage loans and home equity
lines of credit; and
- InvestorsBank offers credit cards, debit cards, cashier's checks,
money orders and traveler's checks.
InvestorsBancorp's principal executive office is located at W239 N1700
Busse Road, Waukesha, Wisconsin, 53188-1160, and its telephone number at that
address is (262) 523-1000.
INVESTORS SUBSIDIARY, INC.
Investors Subsidiary, Inc. is a newly-formed Wisconsin corporation and
is a wholly-owned subsidiary of InvestorsBancorp. Investors Subsidiary was
organized solely for the purpose of facilitating the merger transaction. In the
merger, Investors Subsidiary will merge into InvestorsBancorp, and will cease to
exist after the merger. Investors Subsidiary has not conducted any activities
other than those incident to its formation, its negotiation and execution of the
merger agreement, and its assistance in preparing various SEC and state filings
relating to the proposed going private transaction. Investors Subsidiary has no
significant assets or liabilities.
Investors Subsidiary's principal executive office is located at W239
N1700 Busse Road, Waukesha, Wisconsin, 53188-1160, and its telephone number at
that address is (262) 523-1000.
SCHONATH SHAREHOLDERS
In addition to InvestorsBancorp and Investors Subsidiary, the Schonath
shareholders, some of whom were involved in structuring the transaction and all
of whom will remain shareholders, or will continue to own warrants to purchase
shares, of InvestorsBancorp following the merger are filing this Rule 13e-3
Transaction Statement on Schedule 13e-3. For more information about the Schonath
shareholders, please see "Information About the Directors, Officers and Schonath
Shareholders--Information about the Schonath Shareholders" on page 59.
THE MERGER
Pursuant to an Agreement and Plan of Merger dated as of March 25, 2003
by and between InvestorsBancorp and Investors Subsidiary, as amended by
Amendment No. 1 to Agreement and Plan of Merger dated as of August 1, 2003,
Investors Subsidiary will merge with and into InvestorsBancorp, with
InvestorsBancorp continuing as the surviving corporation. In the merger, each
outstanding share of common stock held by the non-continuing shareholders will
cease to be outstanding and will be converted into the right to receive from
InvestorsBancorp a cash payment in the amount of $14.20. Except for 5,743 shares
held in individual retirement accounts by certain of the Schonath shareholders
and 5,375 shares held by George Schonath and Jenn Schonath, which will be
converted into the right to receive $14.20 per share in the merger, the Schonath
shareholders will not receive cash in exchange for their shares of common stock
of InvestorsBancorp. Instead, their remaining shares of InvestorsBancorp common
stock will continue to represent shares of InvestorsBancorp as the surviving
corporation.
The merger does not require the approval of the shareholders of
InvestorsBancorp and InvestorsBancorp is not seeking a shareholder vote in the
merger. See "Special Factors--Voting
9
Requirements." This transaction statement is being disseminated to
InvestorsBancorp's shareholders, along with financial information, in accordance
with the requirements of the Securities Exchange Act of 1934, as amended, and
the requirements of the Wisconsin Administrative Code.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
InvestorsBancorp was organized on June 12, 1996, to be the holding
company of InvestorsBank, a Wisconsin state bank located in Pewaukee, Wisconsin.
On September 6, 1997, the Middleton Doll Company, formerly known as Bando
McGlocklin Capital Corporation, the former principal shareholder of
InvestorsBancorp, distributed all of the 880,000 shares of InvestorsBancorp it
held to its shareholders. In connection with this distribution, InvestorsBancorp
filed a Form 10-SB with the Securities and Exchange Commission to register its
shares of common stock under the Securities Exchange Act. At the time of the
distribution, George Schonath and his affiliates owned 120,000 shares of
InvestorsBancorp, representing 12% of our outstanding shares, which shares were
initially sold to Mr. Schonath and his affiliates with the approval of the
InvestorsBancorp board of directors, with the specific intent that Mr. Schonath
hold, directly or indirectly, a substantial equity interest in InvestorsBancorp.
As an SEC reporting company, we are required to prepare and file with
the SEC, among other items, the following:
- Annual Reports on Form 10-KSB;
- Quarterly Reports on Form 10-QSB; and
- Proxy Statements and related materials as required by Regulation 14A
under the Securities Exchange Act.
In addition to the burden on management, the costs associated with
these reports and other filing obligations comprise a significant corporate
overhead expense. These costs include securities counsel fees, auditor fees,
costs of printing and mailing the shareholder documents, and word processing,
specialized software and filing costs. These registration and reporting related
costs have been increasing over the years, and we believe they will continue to
increase, particularly as a result of the additional reporting and disclosure
obligations imposed on public companies by the recently enacted Sarbanes-Oxley
Act of 2002.
As of August 1, 2003, there were 990,529 shares of InvestorsBancorp
common stock issued and outstanding, held by approximately 570 current record
shareholders and, to our knowledge, approximately 885 persons who hold their
shares in "street name" through brokers or other intermediaries. Of our
approximately 1,500 shareholders, InvestorsBancorp believes approximately 85%
hold 500 or fewer shares. Our board of directors and management believe that the
recurring expense and burden of maintaining so many small shareholder accounts,
coupled with the SEC reporting costs outlined above, are not cost efficient for
InvestorsBancorp. Going private will allow InvestorsBancorp to avoid these costs
and expenses.
The Schonath shareholders own approximately 60.9% of the outstanding
common stock, and 64.3% of the common stock on a fully-diluted basis taking into
account outstanding warrants and options to purchase common stock. The board of
directors recognizes that, as the controlling shareholders, the Schonath
shareholders may have different financial and business goals than those of
minority shareholders, in that the Schonath shareholders, who include George
Schonath, the Chief Executive
10
Officer of InvestorsBancorp, may want to focus on the ongoing business
operations of the company, while minority shareholders may likely be interested
in the rapid growth and subsequent sale of the company.
There can be many advantages to being a public company, including stock
value, stock liquidity, and use of company stock to raise capital or make
acquisitions. However, there is a limited market for our common stock, and
therefore we have not effectively taken advantage of these benefits. For
example, we believe that in recent years the public marketplace has had less
interest in public companies with a small market capitalization and a limited
amount of securities available for trading in the public marketplace. In recent
times, InvestorsBancorp and the Schonath family have been the primary buyers of
our stock in response to requests from our market makers. We believe it is
highly speculative whether our common stock would ever achieve significant
market value with an active and liquid market. In addition, as a result of our
limited trading market, we are unlikely to be in a position to use our public
company status to raise capital through sales of our common stock in a public
offering in the future or to acquire other business entities using our stock as
consideration. Moreover, our limited trading market makes it difficult for our
shareholders to liquidate their holdings. The cash-out merger will also allow
our small shareholders to do so without typical transaction costs. In addition,
reducing the shareholder base could allow the company to register for status as
a Subchapter S corporation under the Internal Revenue Code. Therefore, our board
of directors and management have concluded that the benefits of being a
registered public company are substantially outweighed by the burden on
management and the expense related to the SEC reporting obligations. Please
refer to "--Reasons for the Merger; Fairness of the Merger" for a further
discussion of the reasons supporting the merger.
In December 2000, George Schonath met for lunch with Terry Mather, one
of InvestorsBancorp's independent directors, and informally discussed various
business matters, including matters concerning InvestorsBancorp. During lunch,
Mr. Schonath and Mr. Mather generally discussed, among a number of other
business matters, InvestorsBancorp's long-term goals and the lack of liquidity
of InvestorsBancorp's common stock. During their conversation, Mr. Mather
informed Mr. Schonath that Jon McGlocklin, a current director of
InvestorsBancorp, had expressed a desire to sell his shares of InvestorsBancorp
common stock, but was concerned about the effect the sale of his stock might
have on the market. Mr. Schonath indicated that repurchasing shares from
existing shareholders, such as Mr. McGlocklin and Sal Bando, a former director
of InvestorsBancorp, could provide liquidity to those shareholders and might be
an attractive investment for the company. In addressing the future of the
company, Mr. Schonath indicated that, as the holder of a controlling interest in
InvestorsBancorp, he would have no interest in selling his shares to an outside
party should any third party express an interest in acquiring InvestorsBancorp.
Following this discussion, Mr. Mather contacted Messrs. Bando and
McGlocklin, both of whom indicated that they would like to sell their shares of
InvestorsBancorp stock, because they were interested in additional liquidity. As
a result, in May 2001, following negotiations among the parties,
InvestorsBancorp purchased the approximately 66,000 shares owned by Messrs.
Bando and McGlocklin and their family members, at a price of $7.50 per share. In
the weeks prior to the purchase, the market price of InvestorsBancorp common
stock fluctuated between $6.50 and $7.75 per share. Over approximately the next
eighteen months, InvestorsBancorp repurchased additional shares at market prices
following contact from market makers in InvestorsBancorp's common stock, as
these repurchases also were an attractive use of capital and were economically
beneficially to InvestorsBancorp and its remaining shareholders. See "Common
Stock Purchase Information--Prior Stock Purchases."
During this period, Mr. Schonath had not made any determinations with
respect to a going private transaction, and he had not discussed his views with
respect to any such transaction with InvestorsBancorp, its directors, or
management. However, in considering the future of InvestorsBancorp,
11
he did begin to weigh the advantages and disadvantages of InvestorsBancorp
continuing as a publicly-traded company with a broad shareholder base against
the advantages and disadvantages of becoming a private company and reducing
InvestorsBancorp's shareholder base to below 300 shareholders. However, Mr.
Schonath took no formal action and did not take any steps toward effecting a
going private transaction at this time.
After observing InvestorsBancorp's performance for some time, in
December 2002, Mr. Schonath began to consider seriously the desirability of
taking InvestorsBancorp private, noting that the heightened regulation of public
companies, as evidenced by the enactment of the Sarbanes-Oxley Act in July 2002,
and the imposition of the numerous securities regulations under the act, were
factors arguing for effecting a going private transaction at this time. Mr.
Schonath noted that a number of public companies had begun considering going
private transactions at this time for similar reasons, particularly those that,
like InvestorsBancorp, had a large number of shareholders who each owned a small
number of shares. In addition, Mr. Schonath noted that the favorable trends in
interest rates and the related increase in the availability of subordinated debt
and trust preferred financing meant that InvestorsBancorp should be able to
acquire the necessary funds to effect a transaction at this time.
After making his determination that the timing was favorable to explore
a going private transaction, Mr. Schonath discussed this possible course of
action with the other members of management, who agreed that the reporting
burdens and potential liability associated with being a public company may be
detracting from InvestorsBancorp's ability to focus on its long-term goals and
growth, and therefore agreed that a going-private transaction should be explored
at this time. Accordingly, in December 2002, members of management contacted
attorneys from Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLC, legal
counsel to InvestorsBancorp, to discuss generally the logistics of going
private.
In January 2003, Howe Barnes Investments, Inc., who had in the past
acted as market makers in InvestorsBancorp's common stock, was contacted with
respect to the possibility of Howe Barnes acting as a financial advisor in
connection with a going-private transaction and the performance of a valuation
of InvestorsBancorp's stock. Additionally, a representative of Keefe, Bruyette &
Woods, Inc. met with Mr. Schonath at InvestorsBancorp's offices for the same
purpose. Also in January, acting on a referral, InvestorsBancorp contacted
Wipfli Ullrich Bertelson LLP, a Wisconsin-based financial advisory firm, as a
potential financial advisor. On January 23, 2003, Mr. Schonath and Greg Mieske,
our Vice President - Operations, met with representatives of Howe Barnes and
Keefe, Bruyette & Woods, to discuss alternative methods for a going private
transaction. A subsequent, similar meeting was also held with representatives of
Wipfli. In beginning to evaluate a going-private transaction, management
recognized the need to effectuate a transaction in a cost-efficient manner, as
well as the need to adequately compensate shareholders of InvestorsBancorp who
would no longer continue to be shareholders after the going-private transaction
was completed. Following those meetings, Mr. Schonath had several follow-up
discussions by telephone with each prospective financial advisor.
At a meeting held on February 18, 2003, the board of directors met with
counsel to consider the commencement of a going private transaction. At this
meeting, Mr. Schonath discussed with the board the idea of pursuing a going
private transaction that would result in the Schonath shareholders surviving as
the sole shareholders of InvestorsBancorp, outlining and discussing with the
board the benefits of such a transaction, including the decreased costs to the
company as a result of eliminating SEC reporting requirements, the benefit to
shareholders of immediate liquidity for their common stock, and the benefits to
the Schonath shareholders, who had, since the company went public in 1997,
always retained a significant position as shareholders, of being able to focus
on the business direction of InvestorsBank. Mr. Schonath indicated that a
primary goal of his was to retain ownership and control of
12
InvestorsBancorp, and that therefore he would be unwilling to sell his
controlling interest in InvestorsBancorp in the event that any third party
sought to acquire the company.
At this meeting, Mr. Schonath informed the board of the various
discussions he and Mr. Mieske had with the prospective financial advisors. In
the course of relaying these discussions to the board, Mr. Schonath outlined the
proposals made by each of the three potential financial advisors, and indicated
that, in his opinion, all three advisors had proposed using largely the same
valuation analysis. In particular, all three potential advisors had indicated
that they would value the stock on a going-concern basis, and each would use
methodologies based on InvestorsBancorp's historical trading price, comparable
transactions, and comparable companies. In addition, Howe Barnes and Keefe
Bruyette & Woods had offered to assist InvestorsBancorp in locating subordinated
debt or trust preferred securities offerings to help finance a transaction.
Because, in his opinion, the three advisors had substantially the same level of
expertise, and would be performing the same types of analyses, Mr. Schonath
recommended that Wipfli be retained to perform a valuation of InvestorsBancorp's
common stock, because their proposal indicated that they would be able to do so
at a lower cost to the company, thereby retaining cash that could be paid to
non-continuing shareholders as well as retained in the company for future
operations. In addition, Mr. Schonath felt that Wipfli's presence in and
experience with InvestorsBancorp's market area would be of greater service to
InvestorsBancorp, as opposed to Howe Barnes and Keefe Bruyette & Woods, both of
whom have a larger, regional focus. The board discussed at length the
qualifications and recommendations of each of the three prospective financial
advisors and considered Mr. Schonath's recommendations. During its
consideration, the board discussed and reviewed the proposals as relayed to them
by Mr. Schonath. The independent board members did not meet separately with any
of the proposed financial advisors, did not consider any advisors other than the
three contacted by Mr. Schonath, and, aside from the review at the February 18
meeting, did not separately evaluate the financial advisors' proposals. However,
the board did carefully consider the proposals presented at the meeting, noting
that the proposed advisors all had expertise in Midwest bank holding company
transactions, and further noting that the straightforward nature of the proposed
transaction meant that the proposals would generally encompass the same or
similar analyses based on trading price, comparable transactions and comparable
companies, which analyses are standard for these types of transactions.
Accordingly, the board did not feel the need to conduct a more extensive search
than that already conducted by Mr. Schonath together with management and the
legal advisors.
Also at this meeting, attorneys from Barack Ferrazzano presented to the
board of directors a number of issues associated with a going private
transaction, including alternative methods of structuring the transaction, the
methods of financing the transaction, the possible need for approval of the
transaction by the Board of Governors of the Federal Reserve System and other
banking regulatory authorities, and the necessity of making SEC filings in
connection with the transaction. In addition, counsel discussed at length the
various voting provisions under Wisconsin law that would be applicable to a
going-private merger transaction, including the following:
- Generally, the merger of InvestorsBancorp with a wholly owned
subsidiary does not require shareholder consent.
- Under Wisconsin's "fair price" provisions, certain "business
combinations" not meeting specified price standards must be approved
by the vote of at least 80% of the outstanding voting shares of
InvestorsBancorp voting together as a class and by 2/3 of the votes
entitled to be cast by shareholders other than the Schonath
shareholders. The fair price provisions are not applicable to
parent/subsidiary mergers.
- Under Wisconsin's "interested shareholder" provisions, certain
business combinations with an "interested shareholder" may require
approval of a majority of InvestorsBancorp's
13
outstanding voting shares, other than those held by the Schonath
shareholders, unless certain price considerations are met. Because
the Schonath family's initial 12% ownership interest in
InvestorsBancorp was approved by the Board of Directors of
InvestorsBancorp, shareholder consent is not required for the merger
under the "interested shareholder" provisions.
For a further discussion of the voting requirements under Wisconsin
law, please see "--Voting Requirements" below.
At the February 18 meeting, the board considered whether, if it
determined that a going private transaction was in the best interests of its
shareholders and if it determined that a merger was the appropriate structure,
such a merger should be structured as a merger with a newly-created wholly-owned
subsidiary or a merger with a stand-alone corporation owned by the Schonath
shareholders. The board considered that a merger with a stand-alone corporation
would require approval of InvestorsBancorp's shareholders, which in turn would
require InvestorsBancorp to file a proxy statement and solicit shareholder votes
on the transaction. In considering a parent/subsidiary merger, the board
considered that, although a parent/subsidiary merger would require the
distribution of a transaction statement on Schedule 13e-3 to InvestorsBancorp's
shareholders, and the filing of the transaction statement with the SEC, a
parent/subsidiary merger would not require shareholder approval, allowing the
transaction to be consummated in a timelier and more cost-efficient manner.
In addition to the merger structure, management and the board
considered and evaluated other possible means of effectuating a transaction.
Because a primary focus of the going-private transaction would be to consolidate
ownership in the Schonath shareholders, and because management and the board of
directors were aware that a transaction could be effected only with the approval
and support of the Schonath shareholders, as majority holders of
InvestorsBancorp's common stock, the alternatives were discussed with and
considered by the Schonath shareholders as well. The alternatives considered by
all parties were as follows:
- An open-market share repurchase. The board felt that a share
repurchase in the open market was a less efficient use of capital,
and was uncertain as to whether this method would result in the
company being able to acquire the entire stock holdings from a
sufficient number of record shareholders to accomplish the going
private objective.
- A self tender offer. In a self tender offer, InvestorsBancorp would
make an offer to all shareholders to purchase a specified number of
shares of stock, either within a specified price range or at a fixed
price. The board felt that a tender offer would be more expensive
than a cash-out merger, could take many months to complete, and
again would provide no assurance that a sufficient number of
shareholders would tender their shares. If the tender offer was not
successful to reduce the number of shareholders, the company would
then likely have to conduct a second step merger to complete the
going private transaction, which would add to the cost and length of
the transaction. The board considered an odd-lot tender offer for
holders of fewer than 100 shares; however, even if all shareholders
holding fewer than 100 shares tendered, the transaction would not
achieve the stated goal of reducing the number of record
shareholders to below 300, and would not achieve the goal of
consolidating ownership in the Schonath shareholders.
- A reverse stock split. In a reverse stock split, InvestorsBancorp,
through an amendment to its Articles of Incorporation, would reduce
the number of issued and outstanding shares of common stock, such
that shareholders owning a certain number of shares would own less
than one full share of InvestorsBancorp common stock, and
InvestorsBancorp would
14
distribute cash for the resulting fractional share interests.
Because a reverse stock split would require an amendment to
InvestorsBancorp's Articles of Incorporation and would therefore
require the vote of InvestorsBancorp's shareholders in order to be
effectuated, this method would be more expensive and could take
longer to complete than a merger with a wholly-owned subsidiary,
which does not require approval under Wisconsin law. In addition, a
reverse stock split would not accomplish the goal of consolidating
ownership in the Schonath shareholders, because some of the Schonath
shareholders individually have small stock holdings and would
therefore be cashed out in the transaction.
Because they felt that they could achieve a going private transaction
with the support of the board and the company, the Schonath shareholders did not
independently consider any alternatives other than those set forth above.
Also at the February 18 meeting, the board of directors, in evaluating
the going-private transaction proposed by Mr. Schonath, considered the formation
of a special committee of the board of directors for the purpose of evaluating
and pursuing a transaction. The board recognized that the interests of the
non-continuing shareholders and the Schonath shareholders are different and
possibly in conflict. The non-continuing shareholders may wish to remain
shareholders of a public company and, in the merger, may have the goal of
obtaining the highest value for their shares, while the Schonath shareholders,
as continuing shareholders, may have the goal of retaining cash for the future
operation of InvestorsBancorp. However, InvestorsBancorp's board of directors is
comprised of five individuals, four of whom are fully independent and only two
of whom hold any common stock, the aggregate amount of which is relatively
insignificant in that it amounts to less than 1% of the outstanding shares. In
addition, Mr. Schonath made clear to the rest of the board that he was willing,
given his potential and actual divergent interests in the transaction, to recuse
himself from any director vote with respect to the transaction. Because the four
independent board members did not have any conflict of interest with respect to
the transaction, the board felt that it could adequately evaluate the
transaction, taking into account the interests of shareholders who would be
cashed out in the transaction, without forming a separate committee, which, if
formed, would likely have included all four independent directors in any event.
With respect to the retention of an independent representative to act solely on
behalf of the non-continuing shareholders, the board did not feel such a
representative was warranted or customary, given that the board intended to
obtain a valuation from an independent advisor that would assess the
going-concern value of InvestorsBancorp, which would allow InvestorsBancorp to
fairly compensate the non-continuing shareholders.
At the February 18 meeting, after considering the presentation by Mr.
Schonath and evaluating the alternative going private transaction structures
presented by counsel, the board approved a resolution authorizing management to
proceed with its investigation of a cash-out parent/subsidiary merger, including
retaining Wipfli to conduct a valuation of the company, exploring funding
opportunities and engaging in discussions with the Federal Reserve regarding
whether any regulatory approval may be required. Mr. Schonath, because of his
position as a Schonath shareholder, abstained from voting on this resolution,
and all other directors voted in favor of the resolution.
On February 21, 2003, InvestorsBancorp retained Wipfli as its financial
advisor to provide it with a valuation of InvestorsBancorp's common stock,
pursuant to the resolutions adopted at the February 18 board meeting.
Based on its preliminary analyses, InvestorsBancorp anticipated that
the purchase of the shares of common stock held by the non-continuing
shareholders would total approximately $6.0 million, based on its rough
estimation of cashing out approximately 400,000 shareholders at $15.00 per
share, an amount that the company felt, outside of any consultation with any
financial or other advisor and considering
15
InvestorsBancorp's trading price and book value, was likely to be the maximum
per share consideration. This estimate did not take into account any fees and
expenses associated with the going private transaction. Although
InvestorsBancorp considered funding a portion of the transaction expenses with a
dividend from its banking subsidiary, InvestorsBank, it determined that this
method would not be preferable, as the current availability of subordinated debt
financing meant that the company could fund the full transaction at a favorable
rate. After reviewing the marketplace for the best available offering,
InvestorsBancorp determined to fund the proposed stock repurchase with $5.0
million of subordinated debt raised in an offering through Citigroup Global
Markets Inc., formerly Salomon Smith Barney Inc., as placement agent, and $1.0
million of new capital contributed to InvestorsBancorp by certain of the
Schonath shareholders through the purchase of newly-issued common stock at a
price equal to the price per share to be paid to shareholders in the going
private transaction. The $1.0 million investment would, in addition to providing
funds necessary to consummate the merger, satisfy the capitalization condition
for InvestorsBancorp's participation in the subordinated debt offering. On
February 21, InvestorsBancorp entered into an engagement letter with Citigroup
Global Markets relating to the subordinated debt offering, and on March 4 the
board adopted resolutions by unanimous written consent authorizing the issuance
of the subordinated debt securities and the execution of the related documents.
See "--Financing of the Merger" below. In determining to participate in the
subordinated debt offering at this time, the board took into account that the
interest rate on the debt securities was favorable to InvestorsBancorp, and
determined that the proceeds could be used as working capital in the event the
going-private transaction did not proceed.
