EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
ASSOCIATED BANC-CORP,
BADGER MERGER CORP.
AND
FIRST FINANCIAL CORPORATION
dated as of
May 14, 1997
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.01. The Merger ........................................... 2
SECTION 1.02. Effective Time ........................................... 2
SECTION 1.03. Effect of the Merger........................................ 3
SECTION 1.04. Articles of Incorporation and Bylaws........................ 3
SECTION 1.05. Directors and Officers of Merger Sub........................ 3
SECTION 1.06. Representation on Associated Board.......................... 3
SECTION 1.07. Conversion of Securities.................................... 3
SECTION 1.08. Exchange of Certificates.................................... 4
SECTION 1.09. Treatment of Stock Options.................................. 7
SECTION 1.10. Stock Transfer Books........................................ 8
SECTION 1.11. Anti-Dilution Adjustment.................................... 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FFC
SECTION 2.01. Organization and Qualification of FFC; Subsidiaries.......... 9
SECTION 2.02. Articles of Incorporation and Bylaws......................... 10
SECTION 2.03. Capitalization ............................................ 10
SECTION 2.04. Authority; State Takeover Laws; Articles of Incorporation.... 11
SECTION 2.05. No Conflict; Required Filings and Consents................... 12
SECTION 2.06. Compliance ............................................ 13
SECTION 2.07. Securities and Banking Reports; Financial Statements......... 13
SECTION 2.08. Absence of Certain Changes or Events......................... 14
SECTION 2.09. Absence of Litigation and Agreements......................... 14
SECTION 2.10. Employee Benefit Plans....................................... 15
SECTION 2.11. Material Contracts........................................... 17
SECTION 2.12. Environmental Matters........................................ 17
SECTION 2.13. Taxes ............................................ 18
SECTION 2.14. Derivative Instruments....................................... 19
SECTION 2.15. Regulatory Approvals......................................... 20
SECTION 2.16. Brokers ............................................ 20
SECTION 2.17. Pooling of Interests and Tax Matters......................... 20
SECTION 2.18. Vote Required ............................................ 20
(ii)
Page
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSOCIATED
SECTION 3.01. Organization and Qualification of Associated; Subsidiaries... 21
SECTION 3.02. Articles of Incorporation and Bylaws......................... 22
SECTION 3.03. Capitalization ............................................ 22
SECTION 3.04. Authority ............................................ 23
SECTION 3.05. No Conflict; Required Filings and Consents................... 23
SECTION 3.06. Compliance ............................................ 24
SECTION 3.07. Securities and Banking Reports; Financial Statements......... 24
SECTION 3.08. Absence of Certain Changes or Events......................... 25
SECTION 3.09. Absence of Litigation and Agreements......................... 25
SECTION 3.10. Employee Benefit Plans....................................... 26
SECTION 3.11. Material Contracts........................................... 28
SECTION 3.12. Environmental Matters........................................ 29
SECTION 3.13. Taxes ............................................ 29
SECTION 3.14. Derivative Instruments....................................... 30
SECTION 3.15. Regulatory Approvals......................................... 31
SECTION 3.16. Brokers ............................................ 31
SECTION 3.17. Pooling of Interest and Tax Matters.......................... 31
SECTION 3.18. Vote Required ............................................ 31
ARTICLE IV
COVENANTS OF FFC AND ASSOCIATED
SECTION 4.01. Affirmative Covenants........................................ 32
SECTION 4.02. Negative Covenants........................................... 32
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Registration Statement....................................... 34
SECTION 5.02. Meetings of Shareholders..................................... 37
SECTION 5.03. Access to Information; Confidentiality....................... 37
SECTION 5.04. Appropriate Action; Consents; Filings........................ 38
SECTION 5.05. No Solicitation of Transactions.............................. 39
SECTION 5.06. Indemnification ............................................ 41
SECTION 5.07. Obligations of Merger Sub.................................... 42
SECTION 5.08. Pooling Affiliates........................................... 42
SECTION 5.09. Executive Agreements and Employee Severance.................. 43
(iii)
Page
SECTION 5.10. Notification of Certain Matters.............................. 45
SECTION 5.11. Public Announcements......................................... 45
SECTION 5.12. Expenses ............................................ 45
SECTION 5.13. Delivery of Shareholder List................................. 45
SECTION 5.14. Letters of Accountants....................................... 45
SECTION 5.15. FFC Reports ............................................ 46
SECTION 5.16. Associated Reports........................................... 46
SECTION 5.17. Pooling ............................................ 47
ARTICLE VI
CONDITIONS OF MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger.. 47
SECTION 6.02. Additional Conditions to Obligations of Associated........... 49
SECTION 6.03. Additional Conditions to Obligations of FFC.................. 49
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination ............................................ 50
SECTION 7.02. Effect of Termination........................................ 52
SECTION 7.03. Amendment ............................................ 52
SECTION 7.04. Waiver ............................................ 52
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Closing ............................................ 52
SECTION 8.02. Non-Survival of Representations, Warranties and Agreements... 52
SECTION 8.03. Notices ............................................ 53
SECTION 8.04. Certain Definitions.......................................... 53
SECTION 8.05. Headings ............................................ 54
SECTION 8.06. Severability ............................................ 54
SECTION 8.07. Entire Agreement ............................................ 54
SECTION 8.08. Assignment ............................................ 55
SECTION 8.09. Parties in Interest.......................................... 55
SECTION 8.10. Governing Law ............................................ 55
SECTION 8.11. Counterparts ............................................ 55
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 14, 1997 (this
"Agreement"), among ASSOCIATED BANC-CORP, a Wisconsin corporation
("Associated"), BADGER MERGER CORP., a newly organized Wisconsin corporation and
wholly owned subsidiary of Associated formed to effect the Merger ("Merger
Sub"), and FIRST FINANCIAL CORPORATION, a Wisconsin corporation ("FFC").
W I T N E S S E T H:
WHEREAS, Associated is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHCA"); and
WHEREAS, FFC is a registered savings and loan holding company
under the Home Owners' Loan Act, as amended ("HOLA"); and
WHEREAS, the Boards of Directors of Associated and FFC have
determined that a so-called merger of equals through a combination of the
respective businesses and operations of such entities and their respective
direct and indirect subsidiaries would be in the best long term interests of the
shareholders of each of Associated and FFC; and
WHEREAS, in order to effect the aforementioned combination,
the respective Boards of Directors of Associated, Merger Sub and FFC have (i)
determined that the merger of Merger Sub with and into FFC (the "Merger") in
accordance with the Wisconsin Business Corporation Law ("Wisconsin Law"),
pursuant and subject to the terms and conditions of this Agreement, are fair to
and in the best interests of their respective corporations and their
shareholders, and (ii) adopted the plan of Merger and the other transactions
contemplated hereby; and
WHEREAS, the Board of Directors of Associated has, subject to
its fiduciary duties under applicable law, resolved to recommend approval of the
plan of Merger by the shareholders of Associated; and
WHEREAS, the Board of Directors of FFC has, subject to its
fiduciary duties under applicable law, resolved to recommend approval of the
Merger by the shareholders of FFC; and
WHEREAS, Associated, Merger Sub and FFC intend to effect a
merger that qualifies for pooling of interests accounting treatment and as a
tax-free reorganization under the Internal Revenue Code of 1986, as amended (the
"Code") with this Agreement representing the plan of reorganization for purposes
of the Code; and
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WHEREAS, as a condition and inducement to Associated's
willingness to enter into this Agreement, FFC and Associated will enter into a
stock option agreement (the "FFC Stock Option Agreement") in the form attached
hereto as Exhibit A; and
WHEREAS, as a condition and inducement to FFC's willingness to
enter into this Agreement, Associated and FFC will enter into a stock option
agreement (the "Associated Stock Option Agreement"; together with the FFC Stock
Option Agreement, the "Option Agreements") in the form attached hereto as
Exhibit B.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Associated, Merger Sub and FFC hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Wisconsin Law, at
the Effective Time (as defined in Section 1.02) Merger Sub shall be merged with
and into FFC. As a result of the Merger, the separate corporate existence of
Merger Sub shall cease and FFC shall continue as the surviving corporation of
the Merger (the "Surviving Corporation"). Associated may at any time elect to
modify the structure of the Merger contemplated by this Agreement so long as (i)
there are no material adverse federal income tax consequences to the FFC
shareholders as a result of such modification, (ii) the consideration to be paid
to the FFC shareholders under this Agreement is not thereby changed or reduced
in amount, and (iii) such modification will not be reasonably likely to delay
materially or jeopardize receipt of any required regulatory approvals. In the
event that Associated elects to change the structure of the Merger, the parties
agree to modify this Agreement and the various exhibits hereto to reflect such
revised structure.