The board of directors again met with counsel on March 11, 2003, to
further discuss the proposed going private transaction. At this meeting, the
board again reviewed the proposed structure of the transaction and discussed the
proposed financing of the merger, including the subordinated debt offering and
the $1.0 million common stock subscription, which the board approved at this
time. In addition, the board discussed materials to be presented to the Federal
Reserve in connection with the proposed transaction, copies of which had been
provided to the board in advance of the meeting. Based on counsel's review of
the applicable regulations, the board believed that InvestorsBancorp would not
be required to seek the approval of the Federal Reserve in connection with the
proposed transaction, but InvestorsBancorp felt that a meeting with the Federal
Reserve would be desirable in order to ensure their comfort with the
transaction. The board also reviewed a draft merger agreement that had been
prepared by counsel and provided to the board in advance of the meeting, which
included the terms and conditions under which a newly-formed, wholly-owned
subsidiary of InvestorsBancorp would be merged with and into InvestorsBancorp.
Also at the meeting, a representative of Wipfli made a presentation to the board
to explain to the full board the valuation methods that would be used in
assessing the value of InvestorsBancorp's common stock.
On March 17, 2003, InvestorsBancorp, together with counsel, met with
representatives of the Federal Reserve to initiate discussions regarding the
proposed going private transaction and disclosed to the Federal Reserve pro
forma capital and financial information prepared by management of
InvestorsBancorp and plans regarding control of InvestorsBancorp by the Schonath
shareholders following the transaction. The pro forma capital information
provided set forth the estimated and pro forma levels of Tier 1 capital and
various capital ratios for each of InvestorsBank and InvestorsBancorp, in each
case illustrating that the companies expected to continue to be "well
capitalized," as defined by the relevant regulatory standards, following the
proposed transaction. In addition, InvestorsBancorp prepared a historical income
statement and budget spreadsheet for use by the Federal Reserve. This
information was prepared by InvestorsBancorp's management solely to help the
Federal Reserve understand the proposed transaction, although copies of this
information were provided to the board in draft form prior to the board's March
11 meeting.
16
On March 19, 2003, in contemplation of the proposed merger, Investors
Subsidiary was formed under Wisconsin law as a wholly-owned subsidiary of
InvestorsBancorp.
On March 25, 2003, the board of directors again met to consider the
proposed transaction. At this meeting, the board discussed the status of the
subordinated debt offering, which was expected to price in the coming days, and
the infusion of $1.0 million in capital by the Emily A. Schonath Irrevocable
Trust and the Sarah E. Schonath Irrevocable Trust. Counsel discussed the results
of its meeting with the Federal Reserve, and informed the board that the Federal
Reserve had requested additional information about the Schonath shareholders
that would be holding the company's stock following the merger. Counsel
indicated that they were working with the Schonath shareholders to comply with
this request. Counsel also summarized the key terms of the proposed transaction,
and discussed at length with the board the alternative structures for cash-out
mergers and the voting requirements and appraisal rights under Wisconsin law,
including the fact that, under Wisconsin law, a parent/subsidiary merger would
not require a shareholder vote, nor would it entitle shareholders to an
appraisal remedy. However, the board felt that the parent/subsidiary merger
remained the best alternative to conduct the going private transaction and would
adequately protect the interests of the shareholders, including the
non-continuing shareholders, in light of a number of reasons, including the
following:
- the numerous benefits to going private as compared to remaining a
public company;
- the relative cost-effectiveness of a parent/subsidiary merger;
- the fact that a parent/subsidiary merger might be consummated much
more quickly than the other alternatives available to the company,
thereby enabling the shareholders to receive value for their shares
more quickly; and
- the fact that the company was obtaining a valuation of the fair
value of the company as a going concern from an independent third
party with expertise in valuing the common stock of financial
institutions, and fair value is the statutory standard of value that
would apply if shareholders were entitled to appraisal rights.
See "--Voting Requirements" and "--Appraisal Rights" below.
After the legal presentation, Wipfli made its financial presentation,
informing the board that, after considering all relevant factors, in its
opinion, the fair value of InvestorsBancorp as a going concern was approximately
$14.5 million, or $13.71 per share as of January 3, 2003, and approximately
$15.0 million, or $14.20 per share as of March 19, 2003, a date close in time to
the board's consideration of the transaction. When first retained, Wipfli chose
to conduct its initial evaluation based on the readily-available December 31,
2002, financials of InvestorsBancorp. The March 19 valuation was conducted in
order to update the January 3, 2003, analysis to March 19, 2003, a date closer
in time to the board's consideration of the transaction, which was scheduled to
take place on March 25, 2003. The March 19, 2003, valuation took into account
newly-available information, including updating the guideline companies' 30-day
average closing prices through March 19, accounting for the guideline companies'
increase in book value for estimated earnings through March 19, and accounting
for the increase in the book value of InvestorsBancorp for estimated earnings
through March 19. The board did not feel that any further updating of the
valuation would be necessary for the transaction, as the proposed transaction
was publicly announced on March 26, shortly after the second valuation was made,
and any trades of InvestorsBancorp common stock based on the announced price
would have the result of skewing the analysis. For further information on the
valuations, see "Valuation of Financial Advisor" below. In preparing its
valuation, Wipfli was provided with historical information regarding the company
by management, including audited financial statements. Although the board did
not review the package of
17
information provided to Wipfli, the board had reviewed this information in the
past, and management had no reason to doubt the accuracy or completeness of the
information provided to Wipfli.
The Wipfli valuation is not a fairness opinion. The board believed that
Wipfli's valuation, in that it assessed the fair value of InvestorsBancorp as a
going concern, adequately balanced the interests of both the non-continuing
shareholders and the shareholders who would remain shareholders after the
merger, and therefore felt that the Wipfli valuation was appropriate under the
circumstances.
After considering all relevant factors, the board approved a resolution
to enter into the merger agreement, a revised draft of which had been provided
to the directors in advance of the meeting, and to proceed with the cash-out
merger under the terms of the merger agreement, which included setting the value
of the cash merger consideration to be paid to the non-continuing shareholders
at $14.20 per share. The board settled on this value based in part on Wipfli's
assessment of the fair value of InvestorsBancorp, as determined under
Wisconsin's statutorily accepted standard of fair value, and based also on
InvestorsBancorp's book value. Once again, Mr. Schonath recused himself from the
vote, and all of the independent directors voted unanimously to approve the
transaction.
The board did not consider any alternatives to a going private
transaction to be viable options for InvestorsBancorp. The board rejected
pursuing a possible sale of InvestorsBancorp, as no firm offers had been
presented to the board and no determination had been made that such a sale would
be in the best interest of the shareholders. In addition, because Mr. Schonath
had in the past made clear that he would be unwilling to sell control of
InvestorsBancorp to a third party, the board was aware that no sale to an
outside party could have a reasonable expectation of being completed, and
therefore felt that attempting to solicit any indications of interest would be a
waste of time and would incur unnecessary expense. Moreover, the board did not
view a sale as an alternative that could achieve the benefits of a going private
transaction, including providing liquidity for those shareholders being paid
cash in the merger while allowing the Schonath shareholders to retain their
position as controlling shareholders of InvestorsBancorp. In addition, the board
noted that the public announcement of the transaction and the merger
consideration would give any interested third parties the opportunity to propose
a business transaction, and that the merger agreement did not prohibit
InvestorsBancorp or the board from engaging in any discussions with interested
parties, therefore giving the board an opportunity to evaluate any transaction
should one be proposed.
Further, because the Schonath shareholders, who collectively own a
majority of InvestorsBancorp common stock, had come to the conclusion that they
wanted to take the company private in order to, among the other reasons
discussed in this transaction statement, eliminate the costs and reporting
obligations associated with being a public company, the board did not consider
continuing InvestorsBancorp as an independent publicly-owned going concern to be
a viable option for the company.
Because the board, composed of four fully independent directors in
addition to Mr. Schonath, who excused himself from voting on the transaction,
carefully evaluated the merits of the going-private transaction, carefully
considered the available methods of completing such a transaction, determined
that any alternatives, such as selling to a third party or remaining public,
were not viable, and determined that it was reasonable to rely on a valuation of
an established and independent valuation advisor with experience in
InvestorsBancorp's market area, the board considered that it was acting in the
best interests of all of the shareholders of InvestorsBancorp, including the
non-continuing shareholders, in approving the transaction.
Also on March 25, in connection with raising the financing necessary
for the merger, the Emily A. Schonath Irrevocable Trust and the Sarah E.
Schonath Irrevocable Trust purchased a total of 70,422 shares of newly-issued
common stock of InvestorsBancorp for $14.20 per share, or aggregate
18
consideration of approximately $1.0 million. The purchase of these shares
provided an additional $1.0 million of capital that would be used to help
finance the going-private merger, and also satisfied the capitalization
conditions for InvestorsBancorp's participation in the $5.0 million private
offering of subordinated debt securities through Citigroup Global Markets, the
proceeds of which would also be used to effectuate the proposed merger.
InvestorsBancorp publicly announced the proposed merger on March 26,
2003.
On March 31, 2003, in anticipation of the merger, Mr. Schonath cashed
in his existing stock options by (a) exercising each of the options, and (b)
immediately reselling the securities back to the company at a price equal to the
$14.20 merger consideration. The number of shares subject to each of his
options, and their exercise prices, were as follows:
Number of Shares Exercise Price
- ---------------- --------------
4,150 $ 6.75
4,400 $ 7.00
5,940 $10.10
The effect of Mr. Schonath's actions to cash in his stock options is
the same as the treatment he would have received pursuant to the merger
agreement. See "Material Terms of the Merger--The Merger Agreement--Stock
Options and Warrants."
On April 16, 2003, Wipfli provided a corrected valuation to the board,
which indicated that the fair value of InvestorsBancorp as a going concern as of
January 3, 2003 was approximately $14.1 million, or $13.37 per share. This
correction was required because two mistakes were inadvertently included in the
underlying analyses. Wipfli had inadvertently used an incorrect price-to-book
value multiple in the guideline companies' method, and had also incorrectly
calculated one of the guideline company's price-to-book value multiple. The
corrected valuation had no effect on the conclusion as to the fair value of
InvestorsBancorp as of March 19, 2003.
Effective on June 30, 2003, the Schonath Family Partnership, a limited
partnership that held 132,943 shares of common stock of InvestorsBancorp and
warrants to purchase an additional 105,000 shares, distributed all of its shares
of common stock and the warrants to its general and limited partners, all of
whom are Schonath shareholders, on a pro-rata basis.
On August 1, 2003, InvestorsBancorp and Investors Subsidiary entered
into an amendment to the merger agreement. The amendment of the merger
agreement was necessary in order to clarify that the 5,743 shares held in
individual retirement accounts of certain of the Schonath shareholders, and
5.375 shares held by George Schonath and Jenn Schonath, would be exchanged for
cash in the merger. The amendment was also necessary to correctly provide that
the directors and officers of InvestorsBancorp holding office immediately prior
to the effective time of the merger would be the directors and officers of the
surviving corporation, which had been the intent of the original merger
agreement.
REASONS FOR THE MERGER; FAIRNESS OF THE MERGER
INVESTORSBANCORP'S REASONS FOR THE MERGER
InvestorsBancorp's reasons for the merger include the following:
- we will realize cost savings in an estimated amount of $115,000
annually by eliminating the requirement to make periodic public
reports and reducing the expenses of shareholder communications,
including printing, postage, data entry, stock transfer and other
administrative expenses, necessitated by a large group of
shareholders that hold a small interest in the outstanding shares of
common stock;
- in the board of directors' judgment, no justification exists for the
continuing direct and indirect costs of registration with the SEC,
which costs have recently increased as a result of heightened
government oversight, given the low trading volume in our common
stock and the
19
fact that approximately 85% of our shareholders hold 500 or fewer
shares, and given that our earnings are sufficient to support growth
and we therefore do not depend on raising capital in the public
market;
- because of the current interest rate trends, InvestorsBancorp was
able to obtain favorable subordinated debt financing to effect a
transaction at this time, and this favorable financing may not be
available in the future;
- the merger allows the non-continuing shareholders to receive cash
for their shares in an illiquid market, in which the primary
available buyers have been the Schonath family and InvestorsBancorp;
- the merger proposal allows the non-continuing shareholders to
realize what our board has determined to be a fair value for their
investment in InvestorsBancorp at a price that represents a 5.72%
premium over the average market price of our common stock during the
month prior and a 6.79% premium in the 60 days prior to the public
announcement of our plans to take InvestorsBancorp private;
- operating as a private company will allow management to better focus
its efforts on the operations of InvestorsBank, our banking
subsidiary, as a result of the reduced burden on management arising
from the significant reduction in the number of shareholders and the
elimination of the increasingly stringent SEC reporting
requirements, which will benefit our customers and the communities
in which we operate;
- the merger proposal allows us to go private, and allows the
non-continuing shareholders to receive fair value and liquidity for
their shares in the quickest and most cost-effective manner,
particularly given the possible ineffectiveness and inefficiencies
of a tender offer, a reverse stock split, or an open market share
repurchase; and
- because, after evaluating InvestorsBancorp's recent performance and
management's expectations as to future performance, the board
considered it likely that a transaction could be completed at a
lower cost now than if InvestorsBancorp were to wait, and that
therefore a transaction conducted at this time had the greatest
likelihood of being completed.
We considered that some shareholders may prefer to continue as
shareholders of InvestorsBancorp as a public company, which is a factor weighing
against the going private merger. However, we believe that the disadvantages of
remaining a public company outweigh any advantages. We have no present intention
to raise capital through sales of securities in a public offering in the future
or to acquire other business entities using stock as the consideration for such
acquisition. Accordingly, we are not likely to make use of any advantage that
our status as a public company may offer.
In addition, we noted that the $14.20 merger consideration was slightly
below the $14.40 trading price of our common stock on the day the board
determined the $14.20 per share price and we entered into the merger agreement.
However, given that this was the only time since our public offering that our
high closing price exceeded $14.00, and given the low trading volume in our
common stock, we did not believe this aberration is an accurate indication of
the value our shareholders could expect to receive in the future, and therefore,
determined that this should not affect our decision to pursue the merger at this
time at the $14.20 price. See "--Valuation of Financial Advisor" above.
20
In view of the wide variety of factors considered in connection with
their evaluation of the merger, our board of directors did not find it
practicable to, and did not, quantify or otherwise attempt to assign relative
weights to the specific factors it considered in reaching their determinations.
The merger, if consummated, will have different effects on the
non-continuing shareholders and the Schonath shareholders. You should read the
discussions under "--InvestorsBancorp's Position as to the Fairness of the
Merger" and "--Effects of the Merger on Shareholders of InvestorsBancorp" for
more information regarding these effects of the merger.
InvestorsBancorp considered various alternative transactions to
accomplish the proposed going-private transaction, but ultimately elected to
proceed with the cash-out merger described in this transaction statement. For a
description of the alternatives considered by the board and the reasons for
structuring the transaction, please see "--Background of the Merger" and
"--Purpose and Structure of the Merger."
INVESTORSBANCORP'S POSITION AS TO THE FAIRNESS OF THE MERGER
Based on a careful review of the facts and circumstances relating to
the merger, the board of directors of InvestorsBancorp believes that the merger
and the terms and provisions of the merger agreement, including the merger
consideration to be paid to the non-continuing shareholders, are substantively
and procedurally fair to its shareholders, including the non-continuing
shareholders. With the exception of George Schonath, who abstained from voting
on the transaction because of his interest as a Schonath shareholder, the board
of directors of InvestorsBancorp unanimously approved the merger.
In concluding that the merger and the terms and conditions of the
merger agreement, including the consideration to be paid to the non-continuing
shareholders, are substantively fair to the shareholders of InvestorsBancorp,
including the non-continuing shareholders, the board of directors considered a
number of factors. The factors that InvestorsBancorp's board of directors
considered positive for all of its shareholders, including the non-continuing
shareholders, included the following:
- the fact that the cash price of $14.20 offered in the merger
represents a 5.72% premium over our 30-day average trading price and
a 6.79% premium over our 60-day average trading price prior to March
26, 2003, the day we announced the merger, although our board
acknowledges that, given the relatively low number of trades in our
common stock, market price is not necessarily the most applicable
measure of our fair value;
- the fact that the cash price of $14.20 represents a 38% premium over
our book value of our common stock as of February 28, 2003; and
- the fact that the common stock of InvestorsBancorp trades
infrequently, with reported trades occurring on only 119 days in the
12 months prior to the public announcement of the proposed merger
with an average trading volume of approximately 1,200 shares per
day, or approximately 0.1% of our outstanding common stock, a volume
that the board felt did not provide sufficient liquidity for its
shareholders, particularly as a large volume of these trades,
representing a total of approximately 25,000 shares, were the result
of transactions effected by the Schonath shareholders.
In addition to the positive factors applicable to all InvestorsBancorp
shareholders set forth above, the factors that the board of directors considered
positive for the non-continuing shareholders included:
21
- the fact that the merger consideration is all cash, which provides
certainty of value to those shareholders and immediate liquidity for
them; and
- the fact that no brokerage or other transaction costs are to be
incurred by them.
In addition to the positive factors applicable to all InvestorsBancorp
shareholders set forth above, the factors that the board of directors considered
positive for the Schonath shareholders included:
- the fact that they will continue to have the opportunity to
participate in the future growth and earnings of InvestorsBancorp;
- the fact that they will realize the potential benefits of
termination of registration of the common stock, including reduced
expenses as a result of no longer needing to comply with SEC
reporting requirements; and
- the fact that they will realize the potential tax benefits of
InvestorsBancorp as a Subchapter S corporation beginning in 2004.
The InvestorsBancorp board considered each of the foregoing factors to
weigh in favor of the substantive fairness of the merger to all shareholders,
including the non-continuing shareholders.
The board is aware of, and has considered, the impact of certain
potentially countervailing factors on the substantive fairness of the merger. In
particular, the factors that the InvestorsBancorp board of directors considered
as potentially negative for the non-continuing shareholders included:
- the fact that the merger consideration was slightly below the
closing price of our common stock on the day we entered into the
merger agreement; however, as noted, the board believes that the
lack of liquidity of our common stock makes market price an
unreliable indicator of our true fair value, particularly the market
price on a single day as opposed to over a longer period, and
additionally notes that, under Wisconsin law, the courts have not
equated "fair value" to "fair market value," particularly in
situations where there is not an established market for the common
stock;
- the fact that they will not have the opportunity to participate in
any future growth and earnings of InvestorsBancorp; and
- the fact that they will be required to pay income tax on the receipt
of cash in the merger.
The factors that the InvestorsBancorp board of directors considered as
potentially negative for the Schonath shareholders included:
- the fact that, upon the effectiveness of an election to qualify
under Subchapter S of the Internal Revenue Code, the Schonath
shareholders will have tax liability based on their pro rata share
of InvestorsBancorp's income, but InvestorsBancorp may not be able
to pay the Schonath shareholders a dividend in an amount sufficient
to satisfy their respective tax liabilities; and
- the fact that the Schonath shareholders, following the merger and
the Subchapter S election, will have restrictions on their ability
to transfer their shares of InvestorsBancorp common stock, and there
will not be a public market for InvestorsBancorp common stock.
22
Our board of directors believes that the foregoing potentially
countervailing factors did not, individually or in the aggregate, outweigh the
overall substantive fairness of the merger to all shareholders, including the
non-continuing shareholders, and that the foregoing factors are outweighed by,
the positive factors previously described.
We believe that the merger is procedurally fair to our shareholders,
including the non-continuing shareholders. In concluding that the merger and the
terms and conditions of the merger agreement, including the consideration to be
paid to the non-continuing shareholders, are procedurally fair to the
shareholders of InvestorsBancorp, including the non-continuing shareholders, the
board of directors considered a number of factors. The factors that
InvestorsBancorp's board of directors considered positive for all of its
shareholders, including the non-continuing shareholders, included the following:
- the fact that the merger is being effected in accordance with all
applicable requirements of Wisconsin law, including the applicable
"fair price" provisions of its merger statutes;
- the fact that, with the exception of George Schonath, the board of
directors is comprised entirely of independent persons, two of whom
own no shares and two of whom would be cashed out in the merger, and
all of whom were not employed or otherwise controlled by
InvestorsBancorp, and, accordingly, there was no need to form a
special committee or retain any unaffiliated representative(s) to
represent the shareholders who would be cashed out in the merger, as
the board was able to adequately balance the competing interests of
the non-continuing shareholders and the Schonath shareholders;
- the fact that George Schonath recused himself from voting on any
matter with respect to the going-private transaction;
- the fact that the board obtained a valuation from an independent
third party concerning InvestorsBancorp and its common stock, and
the board imposed no limitations upon Wipfli with respect to the
investigation made or procedures followed in rendering its valuation
of the common stock;
- the fact that the board retained and received advice from legal
counsel in evaluating the terms of the going private transaction and
the merger agreement;
- the fact that management and the board considered alternative
methods of effecting a going-private transaction, each of which was
determined to be impractical, more expensive than the merger, or
potentially ineffective in achieving the goals of providing
liquidity and value to the non-continuing shareholders as soon as
possible, eliminating the costs and burdens of public company status
and allowing the Schonath shareholders to acquire control of all of
the outstanding shares; and
- the fact that InvestorsBancorp had undertaken the necessary actions
in order to finance the going-private transaction.
The board of directors considered each of the foregoing factors to
weigh in favor of the procedural fairness of the merger to all shareholders,
including the non-continuing shareholders.
The board is aware of, and has considered, the impact of the following
potentially countervailing factors on the procedural fairness of the merger:
23
- although the interests of the Schonath shareholders are different
from the interests of the non-continuing shareholders and may create
actual or potential conflicts of interest in connection with the
merger, neither the board nor any of the directors retained an
independent, unaffiliated representative to act solely on behalf of
the non-continuing, unaffiliated shareholders for the purpose of
negotiating the terms of the merger agreement or preparing a report
concerning the fairness of the merger proposal;
- InvestorsBancorp did not solicit any outside expressions of interest
in acquiring the Company; however, the board considered any such
evaluation a waste of corporate time and resources, given that Mr.
Schonath, who controls over 60% of the voting stock, had
unequivocally informed our board of directors that he would not sell
to a third party;
- the merger does not require the approval of the shareholders of
InvestorsBancorp, and the transaction has not been structured to
require the approval of at least a majority of unaffiliated
shareholders; however, after consideration of the positive factors
described above, the board of directors believes that the
transaction is both substantively and procedurally fair
notwithstanding the absence of a shareholder approval requirement;
and
- the shareholders of InvestorsBancorp are not entitled to appraisal
rights in connection with the merger; however, the board noted that
the $14.20 per share merger consideration was based on our financial
advisor's determination of our "fair value," which is the statutory
standard of value that would be applicable if dissenting
shareholders were entitled to appraisal rights, and, in addition,
the non-continuing shareholders would be able to pursue all
available remedies under applicable law to the extent they wished to
do so.
The board of directors believes that the foregoing potentially
countervailing factors did not, individually or in the aggregate, outweigh the
overall procedural fairness of the merger to all shareholders, including the
non-continuing shareholders, and the foregoing factors are outweighed by, the
procedural safeguards previously described. In particular, with reference to the
lack of a special committee or independent advisor, the board noted that four of
the five board members were fully independent, that the non-independent board
member recused himself from voting on any matter with respect to the transaction
and that the board obtained a valuation from an independent advisor who
determined the fair value of InvestorsBancorp based on Wisconsin's statutorily
accepted definition of fair value, and felt that these procedural safeguards
were sufficient and therefore made it unnecessary to form a special committee or
retain an independent fairness advisor.
We therefore believe that the merger is substantively and procedurally
fair to our shareholders, including the non-continuing shareholders, for the
reasons and factors described above. In reaching this determination, we have not
assigned specific weights to particular factors, and we considered all factors
as a whole. None of the factors that we considered led us to believe that the
merger is unfair to our shareholders, including the non-continuing shareholders.