SECTION 1.02. Effective Time. Within three business days
following the last to occur of (i) receipt of the shareholder approvals
contemplated at Section 6.01(b), (ii) receipt of the required regulatory
approvals contemplated at Section 6.01(c) and expiration of any applicable
waiting periods required thereby and (iii) satisfaction of any other condition
to closing set forth in Article VI, or on such other date as the parties hereto
may agree, the parties hereto shall cause the Merger to be consummated by filing
Articles of Merger (the "Articles of Merger") with the Secretary of State of the
State of Wisconsin, in such form as required by, and executed in accordance with
the relevant provisions of Wisconsin Law (the date and time of the filing of the
Articles of Merger is hereinafter referred to as the "Effective Time").
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SECTION 1.03. Effect of the Merger. (a) Legal Effect. At the
Effective Time, the effect of the Merger shall be as provided in the applicable
provisions of Wisconsin Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, except as otherwise provided herein,
all the property, rights, privileges, powers and franchises of Merger Sub and
FFC shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Merger Sub and FFC shall become the debts, liabilities and duties of
the Surviving Corporation.
(b) Post-Merger Operations. Upon the Merger, the parties
intend that the headquarters office of Associated will remain designated as
Green Bay, Wisconsin. It is further anticipated that Associated and FFC Bank (as
defined in Section 2.01(d))(or any successor to the operations of FFC Bank)
will, for the foreseeable future, maintain significant operations in each of
Green Bay and Stevens Point, Wisconsin.
SECTION 1.04. Articles of Incorporation and Bylaws. At the
Effective Time, the Articles of Incorporation and the Bylaws of Merger Sub in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation following the Merger until
otherwise amended or repealed.
SECTION 1.05. Directors and Officers of Merger Sub. The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation, and the officers of FFC immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified.
SECTION 1.06. Representation on Associated Board. Associated
shall take all necessary actions so that as of the Effective Time, the Board of
Directors of Associated shall consist of a total of fourteen Directors,
consisting of (i) seven individuals, including Harry B. Conlon, the Chairman of
the Board of Associated, who are currently Directors of Associated and, (ii)
seven individuals, including John C. Seramur, to be selected by the Board of
Directors of FFC (subject to the approval of the Board of Directors of
Associated, such approval not to be unreasonably withheld) from the current
Board of Directors of FFC. The Board of Associated shall be divided into three
classes; two of which classes shall be of five persons (one of which shall have
three current directors of Associated and two current directors of FFC, and the
other of which shall have two current directors of Associated and three current
directors of FFC) and one class of four persons (two of which shall be current
directors of Associated and the other two of which shall be current directors of
FFC).
SECTION 1.07. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Associated, Merger
Sub, FFC, or the holders of any of the following securities:
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(a) Each share of FFC common stock, par value $1.00 per share
("FFC Common Stock") (all such shares of FFC Common Stock being
hereinafter collectively referred to as, the "Shares") issued and
outstanding immediately prior to the Effective Time (other than any
Shares to be cancelled pursuant to Section 1.07(b)) shall be converted,
in accordance with Section 1.08, into the right to receive .765 (the
"Exchange Ratio") shares of Associated common stock, par value $0.01
per share ("Associated Common Stock"). As of the Effective Time, all
such Shares shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each certificate
previously representing any such Shares shall thereafter represent the
right to receive a certificate representing shares of Associated Common
Stock into which such Shares are convertible. Certificates previously
representing Shares shall be exchanged for certificates representing
whole shares of Associated Common Stock issued in consideration
therefor upon the surrender of such certificates in accordance with the
provisions of Section 1.08, without interest. No fractional shares of
Associated Common Stock shall be issued, and, in lieu thereof, a cash
payment shall be made pursuant to Section 1.08 hereof.
(b) Each Share held in the treasury of FFC or by any of FFC
Subsidiaries (as defined in Section 2.01) and each Share owned by
Associated or any direct or indirect wholly owned subsidiary of
Associated immediately prior to the Effective Time (other than Shares
held, directly or indirectly, by Associated, any Associated Subsidiary,
FFC or any FFC Subsidiary in trust accounts, managed accounts and the
like or otherwise held in a fiduciary or custodial capacity that are
beneficially owned by third parties and Shares held by Associated, any
Associated Subsidiary, FFC or any FFC Subsidiary in respect of debt
previously contracted) shall be cancelled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(c) Each share of the common stock, par value $.01 per share,
of Merger Sub issued and outstanding immediately prior to the Effective
Time shall by virtue of this Agreement and without any action on the
part of the holder thereof, be converted into and exchangeable for one
share of the common stock of the Surviving Corporation, which shall
thereafter constitute all of the issued and outstanding shares of the
common stock of the Surviving Corporation.
SECTION 1.08. Exchange of Certificates. (a) Exchange Agent. As
of the Effective Time, Associated shall deposit, or shall cause to be deposited,
with a bank or trust company designated by Associated (the "Exchange Agent"),
solely for the benefit of the holders of Shares, for exchange in accordance with
this Article I through the Exchange Agent, certificates representing the shares
of Associated Common Stock (such certificates for shares of Associated Common
Stock, and cash in lieu of fractional shares (if any), together
5
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section 1.07 in
exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail or personally deliver to
each holder of record (or his or her attorney-in-fact) of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted into the
right to receive shares of Associated Common Stock pursuant to Section 1.07 and
cash in lieu of fractional shares (if any), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Associated and
FFC may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Associated Common Stock. Upon surrender of a Certificate for cancellation to
the Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Associated Common Stock,
which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article I (after taking into
account all Shares then held by such holder) and cash in lieu of any fractional
Shares, and the Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of Shares which is not registered in the
transfer records of FFC, a certificate representing the proper number of shares
of Associated Common Stock may be issued to a transferee if the Certificate
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.08, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Associated Common Stock and
cash in lieu of any fractional shares of Associated Common Stock as contemplated
by Section 1.08(e).
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Associated Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Associated Common Stock represented thereby, and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
1.08(e), until the holder of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
whole shares of Associated Common Stock issued in exchange therefor, without
interest, (i) promptly, the amount of any cash payable with respect to a
fractional share of Associated Common Stock to which such holder is entitled
pursuant to Section 1.08(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
6
such whole shares of Associated Common Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions, with a record date
after the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of Associated Common
Stock.
(d) No Further Rights in the Shares. All shares of Associated
Common Stock issued upon conversion of the Shares in accordance with the terms
hereof (including any cash paid pursuant to Section 1.08(e)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such Shares.
In accordance with Wisconsin Law, there shall be no appraisal rights available
to holders of FFC Common Stock or Associated Common Stock in connection with the
Merger.
(e) No Fractional Shares. Notwithstanding anything to the
contrary contained herein, no certificates or scrip representing fractional
shares of Associated Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interest will not entitle
the owner thereof to vote or to any rights of a shareholder of Associated. Each
holder of a fractional share interest shall be paid an amount in cash equal to
the product obtained by multiplying (i) such fractional share interest to which
such holder (after taking into account all fractional share interests then held
by such holder) would otherwise be entitled to receive pursuant to Section 1.07
hereof by (ii) the closing sale price of a share of the Associated Common Stock
on the Nasdaq National Market on the trading day immediately preceding the date
of the Effective Time as reported by the Wall Street Journal.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the shareholders of FFC for twelve months
after the Effective Time shall be delivered to Associated, upon demand, and any
shareholders of FFC who have not theretofore complied with this Article I shall
thereafter look only to Associated for payment of their claim for Associated
Common Stock, any cash in lieu of fractional shares of Associated Common Stock
and any dividends or distributions with respect to Associated Common Stock.
(g) No Liability. Neither Associated, Merger Sub or FFC shall
be liable to any holder of Shares for any such Shares (or dividends or
distributions with respect thereto) or cash delivered to a public official
pursuant to any abandoned property, escheat or similar law.
(h) Withholding Rights. Associated shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of Shares such amounts as Associated is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Associated, such withheld amounts shall be
7
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding were made by
Associated.
SECTION 1.09. Treatment of Stock Options. (a) At the Effective
Time, each option granted by FFC to purchase Shares which is outstanding and
unexercised immediately prior thereto shall be assumed by Associated. Such
options shall cease to represent a right to acquire Shares and shall be
converted automatically into an option to purchase shares of Associated Common
Stock in an amount and at an exercise price determined as provided below:
(i) the number of shares of Associated Common Stock to be
subject to the new option shall be equal to the product of the number
of shares of FFC Common Stock subject to the original option and the
Exchange Ratio; provided that any fractional shares of Associated
Common Stock resulting from such multiplication shall be rounded down
to the nearest whole share; and
(ii) the exercise price per share of Associated Common Stock
under the new option shall be equal to the exercise price per share of
FFC Common Stock under the original option divided by the Exchange
Ratio, provided that such exercise price shall be rounded up to the
nearest whole cent.
(b) the adjustment provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the Code)
shall be and is intended to be effected in a manner which is consistent with
Section 424(a) of the code. The duration and other terms of the new option shall
be the same as the original option except that all references to FFC shall be
deemed to be references to Associated.
(c) At the Effective Time, by virtue of the Merger and without
the need of any further corporate action, Associated shall assume the Restated
FFC Corporation Stock Option Plan III and the First Financial Corporation Stock
Option Plan I, as amended (the "FFC Stock Plans"), with the result that all
obligations of FFC under the FFC Stock Plans, including with respect to FFC
stock options outstanding at the Effective Time under each FFC Stock Plan, shall
be obligations of Associated following the Effective Time.
(d) No later than the Effective Time, Associated shall prepare
and file with the SEC a registration statement on Form S-8 (or another
appropriate form) registering a number of shares of Associated Common Stock
equal to the number of shares subject to the adjusted options. Such registration
statement shall be kept effective (and the current status of the prospectus or
prospectuses required thereby shall be maintained) at least for so long as any
adjusted options may remain outstanding.
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(e) As soon as practicable after the Effective Time,
Associated shall deliver to the holders of options to purchase FFC Common Stock
appropriate notices setting forth such holders' rights pursuant to FFC Stock
Plans and the agreements pursuant to which such options were issued, and the
agreements evidencing the grant of such options shall be assumed by Associated
and shall continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 1.09 after giving effect to the Merger).
SECTION 1.10. Stock Transfer Books. At the Effective Time, the
stock transfer books of FFC shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of FFC. From and
after the Effective Time, the holders of certificates evidencing ownership of
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Shares except as otherwise provided herein or by
law. On or after the Effective Time, any Certificates presented to the Exchange
Agent or Associated for any reason shall be converted into shares of Associated
Common Stock in accordance with this Article I.
SECTION 1.11. Anti-Dilution Adjustment. If, subsequent to the
date hereof and prior to the Effective Time, Associated shall pay a stock
dividend or make a distribution on Associated Common Stock or other capital
stock of Associated in shares of Associated Common Stock or other capital stock
of Associated or any security convertible into Associated Common Stock or other
capital stock of Associated or shall combine, subdivide, reclassify or
recapitalize its stock, then in each such case, from and after the record date
for determining the shareholders entitled to receive such dividend or
distribution or the securities from such combination or subdivision, an
appropriate adjustment shall be made to the Exchange Ratio, for purposes of
determining the number of shares of Associated Common Stock into which FFC's
Common Stock shall be converted. For purposes hereof, the payment of a dividend
in Associated Common Stock, or the distribution on Associated Common Stock in
securities convertible into Associated Common Stock, shall be deemed to have
effected an increase in the number of outstanding shares of Associated Common
Stock equal to the number of shares of Associated Common Stock into which such
securities shall be initially convertible without the payment by the holder
thereof of any consideration other than the surrender for cancellation of such
convertible securities.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FFC
Except as set forth in the disclosure schedule delivered by
FFC to Associated prior to the execution of this Agreement which shall identify
exceptions by specific Section references; provided that disclosure in one
schedule will be deemed to satisfy disclosure in
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another schedule (the "FFC Disclosure Schedule"), FFC hereby represents and
warrants to Associated and Merger Sub that:
SECTION 2.01. Organization and Qualification of FFC;
Subsidiaries. (a) FFC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin. FFC is a unitary savings
and loan holding company registered with the Office of Thrift Supervision under
HOLA.
(b) Section 2.01 of the FFC Disclosure Schedule sets forth a
true and complete list of each of FFC's subsidiaries (the "FFC Subsidiaries")
and the percentage owned by FFC of such equity securities. Except as set forth
in Section 2.01 of the FFC Disclosure Schedule, each FFC Subsidiary is wholly
owned, directly or indirectly, by FFC. Except as set forth in Section 2.01 of
the FFC Disclosure Schedule, all outstanding shares of capital stock of FFC
Subsidiaries are validly issued, fully paid and nonassessable (except as
provided in Section 180.0622(2)(b) of Wisconsin Law) and are free and clear of
any lien, claim, charge, options, encumbrances agreement, mortgage, pledge,
security interest or restriction (each, a "Lien") with respect thereto. Each FFC
Subsidiary is a corporation, partnership, savings bank, savings and loan, bank
or trust company duly incorporated or organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
(c) FFC and each FFC Subsidiary has the requisite corporate
power and authority and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("FFC Permits") necessary to own, lease and operate its properties
and to carry on its business as is now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power,
authority and FFC Permits would not, either individually or in the aggregate,
have a Material Adverse Effect (as defined below) on FFC and the FFC
Subsidiaries, taken as a whole. FFC has not received any notice of proceedings
relating to the revocation or modification of any FFC Permits except for any
such revocation or modification which would not, either individually or in the
aggregate, have a Material Adverse Effect on FFC and the FFC Subsidiaries, taken
as a whole. FFC and each FFC Subsidiary is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
(d) Deposits in First Financial Bank, a Federally chartered
savings bank ("FFC Bank"), are insured by the Savings Association Insurance Fund
to applicable limits.
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The form of charter and any applicable insurance fund for each of the other FFC
Subsidiaries which is a financial institution is set forth in Section 2.01 of
the FFC Disclosure Schedule.
(e) Section 2.01 of the FFC Disclosure Schedule sets forth a
true, complete and correct list of all corporations, partnerships, limited
liability companies or other organizations, whether an incorporated or
unincorporated organization (a "Corporate Entity") of which FFC or any FFC
Subsidiary holds or beneficially owns 5% or more of the outstanding shares of
any class of voting securities, holds a general partnership interest or other
controlling interest, holds or beneficially owns more than 24.9% of the
outstanding capital stock (whether voting or nonvoting) and subordinated debt or
is otherwise deemed to be a subsidiary within the meaning of the BHCA.
The term "Material Adverse Effect" as used in this Agreement
shall mean any change or effect that is or is reasonably likely to be materially
adverse to a party's business, operations, properties (including intangible
properties), condition (financial or otherwise), assets or liabilities
(including contingent liabilities), in the aggregate, or the ability of such
party to consummate the transactions contemplated by this Agreement, except that
a Material Adverse Effect shall not be deemed to have occurred as a result of
any change or effect resulting from a change in law, rule, regulation, generally
accepted accounting principle or regulatory accounting principle, in each case,
affecting financial institutions or their holding companies generally.
SECTION 2.02. Articles of Incorporation and Bylaws. FFC has
heretofore furnished or made available to Associated a complete and correct copy
of the Articles of Incorporation and the Bylaws, as amended or restated, of FFC
and the FFC Subsidiaries and such Articles of Incorporation and Bylaws of FFC
and the FFC Subsidiaries are in full force and effect and neither FFC nor any
FFC Subsidiary is in violation of any of the provisions of its respective
Articles of Incorporation or Bylaws.
SECTION 2.03. Capitalization. (a) Capitalization of FFC. The
authorized capital stock of FFC consists of (i) 75,000,000 Shares, of which, as
of March 31, 1997, 36,411,443 Shares were issued and outstanding, all of which
are validly issued, fully paid and non-assessable (except as provided in Section
180.0622(2)(b) of Wisconsin Law), and all of which have been issued in
compliance with applicable securities laws, and (ii) 3,000,000 shares of serial
preferred stock, par value $1.00 per share ("FFC Preferred Stock"), of which no
shares are issued and outstanding. Since March 31, 1997, no Shares have been
issued, except for Shares issued upon exercise of options outstanding as of
March 31, 1997 under the FFC Stock Plans (as defined in Section 1.09). As of
March 31, 1997, FFC had outstanding 1,266,887 options issued under the FFC Stock
Plans, 992,651 of which were exercisable. No options have been granted since
March 31, 1997 to the date of this Agreement under the FFC Stock Plans. As of
the date of this Agreement, 1,449,620 Shares are held as treasury stock by FFC.