No firm offers have been made by an unaffiliated person during the
preceding two years for the merger or consolidation of InvestorsBancorp with or
into such person, the sale or other transfer of all or any substantial part of
the assets of InvestorsBancorp, or the purchase of a number of shares of common
stock that would enable the holder thereof to exercise control of
InvestorsBancorp.
In determining the independent going concern valuation of
InvestorsBancorp for purposes of determining the fairness of the merger, we
relied upon the financial analyses performed by Wipfli, which, in calculating
InvestorsBancorp's going concern value, took into account current and historical
market prices, including prices paid in previous purchases by the Schonath
shareholders, net book value, going concern value and liquidation value.
Wipfli's analyses are summarized in "Special Factors--Valuation of
24
Common Stock." In determining the fairness of the merger, we have adopted the
analyses and conclusions of Wipfli, and have determined that the transaction is
fair in relation to the going concern value of InvestorsBancorp as determined by
Wipfli.
In reaching a determination as to fairness, we did not consider the
liquidation value of our assets to be a material factor in our consideration of
the fairness of the merger, because we believe that the value that could be
obtained through a liquidation of our assets would be significantly less than
the value that could be obtained through a cash-out going-private transaction.
Although InvestorsBancorp, in reaching our determination as to
fairness, noted the purchase prices paid in previous purchases by the Schonath
shareholders (see "Common Stock Purchase Information--Prior Stock Purchases"),
we did not consider these to be a material factor in our consideration of the
fairness of the merger, because these purchase prices generally approximated the
then-market value of our common stock, and, given the relatively low number of
trades in our common stock, we feel that market price is not necessarily the
most applicable measure of our fair value.
None of InvestorsBancorp, the Schonath shareholders, or any of the
members of our board of directors received any reports, opinions or appraisals
from any outside party relating to the merger or the fairness of the merger
consideration to be received by our shareholders, other than those received from
Wipfli.
InvestorsBancorp has not made any provision in connection with the
merger to grant unaffiliated shareholders access to InvestorsBancorp's corporate
files or to obtain counsel or appraisal services at InvestorsBancorp's expense,
or to structure the merger so as to require the approval of the shareholders of
InvestorsBancorp. With respect to non-continuing shareholders' access to
InvestorsBancorp's corporate files, the board of directors determined that this
transaction statement, together with its other filings with the SEC, provide
adequate information for non-continuing and unaffiliated shareholders. With
respect to obtaining counsel or appraisal services solely for non-continuing
shareholders at InvestorsBancorp's expense, the board did not consider these
necessary or customary. The board of directors also considered the fact that
under Wisconsin corporate law, and subject to certain conditions set forth under
Wisconsin law, shareholders have the right to review InvestorsBancorp's relevant
books and records of account.
INVESTORS SUBSIDIARY'S REASONS FOR THE MERGER
Investors Subsidiary serves exclusively as the acquisition entity by
which the Schonath shareholders will take InvestorsBancorp private. Investors
Subsidiary's reasons for engaging in the merger transaction are the same as
those of InvestorsBancorp, its sole shareholder. See "--InvestorsBancorp's
Reasons for the Merger."
INVESTORS SUBSIDIARY'S POSITION AS TO THE FAIRNESS OF THE MERGER
Investors Subsidiary's sole director believes that the merger is fair
to, and in the best interests of, each of InvestorsBancorp's shareholders,
including the non-continuing shareholders. In reaching this conclusion,
Investors Subsidiary's director relied upon the factors considered by and the
analyses and conclusions of the InvestorsBancorp board of directors, as well as
the analysis and conclusions of InvestorsBancorp's financial advisor, Wipfli,
and Investors Subsidiary adopts such analyses and conclusions as its own. See
"--InvestorsBancorp's Position as to the Fairness of the Merger." The merger
agreement has been approved by Investors Subsidiary's sole director.
THE SCHONATH SHAREHOLDERS' REASONS FOR THE MERGER
The Schonath shareholders' primary reason for the merger is to take
InvestorsBancorp private and become the sole shareholders of the company. As the
controlling shareholders of InvestorsBancorp, with an approximate 60.9% interest
of the outstanding common stock, and an approximate 64.3% interest on a
fully-diluted basis, the Schonath shareholders feel that there would be
significant benefits to eliminating the expenses related to attending to the
large number of shareholders that hold a small interest in the outstanding
shares of common stock. The Schonath shareholders, based on information prepared
by management, estimated the expenses at $115,000 annually, and passed this
estimate on to InvestorsBancorp. In addition, as the Chief Executive Officer of
InvestorsBancorp, Mr. Schonath recognizes that his financial and business goals
may be different than those of the minority shareholders, in that, in the
absence of an active market for the company's shares, minority shareholders are
likely more interested in the rapid growth and subsequent sale of
InvestorsBancorp, while the Schonath shareholders are more interested in the
long-term growth of the company. Going private and eliminating the interests of
the minority shareholders will allow management to refocus the time spent on
shareholder
25
administrative duties to the business concerns of InvestorsBank. In addition,
consolidating the shareholder base so as to enable InvestorsBancorp to qualify
as a corporation under Subchapter S of the Internal Revenue Code, a structure
that the Schonath shareholders believed would provide them with the benefit of
eliminating double taxation of InvestorsBancorp's revenues.
THE SCHONATH SHAREHOLDERS' POSITION AS TO THE FAIRNESS OF THE MERGER
The rules of the SEC require the Schonath shareholders to express their
belief as to the substantive and procedural fairness of the merger to the
non-continuing shareholders. Each of the Schonath shareholders believes that the
merger is both substantively and procedurally fair to, and in the best interests
of, each of InvestorsBancorp's shareholders, including the non-continuing
shareholders. In reaching this conclusion, the Schonath shareholders relied upon
the factors considered by and the analyses and conclusions of the
InvestorsBancorp board of directors as to the substantive and procedural, as
well as the analyses and conclusions of InvestorsBancorp's financial advisor,
Wipfli, and each of the Schonath shareholders adopts such analyses and
conclusions as its own. See "--InvestorsBancorp's Position as to the Fairness of
the Merger."
VALUATION OF FINANCIAL ADVISOR
INTRODUCTION
On February 21, 2003, the board of directors of InvestorsBancorp
retained Wipfli as its financial advisor in connection with the proposed
going-private transaction. Wipfli is a certified public accounting and
consulting firm based in Wisconsin, and was primarily retained to perform a
valuation analysis to determine a going concern value of InvestorsBancorp and
its common stock and to present its valuation to the board.
Wipfli was selected as InvestorsBancorp's financial advisor based upon
its qualifications, expertise and reputation and its specialty in working with
financial institutions and valuing financial institutions and other industries.
Wipfli specializes in advising and providing services to businesses of all
sizes, including advising on and effecting mergers and acquisitions, and,
related to these services, Wipfli provides valuations to financial institutions
and their shareholders for a variety of purposes, including stock redemptions.
In addition, in determining to retain Wipfli, the board considered that Wipfli's
proposal had indicated that they would be performing largely the same valuation
analysis as the other investment banking firms considered, that Wipfli had the
same level of expertise in performing valuations as the other firms, and that
Wipfli's valuation proposal indicated that they would be able to do their
analysis at a lower cost to the company, thereby retaining cash that could be
used both to pay merger consideration to the non-continuing shareholders and to
fund future operations. In addition, the board took into account Wipfli's
familiarity with and understanding of the local markets in which
InvestorsBancorp does business.
On March 25, 2003, Wipfli presented its valuation report to the board,
indicating that it had determined the fair value of InvestorsBancorp as a going
concern to be $13.71 per share as of January 3, 2003, and $14.20 per share as of
March 19, 2003. Wipfli provided a written valuation to the members of the board
of directors, which sets forth the factors used in and the basis for its fair
value determinations, and the assumptions and limitations used in making the
valuation.
On April 16, 2003, Wipfli provided a corrected valuation report to the
board of directors, which indicated that the fair value of InvestorsBancorp as a
going concern as of January 3, 2003 was $13.37 per share. This correction was
required because two mistakes were inadvertently included in the underlying
analyses. Wipfli had inadvertently used an incorrect price-to-book value
multiple in the guideline
26
companies' method, and had also incorrectly calculated one of the guideline
company's price-to-book value multiple. This corrected figure will be used
throughout this summary. The corrected valuation had no effect on the fair value
of InvestorsBancorp as of March 19, 2003.
The full text of Wipfli's presentation made on March 25, 2003, which
sets forth a description of the procedures followed, assumptions made, matters
considered and limits on the review undertaken in connection with its valuation,
is attached as Appendix B-1 to this transaction statement, and is incorporated
herein by reference. The full text of Wipfli's corrected valuation report dated
April 16, 2003 is attached as Appendix B-2 to this transaction statement, and is
incorporated herein by reference. Shareholders are urged to review these
materials in their entirety. This summary of Wipfli's valuation is qualified in
its entirety by reference to the full text of the valuation included in Appendix
B-1 and Appendix B-2.
The Wipfli valuation is directed to the InvestorsBancorp board of
directors, relates only to the fair value of our common stock on a going concern
basis, and does not address any other aspect of the merger or any related
transaction. Further, the Wipfli valuation addresses the fair value of our
common stock as calculated according to Wisconsin's statutory concept of
fairness, which is set forth below. This calculation of fair value may be the
same as, greater than or less than alternate calculations of fair value. The
Wipfli valuation is not a fairness opinion.
SUMMARY OF VALUATIONS
The following is a table summarizing the valuations used by Wipfli.
The underlying analyses for each of these valuations is explained further below.
January 3, 2003 March 19, 2003
WIPFLI VALUATION METHODS
Historical Stock Price Analysis
30-day Average.................................. $ 12.64 $ 13.02
20% Control Premium............................. 2.53 2.60
--------- ---------
Average plus Control Premium.................... $ 15.17 $ 15.62
========= =========
Guideline Company Analysis
Price/Earnings Measure.......................... $ 11.24 $ 13.33
Price/Book Ratio Measure........................ 13.37 14.76
--------- ---------
Average of Two Measures......................... $ 12.31 $ 14.05
========= =========
Guideline Transaction Analysis
Price/Earnings Measure.......................... $ 12.56 $ 12.56
Price/Book Ratio Measure........................ $ 12.69 13.32
--------- ---------
Average of Two Measures......................... $ 12.63 $ 12.94
========= =========
Conclusion (based on average of three analyses)..... $ 13.37 $ 14.20
========= =========
PURCHASE PRICE DETERMINED BY INVESTORSBANCORP............ N/A $ 14.20
=========
DEFINITION OF "FAIR VALUE"
The term "fair value" is a legally created standard of value that
applies to certain specific transactions. In Wisconsin, "fair value" is the
statutory standard of value that would be applicable in cases of dissenting
shareholders' appraisal rights, and, more specifically, is meant to capture "the
value of
27
shares immediately before the effectuation of the corporate action ...
excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable." Although there is no clearly
recognized consensus regarding the interpretation of fair value, published
precedents established in a number of states, including Wisconsin, have not
equated fair value with fair market value, but instead have defined fair value
using a broader standard. In particular, in Wisconsin, the Wisconsin Supreme
Court indicated that, with respect to minority shareholders, fair value should
encompass "the proportionate interest of his or her minority shares in the going
concern of the entire company." Accordingly, Wipfli determined the fair value of
InvestorsBancorp on a marketable, majority interest basis. However, fair value
assumes a hypothetical situation with many built in conditions and assumptions.
SCOPE OF FINANCIAL ADVISOR'S ANALYSIS
To determine InvestorsBancorp's fair value as of March 19, 2003, Wipfli
used three alternative methods of valuation. Wipfli:
- reviewed InvestorsBancorp's 30-day closing average on the OTC
Bulletin Board; and applied a premium to reflect the attributes of
control;
- compared the market prices of similar publicly traded Midwest-based
bank holding companies and used price/earnings and price/book ratios
to determine the fair value of InvestorsBancorp; and applied a
premium to reflect the attributes of control; and
- examined announced sales of control of Midwest-based bank holding
companies, using price/earnings and price/book ratios to determine
the fair value of InvestorsBancorp.
Based on these analyses and its experience in valuing financial
institutions, Wipfli concluded the fair value of the Company as a going concern
to be $13.37 per share as of January 3, 2003, and $14.20 per share as of March
19, 2003, based on a fully diluted 1,055,906 shares issued and outstanding.
In connection with its valuation, Wipfli reviewed a draft of the merger
agreement, and assumed that it would correspond in all material respects to the
final merger agreement entered into by InvestorsBancorp. In addition, Wipfli
reviewed InvestorsBancorp's historical and current business operations and
organization, regulatory relations, financial condition and prospects, and such
other matters as Wipfli deemed relevant. Wipfli also took into account its
assessment of general economic, industry and financial conditions, on a
national, state and local level, and its knowledge of financial institutions,
including banks and bank holding companies. The valuation is based upon
conditions as they existed, and should be evaluated as of the date of the
valuation.
In conducting its review and arriving at its opinion, Wipfli relied
upon, and did not independently verify, any information provided to it or
publicly available that it used in its analysis and its assumptions. A valuation
requires subjective decisions as to which methods of financial analysis to use.
Therefore, Wipfli's valuation of the fair value of InvestorsBancorp is
subjective and is based on Wipfli's experience and judgment, and is not merely
the result of mathematical analysis. You should not view the analyses and
resulting values described below as indicative of actual value or as
constituting advice for any specific action. Wipfli did not independently
appraise InvestorsBancorp's assets or liabilities, and did not examine any
individual loan files.
28
STOCK PRICE ANALYSIS
Wipfli's first method of valuation was to review InvestorsBancorp's
average closing price on the OTC Bulletin Board for the 30 trading days prior to
the valuation date. Wipfli chose the 30-day average because of the thinness in
trading of the company's stock and the fact that, historically, one buyer, the
Schonath family, had accounted for a large portion of the stock purchases.
However, we note that the Schonath shareholders did not conduct any major
purchases of stock during the 30-day periods prior to January 3, 2002, and March
19, 2003, other than a purchase of 500 shares on January 7, 2003. See "Common
Stock Purchase Information-Prior Stock Purchases." The 30-day average for the
period prior to January 3, 2003, was $12.64, and the 30-day average for the
period prior to March 19, 2003, was $13.02. Because the 30-day average
represents a marketable, minority basis of value, a control premium of 20% was
added, resulting in a fair value under this method of $15.17 per share as of
January 3, 2003, and $15.62 per share as of March 19, 2003.
In determining the control premium, Wipfli utilized a published study
regarding control premiums paid in stock market transactions, and evaluated
specific factors that may influence the premium paid, including the existing
management, the ability to replace management, restrictions on transfers of
interest, leverage, company size, the number of shareholders, concentration of
control, the size of the block being valued, the volatility of assets, and the
life of the company. Taking all of these factors into consideration, Wipfli
determined that the control premium of 20% would be the appropriate level.
GUIDELINE COMPANY ANALYSIS
Wipfli's second method of valuation was a guideline company analysis.
Wipfli reviewed InvestorsBancorp's service area, financial condition,
performance, level of competition, and other factors. InvestorsBancorp's
results, including its growth, profitability, and capital strength, were
compared to Midwest-based, publicly traded bank holding companies. Wipfli
selected nine bank holding companies that were similar to InvestorsBancorp,
consisting of Baylake Corp., Commercial National Financial Corp., Heartland
Financial USA, Horizon Bancorp, Iowa First Bancshares Corp., Makesha Investment
Company, Mid-Wisconsin Financial Services Inc., Monroe Bancorp and Princeton
National Bancorp. These nine banks were selected based on size in relation to
InvestorsBancorp, location, and the subject bank's return on assets and return
on equity in comparison to InvestorsBancorp, and other factors.
After that review and comparison, Wipfli analyzed the valuations placed
on the guideline companies. Wipfli selected the price/earnings and price/book
ratios as valuation measures. The ratios chosen were appropriate based on the
appraiser's judgment, past experience, and the following considerations. Wipfli
gave consideration to InvestorsBancorp's reliance on a key employee, its
reliance on brokered certificates of deposit, the single location of its banking
subsidiary, the bank's reliance on the fees generated from the commercial loan
and leased properties portfolios of Bando McGlocklin Small Business Lending
Corporation, and the size of InvestorsBancorp in comparison to the guideline
companies. An adjustment to the price/earnings and price/book multiples was made
for these attributes based on the appraiser's judgment and past experience.
However, a control premium was necessary to convert the marketable, minority
conclusion to fair value. This control premium was calculated as determined
above.
Adjustments to reflect the exercise of the stock options and warrants
and remove InvestorsBancorp's trust preferred securities were also made.
29
Wipfli made its final determination under the guideline company method
by averaging the price/earnings measure and the price/book ratio measure,
because, in its judgment, the measures should carry equal weight.
The following are Wipfli's calculations for InvestorsBancorp's fair
value as of January 3, 2003.
InvestorsBancorp's 2002 earnings $ 1,672,000
Price/earnings multiple 8.4
-------------
Fair market value of InvestorsBancorp determined on a minority, marketable basis 14,077,161
Less: Trust preferred securities (5,000,000)
-------------
Fair market value of common stock 9,077,161
Control premium (20%) 1,815,432
Plus: Cash from exercising options and warrants 972,000
-------------
Adjusted fair value of InvestorsBancorp's common stock 11,864,593
Number of shares outstanding - fully diluted / 1,055,996
-------------
Fair value per share of InvestorsBancorp's common stock $ 11.24
=============
Estimate of InvestorsBancorp's common stock book value at January 3, 2003 $10,357,000
Price/book multiple 1.06
-------------
Fair market value of common stock, minority, marketable 10,956,512
Control premium (20%) 2,191,302
Plus: Cash from exercising options and warrants 972,000
-------------
Adjusted fair value of InvestorsBancorp's common stock 14,119,814
Number of shares outstanding - fully diluted basis / 1,055,996
-------------
Fair value per share of InvestorsBancorp's common stock $ 13.37
=============
Fair value at January 3, 2003 using guideline company method $ 12.31
=============
* Please note that the multiples are rounded to two decimal places for
purposes of this discussion. As a result, numbers may vary slightly.
30
The following are Wipfli's calculations for InvestorsBancorp's fair
value as of March 19, 2003.
InvestorsBancorp's 2002 earnings $ 1,672,000
Price/earnings multiple 9.52
-------------
Fair market value of InvestorsBancorp determined on a minority, marketable basis 15,921,321
Less: Trust preferred securities (5,000,000)
-------------
Fair market value of common stock 10,921,321
Control premium (20%) 2,184,264
Plus: Cash from exercising options and warrants 972,000
-------------
Adjusted fair value of InvestorsBancorp's common stock 14,077,585
Number of shares outstanding - fully diluted / 1,055,996
-------------
Fair value per share of InvestorsBancorp's common stock $ 13.33
=============
Estimate of InvestorsBancorp's common stock book value at March 19, 2003 $10,915,000
Price/book multiple 1.12
-------------
Fair market value of common stock, minority, marketable 12,176,847
Control premium (20%) 2,435,369
Plus: Cash from exercising options and warrants 972,000
-------------
Adjusted fair value of InvestorsBancorp's common stock 15,584,216
Number of shares outstanding - fully diluted basis / 1,055,996
-------------
Fair value per share of InvestorsBancorp's common stock $ 14.76
=============
Fair value at March 19, 2003 using guideline company method $ 14.05
=============
* Please note that the multiples are rounded to two decimal places for
purposes of this discussion. As a result, numbers may vary slightly.
GUIDELINE TRANSACTION ANALYSIS
Wipfli's third method of valuation was based upon announced sales of
bank holding companies in the Midwest. From these values, Wipfli adjusted the
multiples derived from the analysis due to InvestorsBancorp's reliance on a key
employee, its reliance on brokered certificates of deposit, the single location
of its banking subsidiary, and the bank's reliance on the fees generated from
the commercial and leased properties portfolios of Bando McGlocklin Small
Business Lending Corporation. Wipfli also considered that the buyers of these
bank holding companies may have been willing to pay a premium due to the
synergies and benefits of a merger with another financial institution.
Wipfli selected five Midwest transactions based on size, location, and
subjects' return on assets and return on equity in comparison to
InvestorsBancorp and other factors. The transactions used were the sales of
Fortress Bancshares, Inc., Waunakee Bank Shares, Inc., Bancorp Inc., Northern
Plains Bancshares and Marquette Bank Illinois. The size of these financial
institutions ranged from $47 million to $207 million.
31
Wipfli made its final determination under the guideline transaction
method by averaging the price/earnings measure and the price/book ratio measure,
because, in its judgment, the measures should carry equal weight.
The following are Wipfli's calculations for the fair values of
Investors Bancorp at January 3, 2003 utilizing this approach.
InvestorsBancorp's 2002 earnings $ 1,672,000
Price/earnings multiple 10.3
-------------
Unadjusted fair market value of InvestorsBancorp determined on a majority, marketable basis 17,292,660
Less: Trust preferred securities (5,000,000)
Plus: Cash from exercising options and warrants 972,000
-------------
Adjusted fair value of InvestorsBancorp common stock 13,264,660
Number of shares outstanding - fully diluted / 1,055,996
-------------
Fair value per share of InvestorsBancorp common stock $ 12.56
=============
Estimate of InvestorsBancorp common stock book value at January 3, 2003 10,357,000
Price/book multiple 1.2
-------------
Unadjusted fair market value of InvestorsBancorp determined on a majority, marketable basis 12,428,400
Plus: Cash from exercising options and warrants 972,000
-------------
Adjusted fair value of InvestorsBancorp 13,400,400
Number of shares outstanding - fully diluted basis / 1,055,996
-------------
Fair value per share of InvestorsBancorp common stock $ 12.69
=============
Fair value at January 3, 2003 using guideline transaction method $ 12.63
=============
* Please note that the multiples are rounded to two decimal places for
purposes of this discussion. As a result, numbers may vary slightly.
The following are Wipfli's calculations for the fair values of
InvestorsBancorp at March 19, 2003 utilizing this approach.
InvestorsBancorp's 2002 earnings $ 1,672,000
Price/earnings multiple 10.3
-------------
Unadjusted fair market value of InvestorsBancorp determined on a majority, marketable basis 17,292,660
Less: Trust preferred securities (5,000,000)
Plus: Cash from exercising options and warrants 972,000
-------------
Adjusted fair value of InvestorsBancorp common stock 13,264,660
Number of shares outstanding - fully diluted / 1,055,996
-------------
Fair value per share of InvestorsBancorp common stock $12.56
=============
Estimate of InvestorsBancorp common stock book value at March 19, 2003 $10,915,000
Price/book multiple 1.2
-------------
Unadjusted fair market value of InvestorsBancorp determined on a majority, marketable basis 13,098,000
Plus: Cash from exercising options and warrants 972,000
-------------
Adjusted fair value of InvestorsBancorp 14,070,000
32
Number of shares outstanding - fully diluted basis / 1,055,996
-------------
Fair value per share of InvestorsBancorp common stock $ 13.32
=============
Fair value at March 19, 2003 using guideline transaction method $ 12.94
=============
* Please note that the multiples are rounded to two decimal places for
purposes of this discussion. As a result, numbers may vary slightly.
CONCLUSION
As a final step, Wipfli gave what was, in its judgment, the appropriate
weights to the values obtained from each of its three analyses. Because Wipfli
felt that each of the analyses should carry equal weight in determining fair
value, it averaged the three methods, as follows:
January 3, 2003 March 19, 2003
--------------- --------------
Historical Price Method $ 15.17 $ 15.62
Guideline Company Method 12.31 14.05
Guideline Transaction Method 12.63 12.94
------- -------
Conclusion $ 13.37 $ 14.20
======= =======
Considering all of the relevant factors, Wipfli determined, in its
opinion, the fair value per share of InvestorsBancorp at January 3, 2003 was
$13.37, and at March 19, 2003 was $14.20, based on 1,055,906 shares issued and
outstanding.