Other than pursuant to the FFC Stock Option Agreement
11
and the FFC Stock Plans, there are no options, warrants or other rights, rights
of first refusal, agreements, arrangements, or commitments of any character
relating to the issued or unissued capital stock of FFC or obligating FFC to
issue or sell any shares of capital stock of, or other equity interests in FFC.
There are no obligations, contingent or otherwise, of FFC to repurchase, redeem
or otherwise acquire any Shares or to provide funds to or make any investment
(in the form of a loan, capital contribution or otherwise) in any other entity
(including any FFC Subsidiary).
(b) Capital Stock of the FFC Subsidiaries. Except as set forth
in Section 2.03 (b) of the FFC Disclosure Schedule there are no options,
warrants or other rights, rights of first refusal, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the FFC Subsidiaries or obligating any FFC Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in any FFC Subsidiary.
There are no obligations, contingent or otherwise, of any FFC Subsidiary to
repurchase, redeem or otherwise acquire any shares of the capital stock of any
FFC Subsidiary or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
SECTION 2.04. Authority; State Takeover Laws; Articles of
Incorporation. (a) FFC has the requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by FFC and the consummation by FFC of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of FFC and no other corporate proceedings on the
part of FFC are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of the plan of Merger by the holders of two-thirds of the then
outstanding Shares in accordance with Wisconsin Law and FFC's Articles of
Incorporation and Bylaws, and the filing and recordation of appropriate merger
documents required by Wisconsin Law). This Agreement has been duly and validly
executed and delivered by FFC and, assuming the due authorization, execution and
delivery by Associated and Merger Sub, constitutes the legal, valid and binding
obligation of FFC enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and by general principles of equity.
(b) The Board of Directors of FFC has taken all actions
necessary under Wisconsin Law and FFC's Articles of Incorporation, including
approving the transactions contemplated herein, to insure that the restrictions
on business combinations set forth in Wisconsin Law and the supermajority voting
requirements set forth in FFC's Articles of Incorporation do not or will not
apply to this Agreement, the transactions contemplated herein, the FFC Stock
Option Agreement or the transactions contemplated therein or any
12
transaction between Associated or its affiliates, on the one hand, and FFC or
its affiliates, on the other hand, following exercise of the FFC Stock Option.
SECTION 2.05. No Conflict; Required Filings and Consents. (a)
Except as set forth in Section 2.05 of the FFC Disclosure Schedule, the
execution and delivery of this Agreement by FFC does not, and the performance of
this Agreement by FFC shall not, (i) conflict with or violate the Articles of
Incorporation or Bylaws of FFC or any FFC Subsidiary, (ii) conflict with or
violate any domestic (federal, state or local) or foreign law, statute,
ordinance, rule, regulation, order, judgment decision, writ, injunction or
decree (collectively, "Laws") applicable to FFC or any FFC Subsidiary, or by
which its respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of FFC or any FFC
Subsidiary pursuant to any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which FFC
or any FFC Subsidiary is a party or by which FFC or any FFC Subsidiary or its
respective properties are bound or affected, except (in the case of clauses (ii)
and (iii) of this Section 2.05(a)) for any such conflicts, violations, breaches,
defaults or other occurrences that would not, either individually or in the
aggregate, have a Material Adverse Effect on FFC and the FFC Subsidiaries, taken
as a whole.
(b) The execution and delivery of this Agreement by FFC does
not, and the performance of this Agreement by FFC shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, ("Approvals")
except (i) for the applicable requirements, if any, of (A) the Securities Act of
1933, as amended (the "Securities Act"), (B) the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (C) the BHCA, (D) HOLA, (E) the Office of
the Comptroller of the Currency (the "OCC"), (F) the Federal Deposit Insurance
Act, as amended, and the rules and regulations promulgated thereunder (the
"FDIA"), (G) state securities or blue sky laws ("Blue Sky Laws"), (H) the
banking laws and regulations of the State of Wisconsin (the "WBL"), (I) the
filing and recordation of appropriate merger or other documents as required by
Wisconsin Law, (J) the banking laws and regulations of the State of Illinois
(the "IBL"), (K) the Nasdaq Stock Market, (L) applicable laws and regulations
relating to insurance business agencies ("Insurance Laws") and (M) any
applicable domestic or foreign industry self-regulatory organization ("SRO"),
and (ii) such additional Approvals the failure of which to obtain would not
prevent or delay consummation of the Merger, or otherwise prevent FFC from
performing its obligations under this Agreement, and would not, either
individually or in the aggregate, have a Material Adverse Effect on FFC and the
FFC Subsidiaries, taken as a whole.
13
SECTION 2.06. Compliance. Neither FFC nor any FFC Subsidiary
is in conflict with, or in default or violation of, (i) any Law applicable to
FFC or the FFC Subsidiaries or by which any of their respective properties are
bound or affected, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which FFC or any FFC Subsidiary is a party or by which FFC or any FFC
Subsidiary or any of their respective properties are bound or affected, except
for any such conflicts, defaults or violations which would not, either
individually or in the aggregate, have a Material Adverse Effect on FFC and the
FFC Subsidiaries, taken as a whole.
SECTION 2.07. Securities and Banking Reports; Financial
Statements. (a) FFC and the FFC Subsidiaries have filed all material forms,
reports registrations, statements and documents, together with any amendments
required to be made with respect thereto that were required to be filed since
January 1, 1995 with (i) the Securities and Exchange Commission (the "SEC") and
(ii)(A) any SRO, (B) any other federal, state or foreign governmental or
regulatory agency or authority (collectively with the SEC and the SROs,
"Regulatory Agencies") and (C) all other reports and statements (the filings
made with the entities listed in subclause (ii) being referred to as "Other
Reports") required to be filed by FFC and any FFC Subsidiary since January 1,
1995, and paid all fees and assessments due and payable in connection therewith,
except, in the case of the Other Reports, where failure to file such form,
report, registration, statement or document or pay such fees and assessments
would not, either individually or in the aggregate, have a Material Adverse
Effect on FFC and the FFC Subsidiaries, taken as a whole (all such reports and
statements, are collectively referred to as the "FFC Reports"). The FFC Reports,
including all FFC Reports filed after the date of this Agreement, (i) were, or
will be, prepared in accordance with the requirements of applicable Law and (ii)
did not at the time they were filed, or will not at the time they are filed,
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in any filings with the SEC
since January 1, 1995 (the "FFC SEC Reports"), including any FFC SEC Reports
filed since the date of this Agreement and prior to or on the Effective Time,
have been, or will be, prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto) and each fairly presents, or will
fairly present, in all material respects, the consolidated financial position of
FFC and the FFC Subsidiaries as of the respective dates thereof and the
consolidated results of its operations and changes in financial position for the
periods indicated, except that any unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
14
(c) Except as and to the extent set forth on the consolidated
balance sheet of FFC and the FFC Subsidiaries as of December 31, 1996, including
all notes thereto (the "FFC Balance Sheet"), neither FFC nor any FFC Subsidiary
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), except for (i) liabilities or obligations incurred in
the ordinary course of business since December 31, 1996 and (ii) liabilities or
obligations that would not, either individually or in the aggregate, have a
Material Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
SECTION 2.08. Absence of Certain Changes or Events. (a) Except
as disclosed in the FFC SEC Reports filed prior to the date of this Agreement,
since December 31, 1996, (i) FFC and the FFC Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and (ii) there has been no event which has had, or is reasonably likely
to result in, either individually or in the aggregate, a Material Adverse Effect
on FFC and the FFC Subsidiaries, taken as a whole.
SECTION 2.09. Absence of Litigation and Agreements. (a) Except
as disclosed in the FFC SEC Reports filed prior to the date of this Agreement or
set forth in Section 2.09 of the FFC Disclosure Schedule, (i) neither FFC nor
any FFC Subsidiary is subject to any continuing order of, or written agreement
or memorandum of understanding with, or continuing investigation by, any federal
or state savings and loan or bank regulatory authority or other governmental
entity or regulatory authority, or any judgment, order, writ, injunction, decree
or award of any governmental entity or regulatory authority or arbitrator,
including, without limitation, cease-and-desist or other orders which, either
individually or in the aggregate, would have or reasonably be expected to have a
Material Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole; (ii)
there is no claim of any kind, action, suit, litigation, proceeding,
arbitration, investigation, or controversy affecting FFC or the FFC Subsidiaries
pending or, to the knowledge of FFC, threatened, except (A) as of the date of
this Agreement, for matters which individually seek damages not in excess of
$500,000 and (B) as of the Closing (as defined in Section 8.01), for matters
which otherwise cannot reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect on FFC and the FFC Subsidiaries, taken
as a whole; and (iii) there are not uncured violations, or violations with
respect to which refunds or restitutions may be required, cited in any
compliance report to FFC or the FFC Subsidiaries as a result of the examination
by any bank regulatory authority, which would have or reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect on FFC
and the FFC Subsidiaries, taken as a whole.
(b) Except as set forth on the FFC Disclosure Schedule at
Section 2.09, neither FFC nor any of the FFC Subsidiaries is a party to any
written agreement or memorandum of understanding with, or party to any
commitment letter, board resolution submitted to a regulatory authority or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from any governmental
15
entity or agency which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, its credit or reserve policies or
its management nor has FFC or any FFC Subsidiary (i) been advised by any
governmental entity or agency that it is contemplating issuing or requesting (or
is considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission or (ii) have knowledge of any
pending or threatened regulatory investigation. Neither FFC nor any FFC
Subsidiary is required by Section 32 of the Federal Deposit Insurance Act to
give prior notice to a Federal banking agency of the proposed addition of an
individual to its board of directors or the employment of an individual as a
senior executive officer.
SECTION 2.10. Employee Benefit Plans. (a) Except as set forth
in Section 2.10 of the FFC Disclosure Schedule, since December 31, 1996, there
has not been any adoption or amendment in any material respect by FFC or any FFC
Subsidiary of any employment, consulting, termination or severance agreement or
any material bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical or other plan, arrangement or understanding providing benefits to any
current or former employee, officer or director of FFC or any FFC Subsidiary
(collectively, such agreements, plans, arrangements and understandings being the
"FFC Benefit Plans"), or any material change in any actuarial or other
assumption used to calculate funding obligations with respect to any FFC pension
plans, or any change in the manner in which contributions to any FFC pension
plans are made or the basis on which such contributions are determined.
(b) Section 2.10 of the FFC Disclosure Schedule sets forth a
list of all FFC Benefit Plans. FFC has delivered or made available to Associated
true and complete copies of all FFC Benefit Plans together with all current
related documents, including the most recent summary plan descriptions, IRS
determination letters and actuarial reports, if applicable.
(c) (i) Except as disclosed in Section 2.10 of the FFC
Disclosure Schedule, with respect to FFC Benefit Plans, no event has
occurred and, to the knowledge of FFC, there exists no condition or set
of circumstances, in connection with which FFC or any of the FFC
Subsidiaries could be subject to any liability that individually, or in
the aggregate, would have a Material Adverse Effect on FFC and the FFC
Subsidiaries, taken as a whole, under ERISA, the Code or any other
applicable law.
(ii) Each FFC Benefit Plan has been administered in accordance
with its terms, except for any failures so to administer any FFC
Benefit Plan that individually or in the aggregate, would not have a
Material Adverse Effect on FFC and the FFC
16
Subsidiaries, taken as a whole. FFC, the FFC Subsidiaries and all FFC
Benefit Plans are in compliance with the applicable provisions of
ERISA, the Code and all other applicable laws and the terms of all
applicable collective bargaining agreements, except for any failures to
be in such compliance that, individually or in the aggregate, would not
have a Material Adverse Effect on FFC and the FFC Subsidiaries, taken
as a whole. Each FFC Benefit Plan that is intended to be qualified
under Section 401(a) or 401(k) of the Code has received a favorable
determination letter from the IRS that it is so qualified and each
trust established in connection with any FFC Benefit Plan that is
intended to be exempt from Federal income taxation under Section 501(a)
of the Code has received a determination letter from the IRS that such
trust is so exempt. To the knowledge of FFC, no fact or event has
occurred since that date of any determination letter from the IRS which
is reasonably likely to affect adversely the qualified status of any
such FFC Benefit Plan or the exempt status of any such trust.
(iii) Neither FFC nor any of the FFC Subsidiaries has incurred
any liability under Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the
ordinary course). No FFC Benefit Plan has incurred an "accumulated
funding deficiency" (within the meaning of Section 302 of ERISA or
Section 412 of the Code) whether or not waived. To the knowledge of
FFC, there are not any facts or circumstances that would materially
change the funded status of any FFC Benefit Plan that is a "defined
benefit" plan (as defined in Section 3(35) of ERISA) since the date of
the most recent actuarial report for such plan. No FFC Benefit Plan is
a "multiemployer plan" within the meaning of Section 3(37) of ERISA.
(iv) Neither FFC nor any of the FFC Subsidiaries is a party to
any collective bargaining or other labor union contract applicable to
persons employed by FFC or any of the FFC Subsidiaries and no
collective bargaining agreement is being negotiated by FFC or any of
the FFC Subsidiaries. There is no labor dispute, strike or work
stoppage against FFC or any of the FFC Subsidiaries pending or, to the
knowledge of FFC, threatened which may interfere with the respective
business activities of FFC or any FFC Subsidiary, except where such
dispute, strike or work stoppage individually or in the aggregate,
would not have a Material Adverse Effect on FFC and the FFC
Subsidiaries, taken as a whole. As of the date of this Agreement, to
the knowledge of FFC, none of FFC, any of the FFC Subsidiaries or any
of their respective representatives or employees has committed any
unfair labor practice in connection with the operation of the
respective businesses of FFC or any of the FFC Subsidiaries, and there
is no charge or complaint against FFC or any of the FFC Subsidiaries by
the National Labor Relations Board or any comparable governmental
agency pending or threatened in writing.
17
(v) Except as referenced in this Agreement or contemplated by
this Agreement and except as set forth in Section 2.10 of the FFC
Disclosure Schedule, no employee of FFC or any FFC Subsidiary will be
entitled to any additional benefits or any acceleration of the time of
payment or vesting of any benefits under any FFC Benefit Plan as a
result of the transactions contemplated by this Agreement or the Option
Agreements.
(vi) No payment or benefit will or may be made by FFC or any
FFC Subsidiary with respect to any employee or any current of former
director that will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b) of the Code.
SECTION 2.11. Material Contracts. Except as set forth in
Section 2.11 of the FFC Disclosure Schedule, as of the date of this Agreement,
neither FFC nor any FFC Subsidiary is a party to or bound by (a) any contract or
commitment for capital expenditures in excess of $500,000 for any one project,
(b) contracts or commitments for the purchase of materials or supplies or for
the performance of services over a period of more than 60 days from the date of
this Agreement and calling for aggregate future payments of $1,000,000 or more
during the term of such contract or commitment, (c) any contract which is a
"material contract" (as such term is defined in Item 601(b)(10) of Regulation
S-K of the SEC) that has not been filed or incorporated by reference in the FFC
SEC Reports, (d) any contract which contains non-compete or exclusivity
provisions or restrictions with respect to any business or geographic area or
(e) any contract which would prohibit or materially delay the consummation of
the Merger or any other transaction contemplated by this Agreement. Each
contract, arrangement, commitment or understanding of the type described in this
Section 2.11, whether or not set forth in Section 2.11 of the FFC Disclosure
Schedule, is referred to herein as a "FFC Contract". Neither FFC nor any FFC
Subsidiary knows of, or has received notice of, any violation of any FFC
Contract by any of the other parties thereto, except for violations which,
individually or in the aggregate, would not result in a Material Adverse Effect
on FFC and the FFC Subsidiaries, taken as a whole.
SECTION 2.12. Environmental Matters. To the knowledge of FFC
neither FFC, any FFC Subsidiary, nor any properties owned or operated by FFC or
any FFC Subsidiary has been or is in violation of or liable under any
Environmental Law, except for such violations or liabilities that, individually
or in the aggregate, are not reasonably likely to have a Material Adverse Effect
on FFC and the FFC Subsidiaries, taken as a whole. There are no actions, suits
or proceedings, or demands, claims, notices or investigations (including without
limitation notices, demand letters or requests of information from any
environmental agency) instituted or pending, or to the knowledge of FFC,
threatened, relating to the liability of FFC or any FFC Subsidiary with respect
to any properties owned or operated by FFC or any FFC Subsidiary under any
Environmental Law, except for liabilities or violations
18
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
"Environmental Law" means any applicable federal, state, local
or foreign law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent order, judgment, decree, injunction or
agreement with any regulatory authority relating to (i) the protection,
preservation or restoration of the environment (including, without limitation,
air, water vapor, surface water, groundwater, drinking water supply, surface
soil, subsurface soil, plant and animal life or any other natural resource),
and/or (ii) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of any substance
presently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, whether by type or by
quantity, including any material containing any such substance as a component.