The above summary provides a description of the material analyses
performed by Wipfli, and does not purport to be a complete description of
Wipfli's analyses in connection with its valuation. The preparation of a
valuation report involves numerous determinations as to the most appropriate and
relevant methods of financial analyses and the application of these methods to
the particular circumstances, and therefore is not necessarily amenable to
partial analysis or summary description.
In performing its analyses, Wipfli made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of InvestorsBancorp. Wipfli
selected comparable public companies and comparable transactions on the basis of
various factors, including the size and similarity of selected companies, their
business mix, and similar characteristics of the transactions; however, no
company or transaction utilized as a comparison in the analyses summarized above
is identical to InvestorsBancorp or to the merger. Wipfli's valuation was only
one of the factors taken into consideration by the board of directors in making
its determination to approve the merger.
Pursuant to the engagement letter with Wipfli, InvestorsBancorp has
paid Wipfli a financial advisory fee based on time required by the individuals
performing its engagement, plus direct expenses, all totaling approximately
$16,000. Wipfli's fee is not contingent upon, or affected by, its valuation
conclusion.
33
PURPOSE AND STRUCTURE OF THE MERGER
The purposes of the merger are to:
- take InvestorsBancorp private in order to discontinue
InvestorsBancorp's SEC reporting requirements and thereby achieve
significant cost savings;
- put InvestorsBancorp in a position where it will be able to make an
election under Subchapter S of the Internal Revenue Code;
- allow InvestorsBancorp to refocus time spent on shareholder
administrative duties to its banking subsidiary, InvestorsBank; and
- allow George Schonath, the Chief Executive Officer of
InvestorsBancorp, who, together with his family affiliates is
currently the controlling shareholder of InvestorsBancorp, to focus
on financial and business goals that may differ from those of the
non-continuing shareholders.
For further background on the reasons for the merger, see "Special
Factors--Background of the Merger" and "Special Factors--Reasons for the Merger;
Fairness of the Merger."
The proposed transaction has been structured as a going private
transaction to permit the Schonath shareholders to own 100% of a privately-owned
corporation, and has been structured as a cash merger in order to provide the
non-continuing shareholders with cash for their shares. The reason the
going-private transaction has been structured as a parent/subsidiary merger is
because InvestorsBancorp's board of directors believes that this structure
represents the most cost-effective and efficient way of accomplishing the above
objectives. For further background on the alternative structures considered by
the board of directors, see "Special Factors--Background of the Merger."
EFFECTS OF THE MERGER; PLANS OR PROPOSALS AFTER THE MERGER
The merger will have various positive and negative effects on
InvestorsBancorp, which are described below.
TERMINATION OF SECURITIES EXCHANGE ACT REGISTRATION AND REPORTING REQUIREMENTS
Upon the consummation of the merger, the InvestorsBancorp common stock
will be held by fewer than 300 shareholders of record. Accordingly, our
obligation to continue to file periodic reports with the SEC will terminate
pursuant to Rule 12h-3 of the Securities Exchange Act.
The termination of the filing requirement will substantially reduce the
information required to be furnished by InvestorsBancorp to its shareholders and
to the SEC. Therefore, we estimate that we will eliminate costs and expenses
associated with the filing requirements, which we estimate to be approximately
$115,000 on an annual basis. These costs are broken down as follows:
Independent Auditors $ 5,000
SEC Counsel $ 17,000
Executive time (including general counsel's office) $ 71,000
Transfer agent $ 9,000
Printing and Mailing $ 13,000
Total $ 115,000
34
InvestorsBancorp will apply for termination as soon as practicable
following completion of the merger.
EFFECT ON TRADING OF COMMON STOCK
Our common stock is traded on the OTC Bulletin Board on a limited
basis. Once we stop filing reports with the SEC, our common stock will no longer
be eligible for quotation on the OTC Bulletin Board.
ELIMINATION OF NON-CONTINUING SHAREHOLDERS
As a result of the merger, all shares held by non-continuing
shareholders will be converted into the right to receive $14.20 in cash. The
Schonath Shareholders, who collectively own approximately 60.9% of the
outstanding common stock, 64.3% on an fully-diluted basis taking into account
all options and warrants, will, following the merger, own 100% of
InvestorsBancorp. As a result, the non-continuing shareholders will not have the
opportunity to participate in the earnings and growth of InvestorsBancorp after
the merger. Similarly, the non-continuing shareholders will not face the risk of
losses generated by InvestorsBancorp's operations or any decline in the value of
InvestorsBancorp after the merger. For more effects of the merger on
InvestorsBancorp's shareholders, see "--Effects of the Merger on Shareholders of
InvestorsBancorp" below.
REDUCTION IN CAPITAL
As a result of the merger, InvestorsBancorp's capital will be reduced,
although we anticipate that we will remain "well capitalized" for bank
regulatory purposes. For example, it is estimated that Tier 1 capital as of June
30, 2003 will decrease from approximately $15.0 million on a historical basis to
approximately $8.8 million on a pro forma basis.
OTHER FINANCIAL EFFECTS OF THE MERGER
InvestorsBancorp expects that the merger and the use of approximately
$5,956,000 in cash to complete the merger, which includes approximately
$5,655,000 to be paid in to non-continuing shareholders in exchange for their
shares, approximately $43,000 to be paid to holders of options, and
approximately $258,000 in professional fees and other expenses payable by
InvestorsBancorp related to the transaction, will not have any material adverse
effect on InvestorsBancorp's capital adequacy, liquidity, results of operations
or cash flow. See "The Merger--Fees and Expenses" for a description of the fees
and expenses InvestorsBancorp expects to incur in connection with the going
private transaction. See "--Financing of the Merger" below for a description of
how the merger will be financed.
EFFECT ON BUSINESS OF INVESTORSBANCORP
The consummation of the merger is not anticipated to have any effect on
the conduct of InvestorsBancorp's business and operations. However,
InvestorsBancorp and the Schonath shareholders do intend for InvestorsBancorp to
elect Subchapter S corporation status under the Internal Revenue Code, effective
January 1, 2004. As a corporation with Subchapter S status, federal income tax
at the InvestorsBancorp corporate level will be eliminated. However, these
benefits will be offset to some degree by increased distributions to
shareholders.
35
EFFECT ON DIRECTORS AND OFFICERS OF INVESTORSBANCORP
Investors Subsidiary currently has as its sole director George
Schonath. However, it is anticipated that prior to the merger the current
directors of InvestorsBancorp will be appointed as directors of Investors
Subsidiary. Under the terms of the merger agreement, the directors of Investors
Subsidiary will become the directors of the surviving corporation as of the
effective time of the merger, and the officers of InvestorsBancorp will remain
the officers of InvestorsBancorp as the surviving corporation. For information
about these individuals, see "Information about the Directors, Officers and
Schonath Shareholders--Information about the Directors and Executive Officers of
InvestorsBancorp" and "Information about the Directors, Officers and Schonath
Shareholders--Information about the Directors and Executive Officers of
Investors Subsidiary."
PLANS OR PROPOSALS
Other than as described in this transaction statement, neither
InvestorsBancorp nor its management has any current plans or proposals to effect
any extraordinary corporate transaction, such as a merger, reorganization or
liquidation, to sell or transfer any material amount of its assets, to change
its board of directors or management, to change materially its indebtedness or
capitalization, or otherwise to effect any material change in its corporate
structure or business. As stated throughout this transaction statement,
InvestorsBancorp believes there are significant advantages to it in effecting
the merger proposal and going private. Although management does not presently
have any intent to enter into any transaction described above, nor is management
in negotiations with respect to any such transaction, there is always a
possibility that InvestorsBancorp may enter into such an arrangement or
transaction in the future, including, but not limited to, entering into a merger
or acquisition transaction, making any public or private offering for its
shares, or entering into any other arrangement or transaction as it may deem
appropriate. In such event, the Schonath shareholders, as the remaining
shareholders of InvestorsBancorp, may receive payment for their shares in any
such transaction lower than, equal to or in excess of the amount paid to the
non-continuing shareholders in the merger.
EFFECTS OF THE MERGER ON SHAREHOLDERS OF INVESTORSBANCORP
The merger will have various effects on the non-continuing shareholders
and the Schonath shareholders, as described below.
EFFECTS OF THE MERGER ON THE NON-CONTINUING SHAREHOLDERS
The merger will have both positive and negative effects on the
non-continuing shareholders. The board of directors of InvestorsBancorp
considered each of the following effects in determining to approve the merger.
Positive Effects:
As a result of the merger, the non-continuing shareholders will:
- have the right to receive a cash payment of $14.20 per share
for their shares of InvestorsBancorp common stock, which gives
them a premium over the 30- and 60-day average trading prices
of our common stock, and allows them to obtain cash for their
shares in an illiquid market; and
36
- be able to immediately liquidate their holdings without having
to pay brokerage fees or commissions, which the board felt
particularly important given the relatively illiquid market
for shares of InvestorsBancorp's common stock.
Negative Effects:
As a result of the merger, the non-continuing shareholders will:
- no longer be able to participate in any future earnings and
growth of InvestorsBancorp; and
- be required to pay federal and, if applicable, state and local
income taxes on the cash they receive in the merger. For
further discussion, see the section of this transaction
statement entitled "Material Federal Income Tax Consequences
of the Merger."
In addition, the non-continuing shareholders do not have the right to
vote on the merger and will not have dissenters' appraisal rights in connection
with the merger. See "--Voting Requirements" and "--Appraisal Rights" below.
EFFECTS OF THE MERGER ON THE SCHONATH SHAREHOLDERS
The merger will have both positive and negative effects on the
non-continuing shareholders. The board of directors of InvestorsBancorp
considered each of the following effects in determining to approve the merger.
Positive Effects:
As a result of the merger:
- any future earnings and growth of InvestorsBancorp will be
solely for the benefit of the Schonath shareholders;
- as the Schonath shareholders have, since InvestorsBancorp
became a public company, retained a significant ownership
interest in the company, the going private merger will allow
them to continue their controlling position and allow them to
focus their pursuits on the business of InvestorsBancorp; and
- because InvestorsBancorp expects to be a corporation with
Subchapter S status, the federal income tax of
InvestorsBancorp will be eliminated.
Negative Effects:
As a result of the merger:
- the common stock of InvestorsBancorp following the merger will
lack liquidity; and
- upon InvestorsBancorp's election to be treated as a Subchapter
S corporation under the Internal Revenue Code, the Schonath
shareholders will be taxed on the income of InvestorsBancorp,
regardless of whether InvestorsBancorp makes a cash
distribution to them.
37
Effect of the Merger on the Schonath Shareholders' Interest in the Net Book
Value and Net Earnings of InvestorsBancorp:
The following table illustrates the Schonath shareholders' interest in
the net book value and net earnings of InvestorsBancorp as of June 30, 2003,
both before and after the merger, expressed as both dollar amounts and
percentages. This table excludes the warrants to purchase shares held by the
Schonath shareholders.
Interest in Interest in Interest in Interest in
Net Book Value Net Book Value Net Earnings Net Earnings
(Pre-Merger) (Post-Merger) (Pre-Merger) (Post-Merger)
--------------------- --------------------- --------------------- ---------------------
Dollar Dollar Dollar Dollar
Amount Percentage Amount Percentage Amount Percentage Amount Percentage
------ ---------- ------ ---------- ------ ---------- ------ ----------
George Schonath...... $2,845,242 22.4% $2,455,433 36.4% $312,958 22.4% $ 508,556 36.4%
Jenn Schonath........ 25,404 0.2% 0 0.0% 2,794 0.2% 0 0.0%
Sarah Schonath....... 406,463 3.2% 357,522 5.3% 44,708 3.2% 74,048 5.3%
Emily Schonath....... 406,463 3.2% 357,522 5.3% 44,708 3.2% 74,048 5.3%
Tom Evans............ 165,126 1.3% 121,422 1.8% 18,163 1.3% 25,148 1.8%
Emily A. Schonath
Irrevocable Trust.. 1,943,402 15.3% 1,726,898 25.6% 213,761 15.3% 357,666 25.6%
Sarah E. Schonath
Irrevocable Trust.. 1,943,402 15.3% 1,726,898 25.6% 213,761 15.3% 357,666 25.6%
---------- ---- ---------- ---- -------- ---- ---------- ----
Total $7,735,502 60.9% $6,745,695 100.0% $850,853 60.9% $1,397,132 100.0%
========== ==== ========== ===== ======== ==== ========== =====
VOTING REQUIREMENTS
The board of directors of each of InvestorsBancorp and Investors
Subsidiary has approved the merger. The merger does not require the approval of
the holders of InvestorsBancorp common stock, either under the Wisconsin
Business Corporation Law or under our Articles of Incorporation.
Our Articles of Incorporation offer no voting rights to shareholders in
connection with a merger transaction, other than voting rights granted generally
under Wisconsin law.
Under Section 180.1104 of the Wisconsin Business Corporation Law, where
a parent corporation holds at least 90% of the outstanding stock of its
subsidiary, the subsidiary may be merged into the parent, with the parent
continuing as the surviving corporation, upon the action of the board of
directors without shareholder approval of either the parent corporation or the
subsidiary corporation. The statute additionally provides that the board of
directors is given the responsibility of adopting a plan of merger that provides
for the manner of converting the shares of the subsidiary or the parent, as
applicable, into cash or other property. Neither Section 180.1104 nor any other
provision of the Wisconsin Business Corporation Law requires a vote with respect
to the shareholders being cashed out in a parent/subsidiary merger transaction.
Therefore, because InvestorsBancorp owns 100% of the outstanding stock of
Investors Subsidiary, the merger of Investors Subsidiary into InvestorsBancorp
does not require shareholder approval.
The Wisconsin Business Corporation Law contains certain additional
provisions that require supermajority or special approval of shareholders to
business combinations in some instances, although neither statute mandates
supermajority approval of our shareholders in the merger.
38
- Fair Price Provisions. Sections 180.1130 through 180.1133 of
the Wisconsin Business Corporation Law provide that certain
business combinations, including mergers, not meeting
specified price standards, must be approved by at least 80% of
the votes entitled to be cast by outstanding voting shares of
the corporation, voting together as a single voting group, and
by two-thirds of the votes entitled to be cast by shareholders
other than a "significant shareholder," generally defined to
be a person who beneficially owns 10% or more of the
outstanding voting shares, who is a party to the transaction.
These fair price provisions specifically do not apply to
parent/subsidiary mergers effectuated pursuant to Section
180.1104 of the Wisconsin Business Corporation Law. Therefore,
they do not apply to the merger of Investors Subsidiary with
and into InvestorsBancorp.
- Business Combination Provisions. Sections 180.1140 to 180.1144
of the Wisconsin Business Corporation law provide that a
Wisconsin corporation may not engage in business combinations,
including mergers, with an "interested stockholder," which is
generally defined to be a person who beneficially owns at
least 10% of the outstanding stock of the corporation, for
three years after the date the interested stockholder acquired
his 10% interest, unless the business combination or the
acquisition of the 10% interest was approved before the
stockholder acquired his 10% interest. After the three-year
period, a business combination with the interested stockholder
may be consummated only if the acquisition of the 10% interest
was approved by the board of directors before the stockholder
acquired his 10% interest, the business combination is
approved by a majority of the outstanding voting shares not
held by the interested stockholder, or the business
combination is made by a specified price formula intended to
provide a fair price for the shares held by non-interested
stockholders. Because the Schonath family's initial 12%
ownership interest in InvestorsBancorp was approved by the
Board of Directors of InvestorsBancorp, shareholder consent is
not required for the merger under the business combination
provisions.
The boards of directors of each of InvestorsBancorp and Investors
Subsidiary have approved the merger agreement and the merger. You do not have
the right to vote on the merger, and InvestorsBancorp is not seeking a
shareholder vote on the merger. The board of directors has received an opinion
of counsel to the effect that there is no provision of the Wisconsin Business
Corporation Act that would require the approval of InvestorsBancorp's
shareholders for the merger.
APPRAISAL RIGHTS
Holders of shares of InvestorsBancorp common stock will not have
appraisal rights in connection with the merger, either under the Wisconsin
Business Corporation Law or under our Articles of Incorporation. Pursuant to
Section 180.1302 of the Wisconsin Business Corporation Law, shareholders are
entitled to dissent from, and seek appraisal rights with respect to, the
consummation of a plan of merger if either of the following applies:
- shareholder approval of the merger is required by Section
180.1103 of the Wisconsin Business Corporation Law or by the
Articles of Incorporation of the subject company; or
- the issuer corporation is a subsidiary that is merged with its
parent under Section 180.1104 of the Wisconsin Business
Corporation Law.
As discussed above under "--Voting Rights," shareholder approval of the
merger is not required either under the Wisconsin Business Corporation Law or
under our Articles of Incorporation. In addition, because the "issuer
corporation," InvestorsBancorp, is not a subsidiary that is being merged with
its parent, rather, it is the parent corporation that is surviving the merger,
no appraisal rights are available.
The board considered, in its evaluation of the structure of the
transaction, the availability of appraisal rights to its shareholders. However,
the board felt that, in light of (a) the numerous benefits to going private as
compared to remaining a public company, (b) the relative cost-effectiveness of a
parent/subsidiary merger, (c) the fact that InvestorsBancorp might be able to
consummate a parent/subsidiary merger more quickly than the other alternatives
available to the company, thereby
39
enabling the shareholders to receive value for their shares more quickly, and
(d) the fact that the company was obtaining a valuation of the common stock from
an independent third party with expertise in valuing the common stock of
financial institutions, and this valuation would evaluate the "fair value" of
our common stock, which is the statutory standard of value that would be
applicable if dissenting shareholders had appraisal rights, the
parent/subsidiary merger remained the best alternative structure of the
transaction and would adequately protect the interests of the shareholders,
including the non-continuing shareholders. See "--Background of the Merger"
above.
Although our shareholders will not have appraisal rights in connection
with the merger, they may pursue all available remedies under applicable law.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The officers and directors of InvestorsBancorp who are also
shareholders other than George Schonath, our Chief Executive Officer, will
participate in the merger in the same manner and to the same extent as all of
the other non-continuing shareholders of InvestorsBancorp. However, the
directors and officers of InvestorsBancorp have interests in the merger or have
relationships, including those referred to below, that present actual or
potential, or the appearance of actual or potential, conflicts of interest in
connection with the merger. These actual and potential conflicts include the
following:
- as of August 1, 2003, Donald L. Menefee and Donald E. Sydow,
two members of our board of directors, collectively owned 325
and 4,201 shares, respectively, of our outstanding common
stock, excluding options, which will entitle them to receive
approximately $4,600 and $59,700, respectively, in merger
consideration;
- as of August 1, 2003, Susan Hauke, our Chief Financial
Officer, Controller, Vice President-Finance and Secretary, (a)
owned 2,625 shares of common stock, which will entitle her to
receive approximately $37,300 in merger consideration, and (b)
was entitled to purchase 2,625 shares of common stock upon the
exercise of options having an exercise price of $7.33, which
will entitle her to receive approximately $18,000 in cash in
exchange for her options;
- as of August 1, 2003, Greg Mieske, our Vice President-
Operations and Compliance Officer, (a) owned 210 shares of our
common stock, which will entitle him to receive approximately
$3,000 in merger consideration, and (b) was entitled to
purchase 500 shares of common stock upon the exercise of
options having an exercise price of $6.75, which will entitle
him to receive approximately $3,700 in cash in exchange for
his options;
- as of August 1, 2003, Glenn Michaelsen, one of our Senior Vice
Presidents, was entitled to purchase 1,575 shares of common
stock upon the exercise of options having an exercise price of
$8.10, and 500 shares of common stock upon the exercise of
options having an exercise price of $6.75, which will entitle
him to receive approximately $13,300 in cash in exchange for
his options;
- as of August 1, 2003, Kim DeMartino, one of our Senior Vice
Presidents, (a) owned 210 shares of our common stock, which
will entitle her to receive approximately $3,000 in merger
consideration, and (b) was entitled to purchase 1,000 shares
of common stock upon the exercise of options having an
exercise price of $6.75, which will entitle her to receive
approximately $7,500 in cash in exchange for her options;
- The Schonath shareholders, in exchange for the 5,743 shares
held by them in individual retirement accounts and the 5,375
shares held by George Schonath and Jenn Schonath
40
individually that will be cashed out in the merger, will be
entitled to receive an aggregate of approximately $158,000 in
merger consideration.
- the Chief Executive Officer of InvestorsBancorp, George
Schonath, and various of his family affiliates will continue
as the sole shareholders of InvestorsBancorp following the
merger, and therefore will have the opportunity to participate
in any future growth and earnings of InvestorsBancorp; and
- George Schonath, who will continue to own stock in
InvestorsBancorp following the merger as a Schonath
shareholder, in his capacity as Chief Executive Officer of
InvestorsBancorp, was involved in structuring the transaction,
although he did recuse himself from any board action taken
with respect to the going-private transaction.
Except as set forth above, none of our directors or executive officers,
other than George Schonath, own any shares or hold any options or warrants to
acquire shares of our common stock.
The board of directors of InvestorsBancorp was aware of these actual or
potential conflicts of interest and considered them along with the other matters
that have been described in this transaction statement under the captions
"--Background of the Merger; " "--Reasons for the Merger; Fairness of the
Merger; and "--Effects of the Merger on Shareholders of InvestorsBancorp."
In addition, the board of directors, throughout its consideration of
the going-private transaction, recognized that the interests of the
non-continuing shareholders and the Schonath shareholders are different and
possibly in conflict. The non-continuing shareholders may wish to remain
shareholders of a public company, and, in the merger, may have the goal of
obtaining the highest value for their shares, while the Schonath shareholders,
as continuing shareholders, may have the goal of retaining cash for future
operations of InvestorsBancorp. See "Special Factors--Background of the Merger"
and "--Reasons for the Merger; Fairness of the Merger" for a discussion of how
the board of directors addressed this situation.
FINANCING OF THE MERGER
InvestorsBancorp expects that the merger will require approximately
$5,956,000 in cash, which includes approximately $5,655,000 to be paid to
non-continuing shareholders in exchange for their shares, approximately $43,000
to be paid to holders of options, and approximately $258,000 in professional
fees and other expenses payable by InvestorsBancorp related to the transaction.
See "The Merger--Fees and Expenses" for a breakdown of the expenses associated
with the merger.
InvestorsBancorp is financing the merger with $5.0 million of
subordinated debt raised in a private offering through Citigroup Global Markets
Inc., formerly Salomon Smith Barney Inc., as placement agent, and $1.0 million
of new capital contributed to InvestorsBancorp by certain of the Schonath
shareholders through the purchase of newly-issued common stock. In addition to
helping to finance the merger, the $1.0 million capital contribution was a
condition to InvestorsBancorp's participation in the subordinated debt offering.
On February 18 the board authorized management to explore financing
opportunities for the transaction, and InvestorsBancorp entered into an
engagement letter with Citigroup relating to the subordinated debt offering on
February 21, and on March 4 our board adopted resolutions by unanimous written
consent authorizing the issuance of the subordinated debt securities and the
execution of the related documents. On March 28, 2003, InvestorsBancorp entered
into a placement agreement with Citigroup Capital Markets, pursuant to which
InvestorsBancorp agreed to issue and sell $5.0 million principal amount of
Floating Rate Subordinated Debt Securities due 2013, bearing a variable interest
rate per annum reset quarterly, equal to LIBOR plus 3.20%, through Citigroup
41
as its exclusive placement agent. Also on March 28, 2003, InvestorsBancorp
entered into a Subordinated Debt Securities Subscription Agreement with MM
Community Funding IX, Ltd., pursuant to which MM Community Funding IX agreed to
purchase the full amount of the subordinated debt securities. The issuance and
sale of the securities, which is a transaction exempt from registration under
the United States securities laws, closed on April 10, 2003.
On March 12, 2003, the Emily A. Schonath Irrevocable Trust and the
Sarah E. Schonath Irrevocable Trust each obtained a loan from U.S. Bank National
Association in the amount of $500,000, for aggregate loan proceeds of $1.0
million. Each loan is guaranteed by George Schonath, and is collateralized by a
pledge of all of the common stock of InvestorsBancorp held by the Emily A.
Schonath Trust and the Sarah E. Schonath Trust, respectively. Each trust used
the proceeds of the loan to purchase 35,211 newly-issued shares of common stock
of InvestorsBancorp at a price of $14.20 per share, for aggregate consideration
of approximately $1.0 million, on March 25, 2003.
Additional funds, if any, required to fund the merger, will be paid
from our working capital. Because all of the financing for the merger has been
obtained, the consummation of the merger is not subject to any financing
contingencies.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the material federal income tax
consequences to InvestorsBancorp and the shareholders of the merger. This
discussion is based on currently existing provisions of the Internal Revenue
Code of 1986, as amended, existing and proposed Treasury regulations thereunder,
published administrative rulings and court decisions, all of which are subject
to change or a change in interpretation. Any such change, which may or may not
be retroactive, could alter the tax consequences as described herein. It is
assumed that the shares of InvestorsBancorp stock are held as capital assets by
United States persons (i.e., a citizen or resident of the United States or a
domestic corporation). This discussion does not address all aspects of United
States federal income taxation that may be relevant to a particular
InvestorsBancorp shareholder in light of such shareholder's personal
circumstances or those InvestorsBancorp shareholders subject to special
treatment under United States federal income tax laws (for example, financial
institutions; real estate investment trusts; regulated investment companies;
insurance companies; broker-dealers; persons who are not citizens or residents
of the United States or who are foreign corporations, partnerships, estates or
trusts; tax exempt entities or traders in securities that elect to
mark-to-market), or investors who hold their InvestorsBancorp stock as a
position in a straddle, as part of a hedge or synthetic security, as part of a
conversion transaction or other integrated transaction or investors whose
functional currency is not the U.S. dollar. This discussion does not address the
tax consequences of the alternative minimum tax or the tax consequences to
shareholders who acquired their stock through the exercise of an employee stock
option or other compensation arrangements. This discussion does not address any
aspect of state, local or foreign taxation.
No opinion of counsel has been sought or obtained with respect to any
tax consequences described herein. No rulings or determinations of the Internal
Revenue Service or any other tax authorities have been or will be sought or
obtained with respect to any tax consequences described herein. The discussion
below is not binding upon the Internal Revenue Service or such other
authorities. No assurance can be given that the Internal Revenue Service would
not assert, or that a court would not sustain, a different position from any
discussed herein. You are urged to consult your tax advisor regarding the
federal, state, local and foreign tax consequences of the merger.
42
FEDERAL INCOME TAX CONSEQUENCES TO NON-CONTINUING SHAREHOLDERS
The receipt of cash in exchange for InvestorsBancorp's common stock in
the merger will be a taxable transaction for U.S. federal income tax purposes.
In general, a U.S. holder will recognize capital gain or loss equal to the
difference between the amount of cash received and the U.S. holder's tax basis
in the InvestorsBancorp common stock exchanged in the merger. This capital gain
or loss will be long-term capital gain or loss if the U.S. holder held the
InvestorsBancorp common stock for more than one year as of the effective time of
the reorganization. Certain limitations apply to the deductibility of capital
losses by U.S. holders.
FEDERAL INCOME TAX CONSEQUENCES TO SCHONATH SHAREHOLDERS
Because the Schonath shareholders will (1) continue to hold
InvestorsBancorp common stock immediately after the merger, and (2) receive no
cash as a result of the merger, they will not recognize any gain or loss in the
merger, and will have the same adjusted tax basis and holding period in their
InvestorsBancorp common stock as they had in the stock immediately prior to the
merger. These effects apply to each of the Schonath shareholders.
FEDERAL INCOME TAX CONSEQUENCES TO INVESTORSBANCORP AND INVESTORS SUBSIDIARY
Neither InvestorsBancorp nor Investors Subsidiary will recognize gain
or loss for federal income tax purposes as a result of the merger.
BACKUP WITHHOLDING
All InvestorsBancorp shareholders may be subject to backup withholding
at a 28% rate on the cash payments received for their shares of InvestorsBancorp
common stock, unless they establish an exemption. Backup withholding will not
apply, however, if you:
- furnish to InvestorsBancorp a correct taxpayer identification
number and certify that you are not subject to backup
withholding on the substitute Form W-9 included in the letter
of transmittal to be delivered to you following the date of
the merger;
- provide a certificate of foreign status on Form W-8; or
- establish that you are exempt from withholding.
Backup withholding is not an additional tax but is credited against the
federal income tax liability of the taxpayer subject to the withholding. If
backup withholding results in an overpayment of a taxpayer's federal income
taxes, that taxpayer may obtain a refund from the Internal Revenue Service.
THIS SECTION DOES NOT DISCUSS ALL ASPECTS OF UNITED STATES FEDERAL
INCOME TAXATION THAT MAY BE RELEVANT TO YOU IN LIGHT OF YOUR PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISORS
TO DETERMINE THE UNITED STATES FEDERAL, STATE AND LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE MERGER TO YOU IN VIEW OF YOUR OWN PARTICULAR CIRCUMSTANCES.
43
MATERIAL TERMS OF THE MERGER
THE MERGER AGREEMENT
The following is a summary of the material provisions of the merger
agreement. The following summary does not purport to be complete and is
qualified in its entirety by reference to the merger agreement, which is
attached as Appendix A to this transaction statement and is incorporated herein
by reference. You are urged to read the merger agreement in its entirety.
GENERAL
The merger agreement provides that, following the satisfaction or
waiver of the terms and conditions contained in the merger agreement, Investors
Subsidiary will be merged with and into InvestorsBancorp, and InvestorsBancorp
will be the surviving corporation. The merger will become effective upon the
filing of articles of merger with the Secretary of State of Wisconsin. We expect
to complete the merger in August 2003.
ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
In the merger, InvestorsBancorp's articles of incorporation and bylaws
will be amended and restated, and, as so amended and restated, will be the
articles of incorporation and bylaws of the surviving corporation. The directors
and officers of InvestorsBancorp will become the directors and officers of the
surviving corporation as of the effective time of the merger. For information
about the directors and executive officers of InvestorsBancorp and Investors
Subsidiary, respectively, see "Information about the Directors, Officers and
Schonath Shareholders--Information about the Directors and Executive Officers of
InvestorsBancorp" and "Information about the Directors, Officers and Schonath
Shareholders--Information about the Directors and Executive Officers of
Investors Subsidiary."
CONVERSION OF COMMON STOCK
At the effective time of the merger:
- each share of InvestorsBancorp issued and outstanding
immediately prior to the effective time, excluding shares held
by the Schonath shareholders, will be converted into the right
to receive $14.20 in cash, without interest;
- all shares of InvestorsBancorp common stock that are owned by
the Schonath shareholders will represent one share of common
stock of InvestorsBancorp as the surviving corporation; and
- all shares of common stock of Investors Subsidiary will be
canceled, and InvestorsBancorp, as the sole holder of these
shares, will be entitled to receive $1.00 in cash per share of
Investors Subsidiary stock.
EXCHANGE OF SHARES
At the effective time of the merger, each certificate representing
shares of InvestorsBancorp common stock outstanding, other than shares owned by
the Schonath shareholders, will represent only the right to receive $14.20 per
share cash merger consideration. At the effective time, all of these shares will
be canceled and cease to exist, and each holder of a certificate formerly
representing any
44
InvestorsBancorp shares, other than the Schonath shareholders, will cease to
have any voting or other rights with respect to those shares, except the right
to receive the merger consideration, without interest.
InvestorsBancorp has designated LaSalle Bank National Association to
act as paying agent for purposes of making the cash payments provided by the
merger agreement. Simultaneously with the effective time of the merger,
InvestorsBancorp will deposit, or cause to be deposited, with the paying agent
immediately available funds in an aggregate amount necessary to pay the $14.20
per share merger consideration to all shareholders entitled to receive the
merger consideration. The paying agent will use these funds for the sole purpose
of paying the non-continuing shareholders the merger consideration. The paying
agent will, in accordance with irrevocable instructions, deliver to the
non-continuing shareholders the merger consideration according to the procedure
summarized below.
Simultaneously with the effective time of the merger, InvestorsBancorp
will cause the paying agent to mail to non-continuing shareholders a letter of
transmittal and instructions advising them of the effectiveness of the merger
and the procedure for surrendering to the paying agent certificates in exchange
for payment of the $14.20 merger consideration. Upon the surrender for
cancellation to the paying agent of the certificates, together with a letter of
transmittal, duly executed and completed in accordance with its instructions,
and any other items specified by the letter of transmittal, the paying agent
will pay to the non-continuing shareholders the $14.20 per share merger
consideration, and the surrendered certificates will be canceled. Payments of
merger consideration will be reduced by applicable withholding taxes, and no
interest will be paid or accrued on the merger consideration.
InvestorsBancorp recommends that certificates for common stock and
letters of transmittal be sent only by registered U.S. mail, return receipt
requested, appropriately insured. Holders of common stock whose certificates are
lost may be required to make an affidavit identifying the lost certificate or
certificates as lost, stolen or destroyed and, if required, to post a bond in
such amount as may reasonably be required to indemnify InvestorsBancorp and the
paying agent against any claim that may be made with respect to the lost
certificate.
SHAREHOLDERS SHOULD NOT FORWARD THEIR STOCK CERTIFICATES TO THE PAYING AGENT
WITHOUT A LETTER OF TRANSMITTAL.
At and after the effective time of the merger, the non-continuing
shareholders will cease to have any rights as shareholders, except the right to
surrender their certificates, according to the procedure described in this
section and in the letter of transmittal, in exchange for payment of the $14.20
per share merger consideration, without interest, less any required withholding
taxes.
At the effective time of the merger, InvestorsBancorp's stock ledger
will be closed, and no further registrations or transfers of the shares will be
made.
After 180 days following the effective time of the merger,
InvestorsBancorp may cause the paying agent to deliver to it all cash that has
not been distributed in payment of the merger consideration, plus any accrued
interest, and the paying agent's duties will terminate. After that time,
shareholders may surrender their certificates to InvestorsBancorp and receive
the $14.20 per share merger consideration, without interest, less any required
withholding taxes. However, shareholders will have no greater rights against
InvestorsBancorp than may be accorded to general creditors of InvestorsBancorp
under applicable law. InvestorsBancorp will not be liable to any non-continuing
shareholder for any merger consideration delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
45
STOCK OPTIONS AND WARRANTS
Immediately prior to the effective time of the merger, each outstanding
option to purchase InvestorsBancorp common stock will become fully vested and
exercisable and will be canceled and:
- the holder of each option with a per share exercise price of
less than $14.20 will receive an amount in cash equal to the
product of:
(a) the difference between $14.20 and the per share exercise
price of the option, and
(b) the number of shares of InvestorsBancorp common stock
subject to the option, which, net of applicable
withholding taxes, will be due and paid at the effective
time of the merger; and
- each option with a per share exercise price of $14.20 or above
will be deemed not to have any rights after the effective time
of the merger.
At the effective time, the warrants held by the Schonath shareholders
exercisable for the purchase of 105,000 shares of InvestorsBancorp common stock,
will remain outstanding and will be an obligation of InvestorsBancorp as the
surviving corporation.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties of
InvestorsBancorp with respect to it relating to, among other things:
- its organization, qualification, corporate power,
capitalization and similar corporate matters;
- the authorization and enforceability of the merger agreement;
- the absence of required consents of regulatory authorities,
other than filings with the SEC required for going private
transactions, filings and consents required by the Federal
Reserve, the filing of the merger agreement and articles of
merger with corporate and regulatory authorities, and other
non-material consents, filings or notifications;
- its compliance with applicable laws;
- the absence of injunctions, orders and legal proceedings;
- the exemption of the merger from any applicable "fair price,"
"business combination," "control share" or other anti-takeover
laws; and
- the determination by the board of directors that the merger is
fair to and in the best interests of the shareholders of
InvestorsBancorp and the receipt of the approval of the board
of directors of the merger agreement.
The merger agreement contains representations and warranties of
Investors Subsidiary with respect to it relating to, among other things:
- its organization, qualification, corporate power,
capitalization and similar corporate matters;
- the authorization and enforceability of the merger agreement;
46
- the absence of required consents of regulatory authorities,
other than filings with the SEC required for going private
transactions, filings and consents required by the Federal
Reserve, the filing of the merger agreement and articles of
merger with corporate and regulatory authorities, and other
non-material consents, filings or notifications;
- its compliance with applicable laws;
- the absence of injunctions, orders and legal proceedings;
- the exemption of the merger from any applicable "fair price,"
"business combination," "control share" or other anti-takeover
laws; and
- the receipt of the approval of the board of directors of the
merger agreement.
The representations and warranties of each of InvestorsBancorp and
Investors Subsidiary are subject, in some cases, to specified exceptions and
qualifications. The representations and warranties expire upon and will not
survive completion of the merger.
COVENANTS
Under the merger agreement, InvestorsBancorp and Investors Subsidiary
agreed, among other things:
- to file, together with their affiliates engaging in the
transaction, a Rule 13e-3 Transaction Statement on Schedule
13e-3 with the SEC;
- to file any reports required to be filed with regulatory
authorities prior to the effective time;
- to cooperate with each other and use their reasonable efforts
to prepare and file any necessary documentation and to obtain
as promptly as practicable all consents of all regulatory
authorities that are necessary or advisable in connection with
the merger; and
- to use their respective best efforts to take all actions and
do all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by the merger
agreement.
CONDITIONS TO THE MERGER
The obligation of InvestorsBancorp to complete the merger is subject to
a number of conditions, each of which may be waived by InvestorsBancorp,
including the following:
- the accuracy of the representations and warranties of
Investors Subsidiary in all material respects;
- the performance in all material respects of Investors
Subsidiary's obligations under the merger agreement;
- no proceedings involving any challenge to the merger, that
would reasonably be expected to delay the merger, or that
would reasonably be expected to have a material adverse effect
on Investors Subsidiary;
47
- the receipt of any consents required or otherwise reasonably
necessary to consummate the merger; and
- no injunction or governmental order preventing the merger
being in effect.
The obligation of Investors Subsidiary to complete the merger is
subject to a number of conditions, each of which may be waived by Investors
Subsidiary, including the following:
- the accuracy of the representations and warranties of
InvestorsBancorp in all material respects;
- the performance in all material respects of InvestorsBancorp's
obligations under the merger agreement;
- no proceedings involving any challenge to the merger, that
would reasonably be expected to delay the merger, or that
would reasonably be expected to have a material adverse effect
on InvestorsBancorp;
- the receipt of any consents required or otherwise reasonably
necessary to consummate the merger; and
- no injunction or governmental order preventing the merger
being in effect.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated and the transactions
contemplated by the merger agreement may be abandoned at any time by the mutual
consent of the boards of directors of InvestorsBancorp and Investors Subsidiary.
If the merger agreement is terminated, it shall be of no further force and
effect.
AMENDMENT
The merger agreement may be amended by the parties at any time, but no
amendment will be valid unless it is in writing and signed by both
InvestorsBancorp and Investors Subsidiary.
REGULATORY REQUIREMENTS
In connection with the merger, InvestorsBancorp will be required to
make a number of filings with and obtain a number of approvals from various
federal and state governmental agencies, including:
- filing of a certificate of merger with the Secretary of State
of Wisconsin in accordance with Wisconsin law;
- complying with federal and state securities laws, including
filing by InvestorsBancorp, Investors Subsidiary and the
Schonath shareholders this transaction statement on Schedule
13e-3 with the SEC and the Division of Securities of the
Wisconsin Department of Financial Institutions; and
- notifying the Federal Reserve of the merger.
48
ACCOUNTING TREATMENT
InvestorsBancorp anticipates that it will account for the transaction
by treating the shares repurchased in the merger as canceled and retired.
FEES AND EXPENSES
InvestorsBancorp will be responsible for paying the merger-related fees
and expenses, consisting primarily of fees and expenses of its financial
advisor, attorneys and accountants, and other related charges. InvestorsBancorp
estimates that its expenses will total approximately $258,000, assuming the
merger is completed. This amount consists of the following estimated fees:
Description Amount
- ----------- ------
Advisory fees and expenses $ 16,000
Legal fees and expenses 200,000
Accounting fees and expenses 10,000
Paying agent fees and expenses 12,000
SEC filing fees 461
Printing and mailing costs 15,000
Miscellaneous expenses 5,000
-----------
Total $ 258,461
FINANCIAL INFORMATION
SELECTED HISTORICAL FINANCIAL DATA
Set forth below is the selected historical consolidated financial
information of InvestorsBancorp and our subsidiaries. The historical financial
information was derived from the audited consolidated financial statements
included in our Annual Report on Form 10-KSB for the fiscal year ended December
31, 2002, from the unaudited consolidated financial statements included in our
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2003, as amended,
and from other information and data contained in the Annual Report and the
Quarterly Report. More comprehensive financial information is included in the
Annual Report and the Quarterly Report. The financial information that follows
is qualified in its entirety by reference to, and should be read in conjunction
with, the Annual Report, the Quarterly Report and all of the financial
statements and related notes contained in the Annual Report and the Quarterly
Report, copies of which may be obtained as set forth below under the caption
"Where You Can Find More Information."
49
INVESTORSBANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
FISCAL YEAR ENDED
SIX MONTHS
DECEMBER 31, DECEMBER 31, ENDED
2001 2002 JUNE 30, 2003
------------- ------------- -------------
Cash, investments and cash equivalents $ 7,352,190 $ 4,803,094 $ 5,426,294
Loans 123,436,530 154,516,551 161,625,975
Other assets 2,855,049 8,420,304 10,234,288
------------- ------------- -------------
Total assets $ 133,643,769 $ 167,739,949 $ 177,286,557
Deposits $ 120,021,734 $ 135,940,742 $ 132,026,738
Other borrowings 3,815,000 20,075,000 31,900,000
Other liabilities 915,620 1,367,413 657,845
------------- ------------- -------------
Total liabilities $ 124,752,354 $ 157,383,155 $ 164,584,583
Interest income $ 10,056,012 $ 8,184,035 $ 4,411,302
Interest expense (5,835,761) (3,526,306) (1,611,280)
Loan loss provision (847,235) (471,537) (41,432)
------------- ------------- -------------
Net interest income $ 3,373,016 $ 4,186,192 $ 2,758,590
Net income from continuing operations $ 1,473,048 $ 1,672,193 $ 1,397,132
Basic earnings per share $ 1.53 $ 1.79 $ 1.46
Diluted earnings per share $ 1.51 $ 1.70 $ 1.38
Book value per share at June 30, 2003 $ 12.82
990,529 shares outstanding
MARKET PRICE OF INVESTORSBANCORP
COMMON STOCK AND DIVIDEND INFORMATION
COMPARATIVE MARKET PRICE DATA
InvestorsBancorp common stock was held by approximately 570 holders of
record as of August 1, 2003, and is quoted on the OTC Bulletin Board under the
symbol "INVB." The following table shows for the periods indicated, the high and
low closing prices per share of transactions in InvestorsBancorp's common stock
as quoted on the OTC Bulletin Board. Certain other private transactions may have
occurred during the period indicated of which InvestorsBancorp has no knowledge.
The following prices represent inter-dealer prices without retail markups,
markdowns or commissions.
50
CLOSING PRICE PER SHARE
QUARTER ENDING: HIGH LOW
September 30, 2003 (through August 12, 2003) $ 14.25 $ 13.85
June 30, 2003 $ 14.00 $ 13.80
March 31, 2003 $ 14.40 $ 12.70
December 31, 2002 $ 12.75 $ 12.55
September 30, 2002 $ 12.95 $ 12.50
June 30, 2002 $ 13.00 $ 11.00
March 31, 2002 $ 13.00 $ 10.10
December 31, 2001 $ 11.00 $ 8.30
September 30, 2001 $ 8.85 $ 6.75
June 30, 2001 $ 8.25 $ 5.00
March 31, 2001 $ 8.00 $ 7.00
DIVIDENDS
No cash dividends were declared or paid during the years ended December
31, 2002 and 2001. InvestorsBancorp expects that all of its and InvestorsBank's
earnings, if any, will be retained to finance the growth of InvestorsBancorp and
InvestorsBank, and that no cash dividends will be paid for the foreseeable
future. If and when dividends are declared, InvestorsBancorp will probably be
largely dependent upon dividends paid by InvestorsBank for funds to pay
dividends on its common stock. It is also possible, however, that
InvestorsBancorp will pay dividends in the future generated from investment
income and other activities. Upon the effectiveness of InvestorsBancorp's
election to be treated as a Subchapter S corporation, it is expected that
InvestorsBancorp will pay dividends to its shareholders in an amount sufficient
to enable them to pay the taxes they incur on the income, if any, of
InvestorsBancorp.
The Wisconsin Business Corporation Law prohibits InvestorsBancorp from
paying dividends if it is insolvent or if the payment of dividends would render
it unable to pay its debts as they come due in the ordinary course of business.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of common stock at August 1, 2003, by the Schonath
shareholders, by each person known by us to be the beneficial owner of more than
five percent of the outstanding common stock, by each director and by all
directors and executive officers of InvestorsBancorp as a group.
51
NAME OF INDIVIDUAL AND AMOUNT AND NATURE OF
NUMBER OF PERSONS IN GROUP BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
-------------------------- ----------------------- ----------------
SCHONATH SHAREHOLDERS
George R. Schonath 224,820(2) 22.7%
Jenn Schonath 2,607(3) *
Sarah E. Schonath 54,844(4) 5.4%
Emily A. Schonath 54,824(5) 5.4%
Thomas Evans 373,900(6) 35.7%
All Schonath shareholders as a group 708,388 64.7%
OTHER DIRECTORS AND 5% SHAREHOLDERS
Terry L. Mather -- --
Jon McGlocklin -- --
Donald L. Menefee 325 *
Donald E. Sydow 4,201 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A 238,591(7) 23.9%
GROUP (10 PERSONS)
* Less than one percent (1%)
- -------------------------------
(1) Information contained in this column is based upon information
furnished to us by the persons named above and the members of the
designated group, except as set forth in the footnotes below. The
nature of beneficial ownership for shares shown in this column is sole
voting and investment power, except as set forth in the footnotes
below. Inclusion of shares shall not constitute an admission of
beneficial ownership or voting and investment power over included
shares. Pursuant to the rules and regulations of the Securities and
Exchange Commission and the Securities Exchange Act of 1934, as
amended, share amounts include shares obtainable through the exercise
of stock options or warrants within 60 days of the date of information
contained in this table.
(2) Includes 215,289 shares held in his self-directed 401(k) account, 1,664
shares held in his IRA, and warrants to purchase 593 shares. Also,
includes 2,014 shares and warrants to purchase 593 shares over which
Mr. Schonath shares voting and investment power with his spouse, Mrs.
Jenn Schonath. Excludes 303,746 shares and warrants to purchase 58,127
shares held in irrevocable trusts for the benefit of his daughters and
63,980 shares and warrants to purchase 45,688 shares held directly by
his daughters.
(3) Includes 1,206 shares held in her IRA and warrants to purchase 593
shares. Mrs. Schonath shares voting and investment power with her
spouse, Mr. George Schonath.
(4) Includes 620 shares held in her IRA and warrants to purchase 22,844
shares. Excludes 151,873 shares and warrants to purchase 29,063 shares
held in irrevocable trust for the benefit of Ms. Schonath.
(5) Includes 600 shares held in her IRA and warrants to purchase 22,844
shares. Excludes 151, 873 shares and warrants to purchase 29,063 shares
held in irrevocable trust for the benefit of Ms. Schonath.