SECTION 2.13. Taxes. (a) Except for such matters as would not
have, individually or in the aggregate, a Material Adverse Effect on FFC and the
FFC Subsidiaries, taken as a whole, (i) FFC and the FFC Subsidiaries have timely
filed or will timely file all returns and reports required to be filed by them
with any taxing authority with respect to Taxes (as defined below) for any
period ending on or before the Effective Time, taking into account any extension
of time to file granted to or obtained on behalf of FFC and the FFC
Subsidiaries, (ii) all Taxes that are due prior to the Effective Time have been
paid or will be paid (other than Taxes which (1) are not yet delinquent or (2)
are being contested in good faith and have not been finally determined), (iii)
as of the date hereof, no deficiency for any Tax has been asserted or assessed
by a taxing authority against FFC or any of the FFC Subsidiaries which
deficiency has not been paid other than any deficiency being contested in good
faith and (iv) FFC and the FFC Subsidiaries have provided adequate reserves (in
accordance with generally accepted accounting principles) in their financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any returns. As used in this Agreement, "Taxes" shall mean any and all
taxes, fees, levies, duties, tariffs, imposts and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any governmental entity or
taxing authority, including, without limitation: taxes or other charges on or
with respect to income, franchise, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs and similar charges.
(b) To the knowledge of FFC, there are no material disputes
pending, or claims asserted in writing for, Taxes or assessments upon FFC or any
of the FFC Subsidiaries, nor has FFC or any FFC Subsidiaries been requested in
writing to give any currently effective waivers extending the statutory period
of limitation applicable to any federal or state
19
income tax return for any period which disputes, claims, assessments or waivers
would have, individually or in the aggregate, a Material Adverse Effect on FFC
and the FFC Subsidiaries, taken as a whole.
(c) There are no Tax liens upon any property or assets of FFC
or any of the FFC Subsidiaries except liens for current Taxes not yet due and
except for liens which have not had and are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FFC and the FFC
Subsidiaries, taken as a whole.
(d) Neither FFC nor any of the FFC Subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of the Code
by reason of a voluntary change in accounting method initiated by FFC or any of
the FFC Subsidiaries, and the IRS has not initiated or proposed any such
adjustment or change in accounting method, in either case which adjustment or
change would have, individually or in the aggregate, a Material Adverse Effect
on FFC and the FFC Subsidiaries, taken as a whole.
(e) Except as set forth in the financial statements described
in Section 2.07, neither FFC nor any the FFC Subsidiaries has entered into a
transaction which is being accounted for under the installment method of Section
453 of the Code, which would have, individually or in the aggregate, a Material
Adverse Effect on FFC, and the FFC Subsidiaries, taken as a whole.
SECTION 2.14. Derivative Instruments. All swap, forward,
future, option, cap, floor or collar financial contracts, and any other interest
rate protection contracts ("Derivative Instruments") to which FFC or any FFC
Subsidiary is a party or to which any of their properties or assets may be
subject were entered into in the ordinary course of business and, to the
knowledge of FFC, in accordance with prudent banking practice and applicable
rules, regulations, and policies of the regulatory agencies and with
counterparties believed to be financially responsible at the time and, to the
knowledge of FFC, are legal, valid, and binding obligations enforceable in
accordance with their terms (except as may be limited by bankruptcy, insolvency,
moratorium, reorganization, or similar laws affecting the rights of creditors
generally, and the availability of equitable remedies), and, to the knowledge of
FFC, are in full force and effect. FFC and each FFC Subsidiary has duly
performed in all material respects all of its obligations under any such
Derivative Instruments, and to the knowledge of FFC, there are no breaches,
violations, or defaults or allegations or assertions of such by any party
thereunder except for any such breaches, violations, or defaults or allegations
or assertions which would not, individually or in the aggregate, have a Material
Adverse Effect on FFC and the FFC Subsidiaries, taken as a whole.
20
SECTION 2.15. Regulatory Approvals. FFC is not aware of any
aspect of, or issues relating to, its or the FFC Subsidiaries' operations and
business that would prevent the condition of Closing set forth in Section
6.01(c) from being satisfied.
SECTION 2.16. Brokers. Except as contemplated by or referenced
in the May [14], 1997 letter agreement between McDonald & Company Securities,
Inc. ("McDonald") and FFC, a true and complete copy of which FFC has delivered
to Associated, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of FFC or any FFC Subsidiary.
SECTION 2.17. Pooling of Interests and Tax Matters. Neither
FFC nor, to the knowledge of FFC, any of its affiliates has through the date of
this Agreement taken or agreed to take any action that would prevent Associated
from accounting for the business combination to be effected by the Merger as a
pooling of interests in accordance with generally accepted accounting principles
or would prevent the Merger from qualifying as a reorganization under Section
368(a) of the Code. FFC has no reason to believe that the Merger will not
qualify as a pooling of interest or as a reorganization under Section 368(a) of
the Code.
SECTION 2.18. Vote Required. The affirmative vote of the
holders of two-thirds of the outstanding Shares entitled to vote on the Merger
is the only FFC shareholder vote required with respect to the Merger.
SECTION 2.19. Fairness Opinion. FFC has received an opinion
from McDonald to the effect that, in its opinion, the consideration to be paid
to shareholders of FFC under this Agreement is fair to such shareholders from a
financial point of view ("FFC Fairness Opinion"), and McDonald has consented to
the inclusion of the FFC Fairness Opinion in the Form S-4 (as defined below).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSOCIATED
Except as set forth in the disclosure schedule delivered by
Associated to FFC prior to the execution of this Agreement which shall identify
exceptions by specific Section references; provided that disclosure in one
schedule will be deemed to satisfy disclosure in another schedule (the
"Associated Disclosure Schedule"), Associated hereby represents and warrants to
FFC that:
21
SECTION 3.01. Organization and Qualification of Associated;
Subsidiaries. (a) Associated, is a corporation duly organized, validly existing
and in good standing under the laws of the State of Wisconsin. Associated is
registered as a bank holding company with the Federal Reserve Board of Governors
of the Federal Reserve System (the "Federal Reserve Board") under the BHCA.
(b) Section 3.01 of the Associated Disclosure Schedule sets
forth a true and complete list of each of Associated's subsidiaries (the
"Associated Subsidiaries"), all outstanding equity securities of each Associated
Subsidiaries and the percentages owned by Associated of such equity securities.
Except as set forth in Section 3.01 of the Associated Disclosure Schedule, each
Associated Subsidiary is wholly owned, directly or indirectly, by Associated.
Except as set forth in Section 3.01 of the Associated Disclosure Schedule, all
outstanding shares of capital stock of the Associated Subsidiaries are validly
issued, fully paid and nonassessable (except as provided in Section
180.0622(2)(b) of Wisconsin Law) and are free and clear of any Lien, with
respect thereto. Each Associated Subsidiary is a corporation, partnership,
savings bank, savings and loan, bank or trust company duly incorporated or
organized validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization.
(c) Associated and each Associated Subsidiary has the
requisite corporate power and authority and is in possession of all franchises,
grants, authorizations, licenses, permits, easements, consents, certificates,
approvals and orders (the "Associated Permits") necessary to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority and Associated Permits would not,
either individually or in the aggregate, have a Material Adverse Effect on
Associated and the Associated Subsidiaries, taken as a whole. Associated has not
received any notice of proceedings relating to the revocation or modification of
any such Associated Permits except for any such revocation or modification which
would not, either individually or in the aggregate, have a Material Adverse
Effect on Associated and the Associated Subsidiaries, taken as a whole.
Associated and each Associated Subsidiary is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, have a
Material Adverse Effect on Associated and the Associated Subsidiaries, taken as
a whole.
(d) Section 3.01 of the Associated Disclosure Schedule sets
forth with respect to each Associated Subsidiary that is a financial
institution, its form of charter and the insurance fund which insures such
subsidiary's deposits.
22
(e) Section 3.01 of the Associated Disclosure Schedule sets
forth a true, complete and correct list of all Corporate Entities of which
Associated or any Associated Subsidiary holds or beneficially owns 5% or more of
the outstanding shares of any class of voting securities, holds a general
partnership interest or other controlling interest, holds or beneficially owns
more than 24.9% of the outstanding capital stock (whether voting or nonvoting)
and subordinated debt or is otherwise deemed to be a subsidiary within the
meaning of the BHCA.
SECTION 3.02. Articles of Incorporation and Bylaws.