(6) Includes 151,873 shares and warrants to purchase 29,063 shares held by
the Emily A. Schonath Irrevocable Trust and 151,873 shares and warrants
to purchase 29,063 shares held by the Sarah E. Schonath Irrevocable
Trust. Mr. Evans is the trustee of the trusts. Also includes 1,653
shares held in his IRA.
(7) Includes 6,200 shares obtainable through the exercise of options.
COMMON STOCK PURCHASE INFORMATION
PRIOR STOCK PURCHASES
The following table sets forth information with respect to purchases of
shares of InvestorsBancorp common stock, if any, by InvestorsBancorp, Investors
Subsidiary, the directors and
52
executive officers of InvestorsBancorp and Investors Subsidiary, and the
Schonath shareholders during the past two years.
QUARTER ENDED NUMBER OF SHARES PRICE RANGE(S) AVERAGE PRICE PAID
- ------------- ---------------- -------------- ------------------
JUNE 30, 2003
InvestorsBancorp 3,658 $14.20 $ 14.20
MARCH 31, 2003
George R. Schonath 401(k) Account 500 $12.825 $12.825
George R. Schonath 14,490(1) $6.75-10.10 $ 8.20
InvestorsBancorp 14,490 $14.20 $ 14.20
Emily A. Schonath Irrevocable Trust 35,211 $14.20 $ 14.20
Sarah E. Schonath Irrevocable Trust 35,211 $14.20 $ 14.20
DECEMBER 31, 2002
InvestorsBancorp 12,919 $12.63-12.83 $ 12.70
George R. Schonath 401(k) Account 11,899 $12.67 $ 12.67
SEPTEMBER 30, 2002
InvestorsBancorp 3,316 $12.80-12.97 $ 12.88
George R. Schonath 715 $12.75 $ 12.75
George R. Schonath 401(k) Account 7,369 $12.70-12.95 $ 12.81
Emily A. Schonath Irrevocable Trust 4,250 $12.60 $ 12.60
Sarah E. Schonath Irrevocable Trust 4,250 $12.60 $ 12.60
JUNE 30, 2002
George R. Schonath 765 $12.26 $ 12.26
George R. Schonath 401(k) Account 3,779 $12.15-12.26 $ 12.26
Emily A. Schonath Irrevocable Trust 1,739 $12.50-12.70 $ 12.56
Sarah E. Schonath Irrevocable Trust 1,739 $12.50-12.70 $ 12.56
MARCH 31, 2002
None
DECEMBER 31, 2001
George R. Schonath 401(k) Account 1,376 $8.25-8.37 $ 8.25
SEPTEMBER 30, 2001
George R. Schonath 401(k) Account 4,591 $7.13-8.60 $ 8.13
JUNE 30, 2001
InvestorsBancorp 66,349 $7.50 $ 7.50
George R. Schonath 401(k) Account 21,303 $6.63-7.50 $ 7.30
Emily A. Schonath Irrevocable Trust 8,000 $7.00 $ 7.00
Sarah E. Schonath Irrevocable Trust 8,000 $7.00 $ 7.00
MARCH 31, 2001
InvestorsBancorp 6,300 $7.97 $ 7.97
George R. Schonath 401(k) Account 8,499 $7.13-7.38 $ 7.21
Emily A. Schonath Irrevocable Trust 5,170 $7.00 $ 7.00
Sarah E. Schonath Irrevocable Trust 5,170 $7.00 $ 7.00
- --------------------
(1) These shares were purchased pursuant to the exercise of options held by
Mr. Schonath. After exercising the options, Mr. Schonath immediately
resold the shares back to InvestorsBancorp for $14.20 per share. The
effect was therefore the same as the treatment his options would have
received under the merger agreement.
53
RECENT TRANSACTIONS
Since March 15, 2003, InvestorsBancorp, Investors Subsidiary and the
Schonath shareholders and their affiliates have made the following purchases of
InvestorsBancorp common stock at the prices indicated:
NUMBER OF
PURCHASER DATE SHARES PRICE PER SHARE TRANSACTION
- --------- ---- ------ --------------- -----------
Thomas Evans, Trustee 3/25/03 70,422(1) $14.20 New subscription
George R. Schonath 3/31/03 4,150 $ 6.75 Exercise of options(2)
George R. Schonath 3/31/03 4,400 $ 7.00 Exercise of options(2)
George R. Schonath 3/31/03 5,940 $10.10 Exercise of options(2)
InvestorsBancorp 3/31/03 14,490 $14.20 Cash repurchase of options(2)
InvestorsBancorp 4/4/03 735 $14.20 Cash repurchase from 401(k)
account of Mary Block
InvestorsBancorp 4/7/03 2,725 $14.20 Cash repurchase from 401(k)
account of Susan Hauke
InvestorsBancorp 4/7/03 198 $14.20 Cash repurchase from Sarah E.
Schonath
Sarah E. Schonath 4/7/03 198 $14.20 Sale to InvestorsBancorp
- ----------
(1) Includes 35,211 shares purchased by the Emily A. Schonath Irrevocable
Trust and 35,211 shares purchased by the Sarah E. Schonath Irrevocable
Trust, of which Mr. Evans is the sole trustee.
(2) On March 31, 2003, in anticipation of the merger, Mr. Schonath cashed
in his existing stock options by (a) exercising each of the options,
and (b) immediately reselling the securities back to the company at a
price equal to the $14.20 merger consideration. The effect of these
option exercises and the cash repurchase is the same as the treatment
Mr. Schonath would have received pursuant to the merger agreement.
Effective on June 30, 2003, the Schonath Family Partnership, a limited
partnership that held 132,943 shares of common stock of InvestorsBancorp and
warrants to purchase an additional 105,000 shares, distributed all of its shares
of common stock and the warrants to its general and limited partners, all of
whom are Schonath shareholders, on a pro-rata basis.
Other than as described above, there have been no transactions in
InvestorsBancorp common stock by InvestorsBancorp, Investors Subsidiary, the
directors and officers of InvestorsBancorp and Investors Subsidiary, and the
Schonath Shareholders since March 15, 2003, which is the 60th day prior to the
initial filing of this transaction statement.
INFORMATION ABOUT THE DIRECTORS,
OFFICERS AND SCHONATH SHAREHOLDERS
INFORMATION ABOUT THE DIRECTORS AND EXECUTIVE OFFICERS OF INVESTORSBANCORP
Set forth in the table below are the (i) name, (ii) address, (iii)
current principal occupation or employment, and the name, principal business and
address of any corporation or other organization in which the employment or
occupation is conducted, and (iv) material occupations, positions, offices or
employment during the past five years, and the name, principal business and
address of any corporation or
54
other organization in which the occupation, position, office or employment was
carried on, of each of the directors and executive officers of InvestorsBancorp.
Each person identified below is a United States citizen. Unless otherwise
indicated, each person's principal address is W239 N1700 Busse Road, Waukesha,
Wisconsin 53188.
DIRECTORS OF INVESTORSBANCORP
Current Principal Occupation or Employment and
Name Material Positions Held During the Past Five Years
- ---- --------------------------------------------------
Terry L. Mather Mr. Mather has been a partner of Critical Solutions,
Inc., a business consulting firm headquartered in
Milwaukee, Wisconsin, since 1992. Mr. Mather's
principal address is c/o Laacke & Joys, 1433 N. Water
Street, Milwaukee, Wisconsin 53202.
Jon McGlocklin Mr. McGlocklin has been the president of Healy
Awards, Inc. in Menomonee Falls, Wisconsin, since
1997, and an announcer for the Milwaukee Bucks since
1976. He was also a senior vice president of
InvestorsBancorp and InvestorsBank from their
establishment in 1997 until February, 2001. In July,
1997, Mr. McGlocklin was appointed senior vice
president of Bando McGlocklin Capital Corporation,
now known as the Middleton Doll Company, which
primarily makes mortgage loans to small businesses
and which also has a small subsidiary that is a doll
manufacturer, and in November 2001 his title was
changed to vice president. Mr. McGlocklin's principal
address is 5281 North Hwy 83, Hartland, Wisconsin
53029.
Donald L. Menefee Mr. Menefee has been the president and chief
executive officer of Silent Partners, a management
consulting firm based in Door County, Wisconsin,
since he founded the company in 1996. Mr. Menefee's
principal address is 3073 N. Shepard Ave., Milwaukee,
WI 53211.
George R. Schonath Mr. Schonath has been the President and Chief
Executive Officer of InvestorsBancorp and
InvestorsBank since they were established in 1997. In
July 1997, Mr. Schonath was appointed president of
Bando McGlocklin Capital Corporation and also
currently serves as its Chief Executive Officer. In
May 2001, Mr. Schonath returned to his position as a
director of The Middleton Doll Company, where he had
served as a director from 1980 through 1997 and as
Chairman of the Board from 1984 through 1997. Mr.
Schonath is also the sole director and the president
of Investors Subsidiary.
Donald E. Sydow Mr. Sydow has been the president of Oconomowoc
Manufacturing Corp., a ball-bearing manufacturer
located in Oconomowoc, Wisconsin, since 1982. Mr.
Sydow's principal address is 425 South Lapham Street,
Oconomowoc, Wisconsin 53066-3911.
To the knowledge of InvestorsBancorp, none of the foregoing directors
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or has been a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities laws.
55
EXECUTIVE OFFICERS
Current Principal Occupation or Employment and
Name Material Positions Held During the Past Five Years
- ---- --------------------------------------------------
George R. Schonath See the information given for Mr. Schonath above
under "--Directors."
Susan J. Hauke Ms. Hauke has been InvestorsBancorp's controller and
vice-president-finance since 1997, was elected
secretary in 1999, and was elected chief financial
officer in 2002. Ms. Hauke also serves as vice
president-finance, controller, and treasurer of
InvestorsBank. In addition, she is the chief
financial officer, vice president-finance, secretary
and treasurer of The Middleton Doll Company. Ms.
Hauke is also the vice president and treasurer of
Investors Subsidiary.
Glenn A. Michaelsen Mr. Michaelsen was elected as a senior vice president
of InvestorsBancorp and InvestorsBank in October,
2002. Mr. Michaelsen also serves as the senior vice
president of The Middleton Doll Company. Mr.
Michaelsen joined InvestorsBancorp in June, 1998.
Greg A. Mieske Mr. Mieske was elected vice president-operations and
compliance officer of InvestorsBancorp and
InvestorsBank in October 1999. He also serves as
secretary of InvestorsBank. Mr. Mieske joined
InvestorsBancorp in December 1998, and prior to that
served as a financial examiner for the Department of
Financial Institutions of the State of Wisconsin from
1987 until 1998. Mr. Mieske is also the vice
president and secretary of Investors Subsidiary.
Kim E. DeMartino Ms. DeMartino was elected senior vice president of
InvestorsBancorp and InvestorsBank in February 2001.
She has served as a mortgage officer since joining
InvestorsBancorp in 1997.
To the knowledge of InvestorsBancorp, none of the foregoing executive
officers has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state
securities laws.
INFORMATION ABOUT THE DIRECTORS AND EXECUTIVE OFFICERS OF INVESTORS SUBSIDIARY
Set forth in the table below are the (i) name, (ii) address, (iii)
current principal occupation or employment, and the name, principal business and
address of any corporation or other organization in which the employment or
occupation is conducted, and (iv) material occupations, positions, offices or
employment during the past five years, and the name, principal business and
address of any corporation or other organization in which the occupation,
position, office or employment was carried on, of each of the directors and
executive officers of Investors Subsidiary. Each person identified below is a
United States citizen. Unless otherwise indicated, each person's principal
address is W239 N1700 Busse Road, Waukesha, Wisconsin 53188.
56
DIRECTORS
Current Principal Occupation or Employment and
Name Material Positions Held During the Past Five Years
- ---- --------------------------------------------------
George R. Schonath See the information given for Mr. Schonath above
under "Information about the Directors and Executive
Officers of InvestorsBancorp--Directors."
To the knowledge of Investors Subsidiary, Mr. Schonath has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.
It is anticipated that prior to the merger the current directors of
InvestorsBancorp will be appointed as directors of Investors Subsidiary and
under the terms of the merger agreement will continue as directors of
InvestorsBancorp after the merger. See the information given for these persons
above under "Information about the Directors and Executive Officers of
InvestorsBancorp--Directors."
EXECUTIVE OFFICERS
Current Principal Occupation or Employment and
Name Material Positions Held During the Past Five Years
- ---- --------------------------------------------------
George R. Schonath See the information given for Mr. Schonath above
under "Information about the Directors and Executive
Officers of InvestorsBancorp--Directors."
Susan J. Hauke See the information given for Ms. Hauke above under
"Information about the Directors and Executive
Officers of InvestorsBancorp--Executive Officers."
Greg A. Mieske See the information given for Mr. Mieske above under
"Information about the Directors and Executive
Officers of InvestorsBancorp--Executive Officers."
To the knowledge of Investors Subsidiary, none of the foregoing
executive officers has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a party to any judicial
or administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state
securities laws.
INFORMATION ABOUT THE SCHONATH SHAREHOLDERS
Current Principal Occupation or Employment and
Name Material Positions Held During the Past Five Years
- ---- --------------------------------------------------
George R. Schonath See the information for George R. Schonath given
above under
57
"Information about the Directors and Executive
Officers of InvestorsBancorp--Directors."
Jenn M. Schonath Mrs. Schonath is the wife of George Schonath, and is
a homemaker. Mrs. Schonath's principal address is 200
Monastary Hill, Oconomowoc, Wisconsin 53006.
Sarah E. Schonath Ms. Schonath is an adult daughter of Mr. Schonath.
She is employed as a senior accountant with
NeuroSource, Inc. and her business address is 515
North State Street, Suite 1700, Chicago, Illinois
60610. From May 1998 through February 2002, she was
employed as an accountant by the public accounting
firm Arthur Andersen LLP.
Emily A. Schonath Ms. Schonath is an adult daughter of Mr. Schonath.
She is employed as an analyst for Unitrin - Property
and Casualty Insurance Group, and her business
address is 10000 North Central Expressway, Dallas,
Texas 75231. From August 1997 through May 2001, she
was a full-time student at the University of Iowa.
Thomas Evans Mr. Evans is a citizen of the United States whose
principal address is 132 Coy Street, Mankato,
Minnesota 56001. Mr. Evans is a postal clerk with the
United States Post Office and is the brother of Mrs.
Jenn Schonath.
The Emily A. Schonath The Emily A. Schonath Irrevocable Trust dated
Irrevocable Trust dated December 31, 1996 is a trust organized under the laws
December 31, 1996 of the state of Wisconsin, whose principal address is
c/o Thomas Evans, trustee, 132 Coy Street, Mankato,
Minnesota 56001.
The Sarah E. Schonath The Sarah E. Schonath Irrevocable Trust dated
Irrevocable Trust dated December 31, 1996 is a trust organized under the laws
December 31, 1996 of the state of Wisconsin, whose principal address is
c/o Thomas Evans, trustee, 132 Coy Street, Mankato,
Minnesota 56001.
During the past five years, none of the Schonath shareholders has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATED TRANSACTIONS
The directors and officers of InvestorsBancorp and InvestorsBank, and
their associates, have been customers of and had transactions with
InvestorsBancorp and InvestorsBank. InvestorsBank and The Middleton Doll Company
also purchase loan participations from each other from time to time and,
pursuant to a management services and allocation of expenses agreement,
InvestorsBank performs certain loan servicing and administration services to The
Middleton Doll Company. Additional transactions may be expected to take place in
the future.
58
All outstanding loans, commitments to make loans, transactions in
repurchase agreement and certificates of deposit and depository and loan
participation and servicing relationships, in the opinion of management, were
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features.
InvestorsBank received an aggregate of approximately $1.0 million in loan
servicing and administration fees from The Middleton Doll Company in 2002.
InvestorsBancorp and InvestorsBank leased space for their main offices from The
Middleton Doll Company for ten months during 2002. The rent during that period,
including real estate taxes and furnishings, was approximately $90,000. During
October 2002, InvestorsBank purchased the premises from The Middleton Doll
Company for $2.4 million based on the current fair market value of the premises.
After the purchase of the building, InvestorsBank received $9,666 in rental
income from The Middleton Doll Company.
During 2002, a $2.5 million subordinated note to The Middleton Doll
Company was repaid and a $500,000 subordinated note to the Schonath Family
Partnership was repaid. Both of these notes were on substantially the same terms
and conditions as could be obtained from unrelated third parties.
Other than as disclosed in this transaction statement, there are no
other relationships or transactions outstanding.
AGREEMENTS INVOLVING INVESTORSBANCORP'S SECURITIES
It is contemplated that, following the merger, Mr. Schonath and the
Schonath shareholders will enter into a shareholders' agreement under which Mr.
Schonath will control the voting of all of the outstanding shares of the
Company's stock. Additionally, it is contemplated that the shareholders'
agreement will contain transfer restrictions on the outstanding shares of the
Company's stock. The transfer restrictions will be designed to prevent transfers
of shares of the Company's stock to third parties without the Company's approval
by giving the Company a right of first refusal before any shares may be sold to
anyone who is not a party to the shareholders' agreement. The principal reasons
for these transfer restrictions is to maintain control of the Company's
outstanding stock by the Schonath family and to avoid an inadvertent termination
of the Company's Subchapter S status through a sale of shares of Company stock
to a holder that would not meet the qualifications established by applicable tax
laws to be a shareholder in a Subchapter S corporation.
OTHER MATTERS
REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS
Other than as disclosed in this transaction statement,
InvestorsBancorp, Investors Subsidiary and the Schonath shareholders have not
received any report, opinion or appraisal from an outside party that is
materially related to the merger.
FORWARD LOOKING STATEMENTS
This transaction statement includes and incorporates by reference
statements that are not historical facts. These statements are `forward-looking
statements' based on our current plans and expectations relating to analyses of
value, expectations for anticipated growth in the future and future success
under various efforts, and, as such, these forward-looking statements involve
uncertainty and risk. These forward-looking statements should be read in
conjunction with our Annual Report on Form 10-KSB for the year ended December
31, 2002. Our Form 10-KSB is on file with the Securities and Exchange
Commission, a copy of which is available without charge upon written request to:
59
InvestorsBancorp, W239 N1700 Busse Road, Waukesha, Wisconsin 53188, Attention:
Corporate Secretary. In addition, actual results of InvestorsBancorp's
operations and the transactions contemplated by this transaction statement could
differ materially from the forward-looking statements contained in this
transaction statement because of many factors, such as the inability to
consummate the merger; actions of the U.S., foreign or local governments; costs
related to the merger; fluctuations in currency values; competitive pricing;
changes in demand for our products; costs; political and social conditions in
the economies and environments where InvestorsBancorp operates; the economic
environment of the document management industry; and the general economic
environment.
Other factors and assumptions not identified above could also cause the
actual results to differ materially from those set forth in the forward-looking
statements. We do not undertake any obligation to update the forward-looking
statements contained or incorporated in this transaction statement to reflect
actual results, changes in assumptions, or changes in other factors affecting
these forward-looking statements.
WHERE YOU CAN FIND MORE INFORMATION
InvestorsBancorp is subject to the informational requirements of the
Securities and Exchange Act of 1934, as amended. We file reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy these reports, proxy statements and other information at
the Securities and Exchange Commission's Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the Securities and Exchange
Commission at 1-800-SEC-0330. The Securities and Exchange Commission also
maintains an Internet web site, located at www.sec.gov, that contains reports,
proxy statements and other information regarding companies and individuals that
file electronically with the Securities and Exchange Commission.
Copies of any of these documents without their exhibits are also
available without charge to any person to whom we deliver this document. You
must make a written or oral request to InvestorsBancorp, Inc., W239 N1700 Busse
Road, Waukesha, Wisconsin 53188, Attention: Corporate Secretary (telephone:
(262) 523-1000). In order to ensure timely delivery of the documents, any
request should be made by September 5, 2003.
INFORMATION INCORPORATED BY REFERENCE
The rules and regulations of the SEC allow InvestorsBancorp to
incorporate into this document by reference certain reports and other
information, which means that important information may be disclosed to you by
referring you to another report or other information filed separately by
InvestorsBancorp with the SEC. The reports and other information incorporated
into this document by reference are deemed to be part of this document, except
for any information superseded by information contained in, or incorporated by
reference into, this document. This document hereby incorporates by reference
the reports listed below, which have been previously filed by InvestorsBancorp
with the SEC, provided that any reference to any claim of reliance on the
Private Securities Litigation Reform Act's forward looking statement safe harbor
contained in such documents is excluded, and is not incorporated herein by
reference. The following reports contains information about InvestorsBancorp and
its financial condition, results of operations and business that are important
to you, and we encourage you to read them carefully in connection with your
review of this document.
(1) Annual Report on Form 10-KSB, filed by InvestorsBancorp with
the SEC on March 28, 2003;
60
(2) Quarterly Report on Form 10-QSB, filed by InvestorsBancorp
with the SEC on May 13, 2003, as amended on May 16, 2003;
(3) Quarterly Report on Form 10-QSB, filed by InvestorsBancorp
with the SEC on August 13, 2003;
(4) Current Report on Form 8-K, filed by InvestorsBancorp with the
SEC on March 26, 2003; and
(5) Current Report on Form 8-K, filed by InvestorsBancorp with the
SEC on May 2, 2003.
InvestorsBancorp is also incorporating by reference all additional
reports and other information filed by InvestorsBancorp with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act between the
date of this document and the date of consummation of the merger.
InvestorsBancorp has supplied all information contained in or
incorporated by reference in this document relating to InvestorsBancorp,
provided that any reference to any claim of reliance on the Private Securities
Litigation Reform Act's forward looking statement safe harbor contained in any
such document is excluded, and is not incorporated herein by reference.
YOU MAY HAVE BEEN SENT SOME OF THE REPORTS AND OTHER INFORMATION
INCORPORATED BY REFERENCE IN THIS DOCUMENT BY INVESTORSBANCORP, BUT YOU CAN ALSO
OBTAIN ANY OF THEM THROUGH THE SEC AT THE LOCATIONS DESCRIBED ABOVE, OR THROUGH
INVESTORSBANCORP AT THE ADDRESS BELOW. INVESTORSBANCORP WILL PROVIDE TO YOU,
WITHOUT CHARGE, BY FIRST CLASS MAIL OR OTHER EQUALLY PROMPT MEANS WITHIN ONE
BUSINESS DAY OF ANY WRITTEN OR ORAL REQUEST BY YOU, A COPY OF ANY REPORT OR
OTHER INFORMATION INCORPORATED BY REFERENCE IN THIS DOCUMENT BY
INVESTORSBANCORP. YOU SHOULD DIRECT YOUR REQUEST TO THE FOLLOWING ADDRESS:
INVESTORSBANCORP, INC., W239 N1700 BUSSE ROAD, WAUKESHA, WISCONSIN 53188,
ATTENTION: CORPORATE SECRETARY.
61
TRANSACTION STATEMENT
ITEM 1. SUMMARY TERM SHEET.
Regulation M-A Item 1001
The information set forth in the section above captioned "Summary Term
Sheet" is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
Regulation M-A Item 1002
(a) The information set forth in the section above
captioned "Introduction--The
Parties--InvestorsBancorp" is incorporated herein by
reference.
(b) The exact title of the class of equity securities
subject to this Transaction Statement is Common
Stock, par value $0.01 per share. As of August 1,
there were 990,529 shares of common stock
outstanding.
(c) The information set forth in the section above
captioned "Market Price of InvestorsBancorp Common
Stock and Dividend Information--Comparative Market
Price Data" is incorporated herein by reference.
(d) The information set forth in the section above
captioned "Market Price of InvestorsBancorp Common
Stock and Dividend Information--Dividends" is
incorporated herein by reference.
(e) None of the filing parties has made an underwritten
public offering of InvestorsBancorp common stock for
cash during the past three years that was registered
under the Securities Act of 1933 or exempt from
registration thereunder pursuant to Regulation A.
(f) The information set forth in the section above
captioned "Common Stock Purchase Information--Prior
Stock Purchases" is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
Regulation M-A Item 1003 (a) through (c)
(a)-(c) The information set forth in the sections above
captioned "Introduction--The Parties" and
"Information about the Directors, Officers and
Schonath Shareholders" is incorporated herein by
reference.
ITEM 4. TERMS OF THE TRANSACTION.
Regulation M-A Item 1004 (a) and (c) through (f)
(a)(1) Not applicable.
(a)(2)(i) The information set forth in the sections above
captioned "Summary Term Sheet," "Introduction--The
Merger" and "Material Terms of the Merger--The Merger
Agreement" is incorporated herein by reference.
62
(a)(2)(ii) The information set forth in the sections above
captioned "Summary Term Sheet" and "Material Terms of
the Merger--The Merger Agreement" is incorporated
herein by reference.
(a)(2)(iii) The information set forth in the sections above
captioned "Special Factors--Background of the
Merger," "Special Factors--Reasons for the Merger;
Fairness of the Merger' and "Special
Factors--Purchase and Structure of the Merger" is
incorporated herein by reference.
(a)(2)(iv) The information set forth in the section above
captioned "Special Factors--Voting Requirements" is
incorporated herein by reference.
(a)(2)(v) The information set forth in the sections above
captioned "Special Factors--Material Effects of the
Merger; Plans or Proposals after the Merger; "Special
Factors--Effects of the Merger on Shareholders of
InvestorsBancorp" and "Special Factors--Interests of
Certain Persons in the Merger" is incorporated herein
by reference.
(a)(2)(vi) The information set forth in the section above
captioned "Special Factors--Accounting Treatment" is
incorporated herein by reference.
(a)(2)(vii) The information set forth in the section above
captioned "Special Factors--Material Federal Income
Tax Consequences of the Merger" is incorporated
herein by reference.
(c) The information set forth in the sections above
captioned "Special Factors--Material Effects of the
Merger; Plans or Proposals After the Merger" and
"Special Factors--Effects of the Merger on
Shareholders of InvestorsBancorp" is incorporated
herein by reference.
(d) The information set forth in the section above
captioned "Special Factors--Appraisal Rights" is
incorporated herein by reference.
(e) None.
(f) Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
Regulation M-A Item 1005 (a) through (c) and (e)
(a) The information set forth in the section above
captioned "Certain Relationships and Related
Transactions" is incorporated herein by reference.
(b) The information set forth in the section above
captioned "Special Factors--Background of the Merger"
is incorporated herein by reference.
(c) The information set forth in the section above
captioned "Special Factors--Background of the Merger"
is incorporated herein by reference.
(e) The information set forth in the section above
captioned "Certain Relationships and Related
Transactions" is incorporated herein by reference.
63
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Regulation M-A Item 1006 (b) and (c)(1) through (8)
(b) The information set forth in the section above
captioned "Special Factors--Background of the
Merger," "Special Factors--Reasons for the Merger;
Fairness of the Merger' and "Special Factors--Purpose
and Structure of the Merger" is incorporated herein
by reference.
(c)(1)-(8) The information set forth in the sections above
captioned "Special Factors--Background of the Merger"
and "Special Factors--Material Effects of the Merger;
Plans or Proposals after the Merger" incorporated
herein by reference.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
Regulation M-A Item 1013
(a)-(c) The information set forth in the sections above
captioned "Special Factors--Background of the
Merger," "Special Factors--Reasons for the Merger;
Fairness of the Merger" and "Special Factors--Purpose
and Structure of the Merger" is incorporated herein
by reference.
(d) The information set forth in the Proxy Statement
under "Special Factors--Material Effects of the
Merger; Plans or Proposals after the Merger,"
"Special Factors--Effects of the Merger on
Shareholders of InvestorsBancorp" and "Special
Factors--Material Federal Income Tax Consequences of
the Merger".
ITEM 8. FAIRNESS OF THE TRANSACTION.
Regulation M-A Item 1014
(a)-(b) The information set forth in the sections above
captioned "Special Factors--Background of the Merger"
and "Special Factors--Reasons for the Merger;
Fairness of the Merger" is incorporated herein by
reference.
(c) The information set forth in the sections above
captioned "Special Factors--Voting Requirements" is
incorporated herein by reference.
(d)-(e) The information set forth in the sections above
captioned "Special Factors--Background of the Merger"
and "Special Factors--Reasons for the Merger;
Fairness of the Merger" is incorporated herein by
reference.
(f) None.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
Regulation M-A Item 1015
(a)-(b) The information set forth in the sections above
captioned "Special Factors--Background of the
Merger," and "Special Factors--Reasons for the
Merger; Fairness of the Merger" is incorporated
herein by reference.
(c) The information set forth in the sections above
captioned "Other Matters--Where You Can Find More
Information" is incorporated herein by reference. The
valuation of Wipfli Ullrich Bertelson LLP in addition
to being attached as Appendix B-1 and
64
Appendix B-2 of the transaction statement will be
made available for inspection and copying at the
principal executive offices of InvestorsBancorp
during its regular business hours by any interested
equity security holder of InvestorsBancorp or
representative who has been so designated in writing.
ITEM 10. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Regulation M-A Item 1007
(a)-(d) The information set forth in the sections above
captioned "Special Factors--Background of the
Merger," Special Factors--Financing of the Merger"
and "Material Terms of the Merger--Fees and Expenses"
is incorporated herein by reference.
ITEM 11. INTERESTS IN SECURITIES OF THE SUBJECT COMPANY.
Regulation M-A Item 1008
(a) The information set forth in the section above
captioned "Security Ownership" is incorporated herein
by reference.
(b) The information set forth in the section above
captioned "Common Stock Purchase Information--Recent
Transactions" is incorporated herein by reference.
ITEM 12. THE SOLICITATION OR RECOMMENDATION.
Regulation M-A Item 1012(d) and (e)
(d) Not applicable.
(e) Not applicable.
ITEM 13. FINANCIAL STATEMENTS.
Regulation M-A Item 1010(a) through (b)
(a) The required information is incorporated herein by
reference to (a) the Consolidated Financial
Statements, and the notes thereto, of
InvestorsBancorp as of and for its fiscal year ended
December 31, 2002, set forth under Item 7 of
InvestorsBancorp's Form 10-KSB for the year ended
December 31, 2002 (filed March 28, 2003) (File No.
000-29400), and (b) the information set forth in the
section above captioned "Financial Statements--Select
Historical Financial Data."
(b) Not applicable.
ITEM 14. PERSON/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
Regulation M-A Item 1009
(a) Not applicable.
(b) The information in the sections above captioned
"Special Factors--Background of the Merger" and
"Special Factors--Financing of the Merger" is
incorporated herein by reference.
65
ITEM 15. ADDITIONAL INFORMATION.
Regulation M-A Item 1011(b)
(b) The information set forth in the transaction
statement is incorporated herein by reference.
ITEM 16. EXHIBITS.
Regulation M-A Item 1016(a) through (d), (f) and (g)
(a) None.
(b) None.
(c)(1) Valuation of Wipfli Ullrich Bertelson LLP dated March
20, 2003 (included as Appendix B-1 to this
transaction statement).
(c)(2) Corrected valuation of Wipfli Ullrich Bertelson LLP
dated April 16, 2003 (included as Appendix B-2 to
this transaction statement).
(c)(3) Opinion of Barack Ferrazzano Kirschbaum Perlman &
Nagelberg LLC
(d) Agreement and Plan of Merger by and between
InvestorsBancorp and Investors Subsidiary, as
amended by Amendment No. 1 to Agreement and Plan of
Merger by and between InvestorsBancorp and Investors
Subsidiary (included as Appendix A to this
transaction statement).
(f) Not applicable.
(g) Not applicable.
66
SIGNATURES
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated August 14, 2003
InvestorsBancorp Inc.
By: /s/ George R. Schonath
----------------------------------
Name: George R. Schonath
Title: Chief Executive Officer
Investors Subsidiary, Inc.
By: /s/ George R. Schonath
----------------------------------
Name: George R. Schonath
Title: President
/s/ George R. Schonath
----------------------------------
George Schonath
/s/ Jenn Schonath
-------------------------------------
Jenn Schonath
/s/ Sarah E. Schonath
-------------------------------------
Sarah E. Schonath
/s/ Emily A. Schonath
-------------------------------------
Emily A. Schonath
/s/ Thomas Evans
-------------------------------------
Thomas Evans
/s/ Thomas Evans
-------------------------------------
Thomas Evans, as trustee of the Sarah
E. Schonath
Irrevocable Trust dated December
31, 1996
/s/ Thomas Evans
-------------------------------------
Thomas Evans, as trustee of the Emily
A. Schonath
Irrevocable Trust dated December
31, 1996
2
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
(c)(1) Valuation of Wipfli Ullrich Bertelson LLP dated March 20, 2003 (included as
Appendix B-1 to this transaction statement).*
(c)(2) Corrected valuation of Wipfli Ullrich Bertelson LLP dated April 16, 2003
(included as Appendix B-2 to this transaction statement).*
(c)(3) Opinion of Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLC
(d) Agreement and Plan of Merger by and between InvestorsBancorp and Investors
Subsidiary, as amended by Amendment No. 1 to Agreement and Plan of Merger by
and between InvestorsBancorp and Investors Subsidiary (included as Appendix A
to this transaction statement).
* Previously filed
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered
into as of March 25, 2003, by and between InvestorsBancorp, Inc., a Wisconsin
corporation ("INVB"), and Investors Subsidiary, Inc., a Wisconsin corporation
("NEWCO").
RECITALS
A. INVB is a corporation duly organized and existing under the laws of the
State of Wisconsin, having authorized capital stock consisting of 9,000,000
shares of common stock, par value $0.01 per share (the "INVB COMMON STOCK"), of
which 994,187 shares are currently issued and outstanding, and 1,000,000 shares
of preferred stock, par value $0.01 per share (the "INVB PREFERRED STOCK"), of
which no shares are currently issued and outstanding.
B. Newco is a newly-formed, wholly-owned subsidiary of INVB, duly organized
and existing under the laws of the State of Wisconsin, having authorized capital
stock consisting of 100 shares of common stock, par value $0.01 per share (the
"NEWCO STOCK"), of which one share is currently issued and outstanding.
C. The boards of directors of INVB and Newco deem it advisable and to the
benefit of INVB and Newco and their respective shareholders that INVB and Newco
participate in a merger (the "MERGER") in accordance with the provisions of
Section 180.1104 of the Wisconsin Business Corporation Law (the "WBCL"),
pursuant to which Newco shall merge with and into INVB and the separate
corporate existence of Newco shall cease.
In consideration of the foregoing premises and the mutual promises,
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. In addition to those terms defined throughout this
Agreement, the following terms, when used herein, shall have the following
meanings.
(a) "AFFILIATE" means with respect to a particular Person, any other
Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control with such
specified Person.
(b) "BUSINESS DAY" means any day except Saturday, Sunday and any day
on which InvestorsBank is authorized or required by law or other government
action to close.
(c) "CODE" means the United States Internal Revenue Code of 1986.
(d) "CONTRACT" means any agreement, contract, obligation, promise or
understanding (whether written or oral and whether express or implied) that is
legally binding.
A-1
(e) "CONSENT" means any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Legal Requirement, Order or permit.
(f) "DEFAULT" means (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Legal Requirement, Order or
permit, (ii) any occurrence of any event that with the passage of time or the
giving of notice or both would constitute a breach or violation of, default
under, contravention of, or conflict with, any Contract, Legal Requirement,
Order or permit, or (iii) any occurrence of any event that, with or without the
passage of time or the giving of notice or both, would give rise to a right of
any Person to exercise any remedy or obtain any relief under, terminate or
revoke, suspend, cancel, or modify or change the current terms of, or
renegotiate, or to accelerate the maturity or performance of, or to increase or
impose any liability under, any Contract, Legal Requirement, Order or permit,
where, in any such event, such Default is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on INVB or Newco, as
applicable.
(g) "EXCHANGE ACT" means the Securities Exchange Act of 1934.
(h) "GAAP" means U.S. generally accepted accounting principles,
consistently applied during the periods involved.
(i) "INDIVIDUAL AFFILIATE" means, with respect to an individual, (i)
such individual's spouse and their respective siblings, (ii) such individual's
children, and grandchildren, and any of their respective spouses, (iii) any
trust primarily for the benefit of any of the foregoing, and (iv) any profit
sharing or similar plan or trust or retirement account in which such individual
participates.
(j) "KNOWLEDGE" with respect to:
(i) an individual means that such person will be deemed to have
"Knowledge" of a particular fact or other matter if such individual is
actually aware of such fact or other matter; and
(ii) a Person (other than an individual) means that such Person will
be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving as a director or officer or manager of such
Person (or in any similar capacity) has Knowledge of such fact or other
matter.
(k) "LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty, including the United States banking laws, rules and regulations and the
banking laws, rules and regulations of the State of Wisconsin.
(l) "MATERIAL ADVERSE EFFECT," with respect to any Person, means any
event, change or occurrence that, individually or together with any other event,
change of occurrence, has a material adverse impact on (i) the financial
position, business, or results of operations of such Person and its
subsidiaries, taken as a whole, or (ii) the ability of such Person to perform
its obligations under this Agreement or to consummate the Merger, in each case
other than any change, effect, event or occurrence to the extent arising from or
relating to (A) the United States or the banking industry in general, (B)
changes in GAAP or regulatory accounting principals generally applicable to
banks and their holding companies, (C) actions taken pursuant to the obligations
of the parties expressly set forth in this Agreement or (D) general economic
conditions.
(m) "ORDER" means any award, decision, directive, injunction,
judgment, memorandum, order, regulatory agreement, ruling, subpoena or verdict
entered, issued, made or rendered
A-2
by any court, administrative or other governmental agency, including any
Regulatory Authority, or by any arbitrator.
(n) "PERSON" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or any Regulatory Authority.
(o) "PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any judicial or governmental authority, including a
Regulatory Authority, or arbitrator, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by Regulatory
Authorities.
(p) "REGULATORY AUTHORITIES" means any federal, state or local
governmental body, agency or authority that under applicable statutes and
regulations: (i) has supervisory, judicial, administrative, police, taxing or
other power or authority over Newco or INVB; (ii) is required to approve, or
give its Consent to the Merger; or (iii) with which a filing must be made in
connection therewith, including in any case, the SEC, the Board of Governors of
the Federal Reserve System and the Federal Deposit Insurance Corporation.
(q) "SCHONATH SHARES" means the shares of INVB Common Stock held by
George Schonath and his Individual Affiliates.
(r) "SEC" means the United States Securities and Exchange Commission.
(s) "THREATENED" means a claim, Proceeding, dispute, action or other
matter for which any demand or statement has been made (orally or in writing) or
any notice has been given (orally or in writing).
SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
(a) In this Agreement, unless otherwise stated or the context
otherwise requires, the following uses apply: (i) actions permitted under this
Agreement may be taken at any time and from time to time in the actor's sole
discretion; (ii) references to a statute shall refer to the statute and any
successor statute, as amended from time to time, and to all regulations
promulgated under or implementing the statute or successor, as in effect at the
relevant time; (iii) in computing periods from a specified date to a later
specified date, the words "from" and "commencing on" (and the like) mean "from
and including," and the words "to," "until" and "ending on" (and the like) mean
"to, but excluding"; (iv) references to a governmental or quasi-governmental
agency, authority or instrumentality shall also refer to a regulatory body that
succeeds to the functions of the agency, authority or instrumentality; (v)
indications of time of day mean Waukesha, Wisconsin time; (vi) "including" means
"including, but not limited to"; (vii) all references to sections, schedules and
exhibits are to sections, schedules and exhibits in or to this Agreement unless
otherwise specified; (viii) all words used in this Agreement will be construed
to be of such gender or number as the circumstances require; and (ix) the
captions and headings of articles, sections, schedules and exhibits appearing in
or attached to this Agreement have been inserted solely for convenience of
reference and shall not be considered a part of this Agreement nor shall any of
them affect the meaning or interpretation of this Agreement or any of its
provisions.
(b) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
A-3
ARTICLE II
BASIC TERMS OF TRANSACTION
SECTION 2.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined below), Newco shall be merged with
and into INVB pursuant to the provisions of Section 180.1104 of the WBCL, with
INVB continuing as the surviving corporation (INVB, as the surviving corporation
resulting from the Merger, the "SURVIVING CORPORATION").
SECTION 2.2 TIME OF CLOSING. The closing of the transactions contemplated
hereby (the "CLOSING") will take place at 10:00 a.m., Central time, on the date
that the Effective Time occurs, or at such other time as the parties may
mutually agree. The Closing shall be held at such location as may be mutually
agreed by the parties.
SECTION 2.3 EFFECTIVE TIME. The Merger and the other transactions
contemplated by this Agreement shall become effective on the date and at the
time (the "EFFECTIVE TIME") the Articles of Merger ("ARTICLES OF MERGER")
reflecting the Merger shall become effective with the Secretary of State of the
State of Wisconsin.
SECTION 2.4 WBCL. At and after the Effective Time, the Merger shall have
the effects as set forth in the applicable provisions of the WBCL, this
Agreement and the Articles of Merger. From and after the Effective Time, the
Surviving Corporation shall possess all of the rights, powers, privileges and
franchises and be subject to all of the obligations, liabilities, restrictions
and disabilities of INVB and Newco, all as provided under the WBCL, this
Agreement and the Articles of Merger.
SECTION 2.5 ARTICLES OF INCORPORATION. At the Effective Time, the Articles
of Incorporation of INVB, as in effect immediately prior to the Effective Time,
shall be amended and restated in the form attached as Exhibit A, by operation of
this Agreement and by virtue of the Merger, without any further action by the
shareholders or directors of INVB and, as so amended, such Articles of
Incorporation shall be the Articles of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
WBCL.
SECTION 2.6 BYLAWS. At the Effective Time, the bylaws of INVB, as in effect
immediately prior to the Effective Time, shall be amended and restated in the
form attached as Exhibit B, by operation of this Agreement and by virtue of the
Merger, without any further action by the shareholders or directors of INVB and,
as so amended, such bylaws shall be the bylaws of the Surviving Corporation,
until duly amended in accordance with the terms thereof, the Articles of
Incorporation of the Surviving Corporation and the WBCL.
SECTION 2.7 DIRECTORS AND OFFICERS. The directors of Newco holding office
immediately prior to the Effective Time and the officers of INVB holding office
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified, or until
their earlier death, resignation or removal, in accordance with the Surviving
Corporation's Articles of Incorporation and bylaws.
SECTION 2.8 OFFICES. The offices and facilities of INVB immediately prior
to the Merger shall be the offices and facilities of the Surviving Corporation
immediately following the Merger.
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ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF INVB AND NEWCO
SECTION 3.1 INVB STOCK. Subject to the provisions of this Agreement, by
virtue of the Merger and without any action on the part of the holder thereof,
at the Effective Time, (a) each share of INVB Common Stock owned of record by
each shareholder of INVB, other than any Schonath Shares, shall cease to be
outstanding and shall be converted into the right to receive from INVB a cash
payment in the amount of $14.20 (less any required payment of taxes, the "CASH
PAYMENT"); and (b) each of the Schonath Shares will represent one share of
common stock of the Surviving Corporation.
SECTION 3.2 NEWCO STOCK. Subject to the provisions of this Agreement, by
virtue of the Merger and without any action on the part of the holder thereof,
at the Effective Time, each share of Newco Stock will be canceled, and the
holder thereof will be entitled to receive $1.00 in cash per share of Newco
Stock.
SECTION 3.3 OPTIONS.
(a) INVB shall take all actions necessary to provide that, immediately
prior to the Effective Time, (i) each then outstanding option (each, an "OPTION"
and collectively, the "OPTIONS") to purchase or acquire shares of INVB Common
Stock under the InvestorsBancorp Inc. 1997 Equity Incentive Plan (the "EQUITY
PLAN"), whether or not then exercisable or vested, shall become fully
exercisable and vested, (ii) each Option which is then outstanding shall be
canceled as of the Effective Time and (iii) in consideration of such
cancellation, each Option shall, as of the Effective Time, represent for all
purposes only the right to receive in cash, with respect to each Option, an
amount (net of any applicable withholding tax) equal to the differences between
the Cash Payment and the per share exercise price of such Option to the extent
such difference is a positive number, multiplied by the number of shares of INVB
Common Stock subject to such Option (such amount in cash as described above
being hereinafter referred to as the "OPTION PAYMENT"), payable as provided in
SECTION 3.3(b).
(b) Upon the Effective Time, INVB shall pay to each holder of an
Option the Option Payment (net of any applicable withholding tax and without any
interest thereon) in respect thereof; provided, however, that with respect to
any Person subject to Section 16(a) of the Exchange Act, such Option Payment
shall not be payable until the first date payment can be made without liability
to such Person under Section 16(b) of the Exchange Act, but shall be paid as
soon as practicable thereafter. No interest shall be paid or accrued on the
Option Payment. Until settled in accordance with the provisions of this SECTION
3.3(b), each Option shall be deemed at any time after the Effective Time to
represent for all purposes only the right to receive the Option Payment.
(c) Prior to the Effective Time, INVB shall take all action necessary
(including causing the Board of Directors of INVB or any subsidiary (or any
respective committees thereof) to take such actions) as are allowed by the
Equity Plan to ensure that (i) following the Effective Time, no holder of an
Option nor any party to or participant in the Equity Plan shall have any right
thereunder to acquire equity securities of INVB or any subsidiary and (ii) the
Equity Plan shall terminate as of the Effective Time.
SECTION 3.4 WARRANTS. At the Effective Time, the warrant (the "WARRANT")
issued to the Schonath Family Partnership, a limited partnership, and
exercisable for the purchase of 105,000 shares of INVB Common Stock, shall
remain outstanding and become an obligation of the Surviving Corporation.
SECTION 3.5 STOCK TRANSFER BOOKS. At the Effective Time, the stock transfer
books of INVB shall be closed and there shall be no further registration of
transfers of shares of INVB Common Stock thereafter on the records of INVB.
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ARTICLE IV
EXCHANGE OF SHARES
SECTION 4.1 PAYING AGENT. Prior to the Effective Time, INVB shall appoint a
United States bank or trust company to act as paying agent (the "PAYING AGENT")
for the payment of funds in amounts and at times necessary for the payment of
the Cash Payment to the shareholders of INVB, and immediately following the
Effective Time, the Surviving Corporation shall deposit, or shall cause to be
deposited, with the Paying Agent the funds, in amounts and at times necessary
for the payment of the Cash Payment to the shareholders of INVB, in a separate
fund (the "PAYMENT FUND") established for the benefit of the shareholders of
INVB, for payment in accordance with this ARTICLE IV, through the Paying Agent.
If for any reason the Payment Fund is inadequate to pay the amounts to which
holders of shares of INVB Common Stock shall be entitled under this Agreement,
the Surviving Corporation shall take all steps necessary to deposit, or cause to
be deposited, in trust additional cash with the Paying Agent sufficient to make
all payments required under this Agreement, and the Surviving Corporation shall
in any event be liable for payment thereof. The Payment Fund shall not be used
for any purpose except as expressly provided in this Agreement.
SECTION 4.2 EXCHANGE PROCEDURES.