Associated, Merger Sub and Associated Bank Green Bay, N.A. and Associated Bank
Milwaukee (together, the "Associated Material Subsidiaries") have heretofore
furnished or made available to FFC a complete and correct copy of their
respective Articles of Incorporation and the Bylaws, as amended or restated. The
Associated Material Subsidiaries are Associated's only banking subsidiaries with
total assets (as reflected on the financial statements of Associated's banking
subsidiaries) greater than $500 million. Such Articles of Incorporation and
Bylaws are in full force and effect and none of Associated, Merger Sub or the
Associated Material Subsidiaries are in violation of any of the provisions of
their respective Articles of Incorporation or Bylaws.
SECTION 3.03. Capitalization. (a) Capitalization of
Associated. The authorized capital stock of Associated consists of (i)
48,000,000 shares of Associated Common Stock of which as of March 31, 1997,
22,439,000 shares were issued and outstanding, all of such shares are, and the
shares of Associated Common Stock to be issued pursuant to the Merger, when so
issued will be, validly issued, fully paid and non-assessable (except as
provided in Section 180.0622(2)(b) of Wisconsin Business Corporation Law), and
all of which have been or will be issued in compliance with applicable
securities laws, and (ii) 750,000 shares of preferred stock, par value $1.00 per
share ("Associated Preferred Stock"), of which no shares are issued and
outstanding. Since March 31, 1997, no shares of Associated Common Stock have
been issued, except for shares issued upon exercise of options outstanding as of
March 31, 1997, under the Restated Long Term Incentive Stock Plan and the 1982
Incentive Stock Option Plan (the "Associated Stock Plans"). As of March 31, 1997
Associated had reserved 2,127,855 shares of Associated Common Stock under the
Associated Stock Plans pursuant to which options covering 1,262,577 shares of
Associated Common Stock were outstanding. No options have been granted since
March 31, 1997 to the date of this Agreement under the Associated Stock Plans.
As of the date of this Agreement 34,556 shares of the Associated Common Stock
are held as treasury stock by Associated. Other than pursuant to the Associated
Stock Option Agreement and the Associated Stock Plans there are no options,
warrants or other rights, rights of first refusal, agreements, arrangements, or
commitments of any character relating to the issued or unissued capital stock of
Associated or obligating Associated to issue or sell any shares of capital stock
of, or other equity interests in Associated. There are no obligations,
contingent or otherwise, of Associated to repurchase, redeem or otherwise
acquire any shares of
23
Associated Common Stock or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity
(including any Associated Subsidiary).
(b) Capital Stock of the Associated Subsidiaries. Except as
set forth in Section 3.03(b) of the Associated Disclosure Schedule, there are no
options, warrants or other rights, rights of first refusal, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Associated Subsidiaries or obligating any Associated
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in any Associated Subsidiary. There are no obligations, contingent or
otherwise, of any Associated Subsidiary to repurchase, redeem or otherwise
acquire any shares of the capital stock of any Associated Subsidiary or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity.
SECTION 3.04. Authority. Associated and Merger Sub have the
requisite corporate power and authority to execute and deliver this Agreement
and to perform their obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Associated
and Merger Sub and the consummation by Associated and Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Associated and Merger Sub and no other
corporate proceedings on the part of Associated or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger, the requisite approval to increase the
authorized number of, and the issuances of, shares of Associated Common Stock in
connection with the Merger). This Agreement has been duly and validly executed
and delivered by Associated and Merger Sub and, assuming the due authorization,
execution and delivery by FFC, constitutes the legal, valid and binding
obligation of Associated and Merger Sub enforceable in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally and by general
principles of equity.
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
Except as set forth in Section 3.05 of the Associated Disclosure Schedule, the
execution and delivery of this Agreement by Associated and Merger Sub does not,
and the performance of this Agreement by Associated and Merger Sub shall not,
(i) conflict with or violate the Articles of Incorporation or Bylaws of
Associated or any Associated Subsidiary, (ii) conflict with or violate any Laws
applicable to Associated or any Associated Subsidiary, or by which its
respective properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on any of the properties or assets of Associated or any Associated Subsidiary
pursuant to any note, bond, mortgage, indenture, contract, agreement,
24
lease, license, permit, franchise or other instrument or obligation to which
Associated or any Associated Subsidiary is a party or by which Associated or any
Associated Subsidiary or its respective properties are bound or affected, except
(in the case of clauses (ii) and (iii) of this Section 3.05(a)) for any such
conflicts, violations, breaches, defaults or other occurrences that would not,
either individually or in the aggregate, have a Material Adverse Effect on
Associated and the Associated Subsidiaries, taken as a whole.
(b) The execution and delivery of this Agreement by Associated
and Merger Sub does not, and the performance of this Agreement by Associated and
Merger Sub shall not, require any Approval, except (i) for applicable
requirements, if any, of (A) the Securities Act, (B) the Exchange Act, (C) the
BHCA, (D) HOLA, (E) the OCC, (F) the FDIA, (G) Blue Sky Laws, (H) the WBL, (I)
the filing and recordation of appropriate merger or other documents as required
by Wisconsin Law, (J) the IBL, (K) the Nasdaq Stock Market, (L) Insurance Laws
and (M) any applicable SRO and (ii) such additional Approvals the failure of
which to obtain would not prevent or delay consummation of the Merger, or
otherwise prevent Associated and Merger Sub from performing their obligations
under this Agreement, and would not, either individually or in the aggregate,
have a Material Adverse Effect on Associated and the Associated Subsidiaries,
taken as a whole.
SECTION 3.06. Compliance. Neither Associated nor any
Associated Subsidiary is in conflict with, or in default or violation of, (i)
any Law applicable to Associated or the Associated Subsidiaries or by which any
of their respective properties are bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Associated or any Associated Subsidiary
is a party or by which Associated or any Associated Subsidiary or any of their
respective properties are bound or affected, except for any such conflicts,
defaults or violations which would not, either individually or in the aggregate,
have a Material Adverse Effect on Associated and the Associated Subsidiaries,
taken as a whole.
SECTION 3.07. Securities and Banking Reports; Financial
Statements. (a) Associated and the Associated Subsidiaries have filed all
material forms, reports, registrations, statements and documents, together with
any amendments required to be made with respect thereto that were required to be
filed since January 1, 1995 with the Regulatory Agencies and all Other Reports
required to be filed by Associated and any Associated Subsidiary since January
1, 1995, and paid all fees and assessments due and payable in connection
therewith, except, in the case of the Other Reports, where failure to file such
form, report, registration, statement or document or pay such fees and
assessments would not, either individually or in the aggregate, have a Material
Adverse Effect on Associated and the Associated Subsidiaries, taken as a whole
(all such reports and statements are collectively referred to as the "Associated
Reports"). The Associated Reports, including all Associated Reports filed after
the date of this Agreement, (i) were, or will be, prepared in accordance with
the requirements of applicable Law and (ii) did not at the time they were
25
filed, or will not at the time they are filed, contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in any filings with the SEC
since January 1, 1995 (the "Associated SEC Reports"), including any Associated
SEC Reports filed since the date of this Agreement and prior to or on the
Effective Time, have been, or will be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as the may be indicated in the notes thereto) and each
fairly presents, or will fairly present, in all material respects, the
consolidated financial position of Associated and the Associated Subsidiaries as
of the respective dates thereof and the consolidated results of its operations
and changes in financial position for the periods indicated, except that any
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
(c) Except as and to the extent set forth on the consolidated
balance sheet of Associated and the Associated Subsidiaries as of December 31,
1996, including all notes thereto (the "Associated Balance Sheet"), neither
Associated nor any Associated Subsidiary has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise), except for (i)
liabilities or obligations incurred in the ordinary course of business since
December 31, 1996 and (ii) liabilities or obligations that would not, either
individually or in the aggregate, have a Material Adverse Effect on Associated
and the Associated Subsidiaries, taken as a whole.
SECTION 3.08. Absence of Certain Changes or Events. (a) Except
as disclosed in the Associated SEC Reports filed prior to the date of this
Agreement, since December 31, 1996, (i) Associated and the Associated
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and (ii) there has been no event which
has had, or is reasonably likely to result in, either individually or in the
aggregate, a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole.