(a) Promptly after the Effective Time, the Surviving Corporation shall
cause the Paying Agent to mail to each holder of record of a certificate or
certificates that represented shares of INVB Common Stock immediately prior to
the Effective Time (the "CERTIFICATES") appropriate transmittal materials and
instructions (which shall specify that delivery shall be effected, and risk of
loss and title to such Certificates shall pass, only upon proper delivery of
such Certificates to the Paying Agent). Upon surrender of a Certificate for
cancellation to the Paying Agent together with such letter of transmittal, duly
executed, or an "agents message" in the case of a book entry transfer, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in respect thereof cash
in an amount equal to the product of (a) the number of shares of INVB Common
Stock formerly represented by such Certificate, multiplied by (b) the Cash
Payment, less any required withholding taxes, and the Certificate so surrendered
shall forthwith be cancelled. No interest shall be paid or accrued on the Cash
Payment payable upon the surrender of any Certificate. If any holder of a
Certificate shall be unable to surrender such holder's Certificate because such
Certificate has been lost, mutilated or destroyed, such holder may deliver in
lieu thereof an affidavit and indemnity bond in form and substance and with
surety reasonably satisfactory to the Surviving Corporation and the Paying
Agent. If payment is to be made to a Person other than the Person in whose name
the surrendered Certificate is registered, it shall be a condition of payment
that the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the Person requesting such payment shall pay
any transfer or other taxes required by reason of the payment to a Person other
than the registered holder of the surrendered Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable.
SECTION 4.3 DEDUCTIONS/WITHHOLDING. Each of the Surviving Corporation and
the Paying Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of INVB
Common Stock such amounts, if any, as it is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of state,
local or foreign tax law. To the extent that any amounts are so withheld by the
Surviving Corporation or the Paying Agent, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of INVB Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or the Paying
Agent, as the case may be.
SECTION 4.4 TERMINATION OF PAYMENT FUND; INTEREST. Any portion of the
Payment Fund that remains undistributed to the holders of shares of INVB Common
Stock for 180 days after the Effective
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Time shall be delivered to the Surviving Corporation, upon demand, and any
holder of INVB Common Stock who has not theretofore complied with this ARTICLE
IV and the instructions set forth in the letter of transmittal mailed to such
holder after the Effective Time shall thereafter look only to the Surviving
Corporation for payment of the Cash Payment to which such holder is entitled.
All interest accrued in respect of the Payment Fund shall inure to the benefit
of and be paid to the Surviving Corporation.
SECTION 4.5 LIMITATION OF LIABILITY. Any other provision of this Agreement
notwithstanding, neither the Surviving Corporation nor the Paying Agent shall be
liable to a holder of INVB Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF INVB
SECTION 5.1 CORPORATE ORGANIZATION, AUTHORIZATION, ETC. INVB is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Wisconsin and has full corporate power and authority to conduct
its business as it is now being conducted and to own, lease and operate its
material assets. INVB is duly registered with the Board of Governors of the
Federal Reserve System as a bank holding company under the Bank Holding Company
Act of 1956. INVB is duly qualified or licensed to do business as a foreign
corporation and is in good standing in the states of the United States and
foreign jurisdictions where the character of its assets or the nature or conduct
of its business makes such qualification or licensing necessary, except for
jurisdictions in which the failure to be so qualified, licensed and in good
standing would not have a Material Adverse Effect on INVB. INVB has full
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by INVB and is a valid and binding agreement of INVB in accordance
with its terms, subject to laws relating to creditors' rights generally.
SECTION 5.2 AUTHORIZED AND OUTSTANDING STOCK. The authorized capital stock
of INVB consists of 9,000,000 shares of INVB Common Stock, and 1,000,000 shares
of INVB Preferred Stock. As of the date hereof, (i) 994,187 shares of INVB
Common Stock are outstanding, and all of such shares are fully paid, validly
issued and nonassessable, and (ii) no shares of INVB Preferred Stock are
outstanding. As of the date hereof, 100,000 shares of INVB Common Stock are
reserved for issuance pursuant to the Equity Plan, of which 20,690 were subject
to outstanding Options, and 105,000 shares of INVB Common Stock are reserved for
issuance in connection with the Warrant. Except as otherwise provided herein,
INVB does not have outstanding, and is not bound by, any subscriptions, options,
warrants, calls, commitments or agreements to issue any additional shares of its
capital stock, including any right of conversion or exchange under any
outstanding security or other instrument, and INVB is not obligated to issue any
shares of its capital stock for any purpose. There are no unsatisfied preemptive
rights with respect to INVB Stock.
SECTION 5.3 CONSENTS OF REGULATORY AUTHORITIES. Other than (i) filings with
the SEC required for "going private" transactions; (ii) filings and Consents
required by the Board of Governors of the Federal Reserve System; (iii) the
filing of this Agreement or Articles of Merger with corporate and Regulatory
Authorities, as appropriate; and (iv) other Consents, filings or notifications
that, if not obtained or made, are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on INVB, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by INVB of the Merger and the other transactions contemplated by
this Agreement.
SECTION 5.4 NO BREACH. Neither the execution and delivery of this Agreement
by INVB, nor the consummation by INVB of the transactions contemplated hereby,
nor compliance by INVB with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of INVB's Articles of Incorporation or
bylaws or any resolution adopted by the board of directors or the shareholders
of INVB, or
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(ii) constitute or result in a Default under or result in the creation of any
lien on any asset of INVB under, any Contract or permit of INVB, where such
Default or lien is reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on INVB.
SECTION 5.5 COMPLIANCE WITH LAWS. INVB has in effect all permits necessary
for it to own, lease or operate its material assets and to carry on its business
as now conducted, except for those permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on INVB, and there has occurred no Default under any such permit, other
than Defaults which could not reasonably be anticipated to have, individually or
in the aggregate, a Material Adverse Effect on INVB. INVB:
(a) is not in Default under any of the provisions of its Articles of
Incorporation or bylaws;
(b) is not in Default under any Legal Requirement, Order or permit
applicable to its business, except for Defaults that could not reasonably be
anticipated to have, individually or in the aggregate, a Material Adverse Effect
on INVB; and
(c) since January 1, 2001, has not received any notification or
communication from any agency or department of federal, state or local
government or any Regulatory Authority or the staff thereof (i) asserting that
INVB is not, or may not be, in compliance with any Legal Requirement, where such
noncompliance is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on INVB, (ii) threatening to revoke any permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on INVB, or (iii) requiring INVB to enter
into or consent to the issuance of a cease and desist order, injunction, formal
agreement, directive, commitment, or memorandum of understanding, or to adopt
any board resolution or similar undertaking, which restricts materially the
conduct of its business, or in any manner relates to its employment decisions,
its employment safety practices, its capital adequacy, its credit or reserve
policies, its management, or the payment of dividends.
SECTION 5.6 PROCEEDINGS. There is no Proceeding instituted or pending, or,
to the Knowledge of INVB, Threatened (or unasserted but considered probable of
assertion and that if asserted would have at least a reasonable possibility of
an unfavorable outcome) against INVB, or against any director or officer in
their capacities as such, or against any asset, interest, or right of any of
them that is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on INVB, nor are there any Orders outstanding against
INVB that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on INVB.
SECTION 5.7 TAKEOVER LAWS. INVB has taken all necessary action to exempt
the transactions contemplated by this Agreement from, or if necessary to
challenge the validity or applicability of, any applicable "fair price,"
"business combination," "control share," or other anti-takeover laws
(collectively, "TAKEOVER LAWS").
SECTION 5.8 BOARD ACTION. The Board of Directors of INVB, at a meeting duly
called and held, has determined that this Agreement and the transactions
contemplated hereby, including the Merger, are fair to and in the best interests
of the shareholders of INVB, and approved this Agreement and the transactions
contemplated hereby, including the Merger.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF NEWCO
Newco hereby represents and warrants to INVB that:
SECTION 6.1 CORPORATE ORGANIZATION, AUTHORIZATION, ETC. Newco is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Wisconsin and has full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
Newco is duly qualified or licensed to do business as a foreign corporation and
is in good standing in the states of the United States and foreign jurisdictions
where the character of its assets or the nature or conduct of its business makes
such qualification or licensing necessary, except for jurisdictions in which the
failure to be so qualified, licensed and in good standing would have a Material
Adverse Effect on Newco. This Agreement has been duly executed and delivered by
Newco and is a valid and binding agreement of Newco in accordance with its
terms, subject to laws relating to creditors' rights generally.
SECTION 6.2 AUTHORIZED AND OUTSTANDING STOCK. The authorized capital
stock of Newco consists of 100 shares of common stock, par value $0.01 per
share. As of the date hereof, one share of Newco Stock outstanding, and such
share is fully paid, validly issued and nonassessable. Newco does not have
outstanding, and is not bound by, any subscriptions, options, warrants, calls,
commitments or agreements to issue any additional shares of its capital stock,
including any right of conversion or exchange under any outstanding security or
other instrument, and Newco is not obligated to issue any shares of its capital
stock for any purpose. There are no unsatisfied preemptive rights in respect of
Newco Stock.
SECTION 6.3 CONSENTS OF REGULATORY AUTHORITIES. Other than (i) filings
with the SEC required for "going private" transactions; (ii) the filing of this
Agreement or Articles of Merger with corporate and Regulatory Authorities, as
appropriate; and (iii) other Consents, filings or notifications that, if not
obtained or made are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Newco, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
Newco of the Merger and the transactions contemplated by this Agreement.
SECTION 6.4 NO BREACH. Neither the execution and delivery of this
Agreement by Newco, nor the consummation by Newco of the transactions
contemplated hereby, nor compliance by Newco with any of the provisions hereof,
will (i) conflict with or result in a breach of any provisions of Newco'
Articles of Incorporation or bylaws, or (ii) constitute or result in a Default
under or result in the creation of any lien on any asset of Newco under, any
Contract or permit of Newco, where such Default or lien is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Newco.
SECTION 6.5 COMPLIANCE WITH LAWS. Newco:
(a) is not in Default under any of the provisions of its
Articles of Incorporation or bylaws;
(b) is not in Default under any Legal Requirement, except
for Defaults that could not reasonably be anticipated to have, individually or
in the aggregate, a Material Adverse Effect on Newco; and
(c) since its incorporation, has not received any
notification or communication from any agency or department of federal, state,
or local government or any Regulatory Authority or the staff thereof asserting
that Newco is not, or may not be, in compliance with any Legal Requirement,
where such noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Newco.
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SECTION 6.6 PROCEEDINGS. There is no Proceeding instituted or pending,
or, to the Knowledge of Newco, Threatened (or unasserted but considered probable
of assertions and that if asserted would have at least a reasonable possibility
of an unfavorable outcome) against Newco, or against any director or officer in
their capacities as such, or against any asset, interest, or right of Newco that
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Newco, nor are there any Orders outstanding against Newco,
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Newco.
SECTION 6.7 TAKEOVER LAWS. Newco has taken all necessary action to
exempt the transactions contemplated by this Agreement from, or if necessary to
challenge the validity or applicability of, any applicable Takeover Laws.
SECTION 6.8 BOARD ACTION. The Board of Directors of Newco, at a meeting
duly called and held, has by unanimous vote of the directors present (who
constitute all of the directors then in office) adopted this Agreement and the
transactions contemplated hereby, including the Merger.
ARTICLE VII
OBLIGATIONS PRIOR AND SUBSEQUENT TO EFFECTIVE TIME
SECTION 7.1 SCHEDULE 13E-3. As promptly as practicable following the
date of this Agreement, INVB and Newco shall file with the SEC, and shall use
their reasonable best efforts to cause any of their Affiliates engaging in this
transaction to file with the SEC, a Rule 13E-3 Transaction Statement on Schedule
13E-3.
SECTION 7.2 REPORTS. Each of INVB and Newco shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other party copies of
all such reports promptly after the same are filed. As of their respective
dates, any such reports will comply in all material respects with all Legal
Requirements and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
SECTION 7.3 CONSENTS OF REGULATORY AUTHORITIES. INVB and Newco shall
cooperate with each other and use their reasonable efforts to promptly prepare
and file all necessary documentation, to effect all applications, notices,
petitions and filings and to obtain as promptly as practicable all Consents of
all Regulatory Authorities and other Persons that are necessary or advisable to
consummate the transactions contemplated by this Agreement, including the
Merger. The parties agree that they will consult with each other with respect to
the obtaining of all Consents of all Regulatory Authorities and other Persons
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of matters
relating to contemplation of the transactions contemplated herein. Each party
also shall promptly advise the other upon receiving any communication from any
Regulatory Authority whose Consent is required for consummation of the
transactions contemplated by this Agreement that causes such party to believe
that there is a reasonable likelihood that any requisite Consent will not be
obtained or that the receipt of any such Consent will be materially delayed.
SECTION 7.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each of INVB and Newco agrees to use, and to
cause its subsidiaries, if any, to use, its reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper, or advisable under applicable Legal Requirements to consummate and make
effective, as soon as reasonably practicable after the date of this Agreement,
the transactions contemplated by this Agreement, including using its reasonable
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause to be satisfied the
conditions referred to in
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ARTICLE VIII; provided, however, that nothing herein shall preclude either party
from exercising its rights under this Agreement.
SECTION 7.5 PRESS RELEASES. INVB and Newco shall consult with each other
as to the form and substance of any press release or other public disclosure
materially related to this Agreement; provided, however, that nothing in this
SECTION 7.5 shall prohibit any party from making any disclosure that is
necessary or advisable in order to comply with such party's disclosure
obligations under any applicable Legal Requirements.
SECTION 7.6 FURTHER ASSURANCES. Each party hereto agrees to execute and
deliver such instruments and take such other party may reasonably require in
order to carry out the intent of this Agreement. Each party shall use its best
efforts to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement and to effect the Merger in
accordance with the terms and conditions of this Agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF INVB
The obligation of INVB to consummate the Merger and to take the other
actions required to be taken by INVB at the Effective Time are subject to the
satisfaction of each of the following conditions (any of which may be waived by
INVB, in whole or in part):
SECTION 8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Newco set forth in this Agreement shall be
true and correct in all material respects with the same force and effect as if
all of such representations and warranties were made at the Effective Time,
provided, however, that to the extent such representations and warranties
expressly relate to an earlier date, such representations shall be true and
correct in all material respects on and as of such earlier date, and provided
further, that to the extent that such representations and warranties are made in
this Agreement subject to a standard of materiality or Knowledge, such
representations and warranties shall be true and correct in all respects.
SECTION 8.2 NEWCO'S PERFORMANCE. Newco shall have performed or complied
in all material respects with all of the covenants and obligations to be
performed or complied with by it under the terms of this Agreement on or prior
to the Effective Time, provided, however, that to the extent performance and
compliance with such covenants and obligations are subject in this Agreement to
a standard of materiality, Newco shall have performed and complied in all
respects with such covenants and obligations.
SECTION 8.3 DOCUMENTS SATISFACTORY. All proceedings, corporate or other,
to be taken by Newco in connection with the Merger, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to INVB, and
Newco shall have made available to INVB for examination the originals or true
and correct copies of all records and documents relating to the business and
affairs of Newco that INVB may reasonably request in connection with said
transactions.
SECTION 8.4 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or Threatened against Newco or INVB, or against any of
the Affiliates of INVB any Proceeding: (a) involving any challenge to, or
seeking damages or other relief in connection with, the Merger; or (b) that
would reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with the Merger; or (c) that would reasonably
be expected to have a Material Adverse Effect on Newco.
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SECTION 8.5 CONSENTS. Any Consents required to be secured by either
party by the terms of this Agreement or otherwise reasonably necessary in the
opinion of INVB to consummate the Merger and all necessary regulatory approvals
shall have been obtained and shall be reasonably satisfactory to INVB, and all
applicable waiting periods shall have expired.
SECTION 8.6 NO INJUNCTION. There shall be no Legal Requirement or any
injunction or other Order that has been adopted or issued, or has otherwise
become effective, since the date of this Agreement that prohibits the Merger.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF NEWCO
Newco's obligation to consummate the Merger and to take the other actions
required to be taken by Newco at the Closing are subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Newco, in whole or in part):
SECTION 9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of INVB set forth in this Agreement shall be true
and correct in all material respects with the same force and effect as if all of
such representations and warranties were made at the Effective Time, provided,
however, that to the extent such representations and warranties expressly relate
to an earlier date, such representations shall be true and correct in all
material respects on and as of such earlier date, and provided further, that to
the extent that such representations and warranties are made in this Agreement
subject to a standard of materiality or Knowledge, such representations and
warranties shall be true and correct in all respects.
SECTION 9.2 INVB'S PERFORMANCE. INVB shall have performed or complied in
all material respects with all of the covenants and obligations to be performed
or complied with by it, under the terms of this Agreement on or prior to the
Effective Time, provided, however, that to the extent performance and compliance
with such covenants and obligations are subject in this Agreement to a standard
of materiality.
SECTION 9.3 DOCUMENTS SATISFACTORY. All proceedings, corporate or other,
to be taken by INVB in connection with the Merger, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to Newco.
SECTION 9.4 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or Threatened against Newco or INVB, or against any of
the Affiliates of Newco any Proceeding: (a) involving any challenge to, or
seeking damages or other relief in connection with, the Merger; or (b) that
would reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with the Merger; or (c) that would reasonably
be expected to have a Material Adverse Effect on INVB.
SECTION 9.5 CONSENTS. Any Consents required to be secured by either
party by the terms of this Agreement or otherwise reasonably necessary in the
opinion of Newco to consummate the Merger and all necessary regulatory approvals
shall have been obtained and shall be reasonably satisfactory to Newco, and all
applicable waiting periods shall have expired.
SECTION 9.6 NO INJUNCTION. There shall be no Legal Requirement or any
injunction or other Order that has been adopted or issued, or has otherwise
become effective, since the date of this Agreement that prohibits the Merger.
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ARTICLE X
TERMINATION
SECTION 10.1 RIGHT OF TERMINATION. Anything herein to the contrary
notwithstanding, prior to filing of this Agreement or Articles of Merger with
the Secretary of State of the State of Wisconsin, this Agreement may be
terminated and the transactions contemplated hereby may be abandoned at any time
by the mutual consent in writing of the boards of directors of INVB and Newco.
SECTION 10.2 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to this ARTICLE X, the same shall be of no further force or effect and
there shall be no liability by reason of this Agreement or the termination
thereof on the part of Newco, INVB or any of the directors, officers, employees,
or agents, or shareholders of any of them, except as to any liability for breach
of any duty, representation, warranty or obligation under this Agreement arising
prior to the date of termination.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement, and the performance of the
obligations imposed by this Agreement shall be governed by the State of
Wisconsin applicable to Contracts made and wholly to be performed in such state
without regard to conflicts of laws.
SECTION 11.2 BROKERS. Except for Wipfli Ullrich Bertelson LLP, each of
INVB and Newco represents and warrants that neither it not any of its officers,
directors, employees or Affiliates has employed any broker or finder or incurred
any liability for any financial advisory fees, investment bankers' fees,
brokerage fees, commissions or finders' fees in connection with this Agreement
or the transactions contemplated hereby.
SECTION 11.3 ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS. No party
may assign any of its rights under this Agreement to any other Person without
the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed. Subject to the preceding sentence, this
Agreement and every representation, warranty, covenant, agreement and provision
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Nothing expressed or referred
to in this Agreement will be construed to give any Person other than the parties
to this Agreement any legal or equitable right, remedy or claim under or with
respect to this Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
SECTION 11.4 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law: (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
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SECTION 11.5 MODIFICATION. This Agreement may only be amended by a
written agreement executed by both parties.
SECTION 11.6 NOTICES. All notices, consents, waivers and other
communications under this Agreement must be in writing (which shall include
telecopy communication) and will be deemed to have been duly given if delivered
by hand or by nationally recognized overnight delivery service (receipt
requested), mailed by certified mail (return receipt requested) with first class
postage prepaid or by facsimile if confirmed immediately thereafter by also
mailing a copy of any notice, request or other communication by mail as required
in this Section:
(a) If to INVB, to:
InvestorsBancorp, Inc.
W239 N1700 Busse Road
Waukesha, WI 53188-1160
Attention: Mr. George R. Schonath
Facsimile: (262) 523-4193
(b) if to Newco, to:
Investors Subsidiary, Inc.
W239 N1700 Busse Road
Waukesha, WI 53188-1160
Attention: Mr. George R. Schonath
Facsimile: (262) 523-4193
with a copy to:
Barack Ferrazzano Kirschbaum
Perlman & Nagelberg LLC
333 W. Wacker Drive, Suite 2700
Chicago, Illinois 60606
Facsimile: (312) 984-3150
Attention: John E. Freechack, Esq.
or to such other Person or place as INVB or Newco shall furnish in writing.
Except as otherwise provided herein, all such notices, consents, waivers and
other communications shall be effective: (a) if delivered by hand, when
delivered; (b) if mailed in the manner provided in this Section, five (5)
Business Days after deposit with the United States Postal Service; (c) if
delivered by overnight express delivery service, on the next Business Day after
deposit with such service; and (d) if by facsimile, on the next Business Day if
also confirmed by mail in the manner provided in this Section.
SECTION 11.7 ENTIRE AGREEMENT. This Agreement and any documents executed
by the parties pursuant to this Agreement and referred to herein constitute a
complete and exclusive statement of the entire understanding and agreement of
the parties hereto with respect to their subject matter and supersede all other
prior agreements and understandings, written or oral, relating to such subject
matter between the parties.
SECTION 11.8 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such 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
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only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement unless
the consummation of the Merger is adversely affected thereby.
SECTION 11.9 COUNTERPARTS. This Agreement and any amendments thereto may
be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same agreement.
SECTION 11.10 SURVIVAL. None of the representations and warranties set
forth in this Agreement shall survive the Effective Time.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers as of the day and year first written
above.
INVB: NEWCO:
INVESTORSBANCORP, INC., a Wisconsin INVESTORS SUBSIDIARY, INC., a Wisconsin
corporation corporation
By: /s/ George R. Schonath By: /s/ George R. Schonath
------------------------------------ ------------------------------------
Name: George R. Schonath Name: George R. Schonath
---------------------------------- ----------------------------------
Title: Chief Executive Officer Title: President
--------------------------------- ---------------------------------
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AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (this "AMENDMENT") is
made and entered into as of August 1, 2003, by and between InvestorsBancorp,
Inc., a Wisconsin corporation ("INVB"), and Investors Subsidiary, Inc., a
Wisconsin corporation ("NEWCO").
RECITALS
A. INVB and Newco have entered into that certain Agreement and Plan of
Merger dated as of March 25, 2003 (the "AGREEMENT"), pursuant to which Newco
will be merged with and into INVB.
B. The parties hereto desire to amend the Agreement in accordance with
the terms and provisions set forth herein.
In consideration of the foregoing premises and the mutual promises,
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Paragraph (q) of Section 1.1 of the Agreement is hereby amended by
adding the clause", except for 5,743 shares held in individual retirement
accounts of certain of the Schonath Shareholders and 5,375 shares held by George
Schonath and Jenn Schonath" to the end of such paragraph (q).
2. Section 2.7 of the Agreement is hereby amended in its entirety to read
as follows:
"SECTION 2.7 DIRECTORS AND OFFICERS. The directors and officers of
INVB holding office immediately prior to the Effective Time shall, from and
after the Effective Time, be the initial directors and officers of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified, or until their earlier death, resignation or
removal, in accordance with the Surviving Corporation's Articles of
Incorporation and bylaws."
3. All of the terms and conditions set forth in the Agreement shall
remain in full force and effect, except to the extent otherwise expressly set
forth in this Amendment.
4. The following provisions of the Agreement are hereby incorporated into
this Amendment, and all references to "this Agreement" contained in such
provisions shall, for purposes of this Amendment, be deemed to be references to
this Amendment: Sections 11.1, 11.3, 11.4, 11.5, 11.7, 11.8 and 11.9.
[THIS SPACE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers as of the day and year first written
above.
INVB: NEWCO:
INVESTORSBANCORP, INC., a Wisconsin INVESTORS SUBSIDIARY, INC., a Wisconsin
corporation corporation
By: /s/ George R. Schonath By: /s/ George R. Schonath
-------------------------------- ------------------------------------
Name: George R. Schonath Name: George R. Schonath
------------------------------ ----------------------------------
Title: Chief Executive Officer Title: President
----------------------------- ---------------------------------
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