SECTION 3.09. Absence of Litigation and Agreements. (a) Except
as disclosed in the Associated SEC Reports filed prior to the date of this
Agreement or set forth in Section 3.09 of the Associated Disclosure Schedule,
(i) neither Associated nor any Associated Subsidiary is subject to any
continuing order of, or written agreement or memorandum of understanding with,
or continuing investigation by, any federal or state savings and loan or bank
regulatory authority or other governmental entity or regulatory authority, or
any judgment, order, writ, injunction, decree or award of any governmental
26
entity or regulatory authority or arbitrator, including, without limitation,
cease-and-desist or other orders which, either individually or in the aggregate,
would have or reasonably be expected to have a Material Adverse Effect on the
Associated and the Associated Subsidiaries, taken as a whole; (ii) there is no
claim of any kind, action, suit, litigation, proceeding, arbitration,
investigation, or controversy affecting Associated or the Associated
Subsidiaries pending or, to the knowledge of Associated, threatened, except (A)
as of the date of this Agreement, for matters which individually seek damages
not in excess of $500,000 and (B) as of the Closing, for matters which cannot
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect on Associated and the Associated Subsidiaries, taken as
a whole; and (iii) there are not uncured violations, or violations with respect
to which refunds or restitutions may be required, cited in any compliance report
to Associated or the Associated Subsidiaries as a result of the examination by
any bank regulatory authority, which would have or reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect on
Associated and the Associated Subsidiaries, taken as a whole.
(b) Except as set forth on the Associated Disclosure Schedule
at Section 3.09, neither Associated nor any of the Associated Subsidiaries is a
party to any written agreement or memorandum of understanding with, or party to
any commitment letter, board resolution submitted to a regulatory authority or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from any governmental entity
or agency which restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies or its
management nor has Associated or any Associated Subsidiary (i) been advised by
any governmental entity or agency that it is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission or (ii) have knowledge of any
pending or threatened regulatory investigation. Neither Associated nor any
Associated Subsidiary is required by Section 32 of the Federal Deposit Insurance
Act to give prior notice to a Federal banking agency of the proposed addition of
an individual to its board of directors or the employment of an individual as a
senior executive officer.
SECTION 3.10. Employee Benefit Plans. (a) Since December 31,
1996, there has not been any adoption or amendment in any material respect by
Associated or any Associated Subsidiary of any employment, consulting,
termination or severance agreement or any material bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding providing benefits to any current or former employee, officer
or director of Associated or any Associated Subsidiary (collectively, such
agreements, plans, arrangements and understandings being the "Associated Benefit
Plans"), or any material change in any actuarial or other assumption used to
calculate funding obligations with respect to any
27
Associated pension plans, or any change in the manner in which contributions to
any Associated pension plans are made or the basis on which such contributions
are determined.
(b) Section 3.10 of the Associated Disclosure Schedule sets
forth a list of all Associated Benefit Plans. Associated has delivered or made
available to FFC true and complete copies of all Associated Benefit Plans
together with all current related documents, including the most recent summary
plan descriptions, IRS determination letters and actuarial reports, if
applicable.
(c) (i) Except as disclosed in Section 3.10 of the Associated
Disclosure Schedule, with respect to Associated Benefit Plans, no event
has occurred and, to the knowledge of Associated, there exists no
condition or set of circumstances, in connection with which Associated
or any of the Associated Subsidiaries could be subject to any liability
that individually or in the aggregate would have a Material Adverse
Effect on the Associated and the Associated Subsidiaries, taken as a
whole, under ERISA, the Code or any other applicable law.
(ii) Each Associated Benefit Plan has been administered in
accordance with its terms, except for any failures so to administer any
Associated Benefit Plan that individually or in the aggregate would not
have a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole. Associated, the Associated Subsidiaries
and all Associated Benefit Plans are in compliance with the applicable
provisions of ERISA, the Code and all other applicable laws and the
terms of all applicable collective bargaining agreements, except for
any failures to be in such compliance that individually or in the
aggregate would not have a Material Adverse Effect on Associated and
the Associated Subsidiaries, taken as a whole. Each Associated Benefit
Plan that is intended to be qualified under Section 401(a) or 401(k) of
the Code has received a favorable determination letter from the IRS
that it is so qualified and each trust established in connection with
any Associated Benefit Plan that is intended to be exempt from Federal
income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that such trust is so exempt. To the
knowledge of Associated, no fact or event has occurred since that date
of any determination letter from the IRS which is reasonably likely to
affect adversely the qualified status of any such Associated Benefit
Plan or the exempt status of any such trust.
(iii) Neither Associated nor any of the Associated
Subsidiaries has incurred any liability under Title IV of ERISA (other
than liability for premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course). No Associated Benefit Plan has
incurred an "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code) whether or not waived.
To the knowledge of Associated, there are not any facts or
circumstances that would
28
materially change the funded status of any Associated Benefit Plan that
is a "defined benefit" plan (as defined in Section 3(35) of ERISA)
since the date of the most recent actuarial report for such plan. No
Associated Benefit Plan is a "multiemployer plan" within the meaning of
Section 3(37) of ERISA.
(iv) Neither Associated nor any of the Associated Subsidiaries
is a party to any collective bargaining or other labor union contract
applicable to persons employed by Associated or any of the Associated
Subsidiaries and no collective bargaining agreement is being negotiated
by Associated or any of the Associated Subsidiaries. There is no labor
dispute, strike or work stoppage against Associated or any of the
Associated Subsidiaries pending or, to the knowledge of Associated,
threatened which may interfere with the respective business activities
of Associated or any Associated Subsidiary, except where such dispute,
strike or work stoppage individually or in the aggregate would not have
a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole. As of the date of this Agreement, to
the knowledge of Associated, none of Associated, any of the Associated
Subsidiaries or any of their respective representatives or employees
has committed any unfair labor practice in connection with the
operation of the respective businesses of Associated or any of the
Associated Subsidiaries, and there is no charge or complaint against
Associated or any of the Associated Subsidiaries by the National Labor
Relations Board or any comparable governmental agency pending or
threatened in writing.
(v) Except as referenced in this Agreement or contemplated by
this Agreement and except as set forth in Section 3.10 of the
Associated Disclosure Schedule, no employee of Associated or any
Associated Subsidiary will be entitled to any additional benefits or
any acceleration of the time of payment or vesting of any benefits
under any Associated Benefit Plan as a result of the transactions
contemplated by this Agreement or the Option Agreements.
(vi) No payment or benefit will or may be made by Associated
or any Associated Subsidiary with respect to any employee or any
current of former director that will be characterized as an "excess
parachute payment" within the meaning of Section 280G(b) of the Code.
SECTION 3.11. Material Contracts. Except as set forth in
Section 3.11 of the Associated Disclosure Schedule, as of the date of this
Agreement, neither Associated nor any Associated Subsidiary is a party to or
bound by (a) any contract or commitment for capital expenditures in excess of
$500,000 for any one project, (b) contracts or commitments for the purchase of
materials or supplies or for the performance of services over a period of more
than 60 days from the date of this Agreement and calling for aggregate future
payments of $1,000,000 or more during the term of such contract or commitment,
(c) any contract which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the
29
SEC) that has not been filed or incorporated by reference in the Associated SEC
Reports, (d) any contract which contains non-compete or exclusivity provisions
or restrictions with respect to any business or geographic area or (e) which
would prohibit or materially delay the consummation of the Merger or any other
transaction contemplated by this Agreement. Each contract, arrangement,
commitment or understanding of the type described in this Section 3.11, whether
or not set forth in Section 3.11 of Associated Disclosure Schedule, is referred
to herein as a "Associated Contract". Neither Associated nor any of Associated
Subsidiary knows of, or has received notice of, any violation of any Associated
Contract by any of the other parties thereto, except for violations which,
individually or in the aggregate, would not result in a Material Adverse Effect
on Associated and Associated Subsidiaries, taken as a whole.
SECTION 3.12. Environmental Matters. To the knowledge of
Associated neither Associated, any Associated Subsidiary, nor any properties
owned or operated by Associated or any Associated Subsidiary has been or is in
violation of or liable under any Environmental Law, except for such violations
or liabilities that, individually or in the aggregate, are not reasonably likely
to have a Material Adverse Effect on Associated and the Associated Subsidiaries,
taken as a whole. There are no actions, suits or proceedings, or demands,
claims, notices or investigations (including without limitation notices, demand
letters or requests of information from any environmental agency) instituted or
pending, or to the knowledge of Associated, threatened, relating to the
liability of Associated or any Associated Subsidiary with respect to any
properties owned or operated by Associated or any Associated Subsidiary under
any Environmental Law, except for liabilities or violations that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Associated and the Associated Subsidiaries, taken as a whole.
SECTION 3.13. Taxes. (a) Except for such matters as would not
have, individually or in the aggregate, a Material Adverse Effect on Associated
and the Associated Subsidiaries, taken as a whole, (i) Associated and the
Associated Subsidiaries have timely filed or will timely file all returns and
reports required to be filed by them with any taxing authority with respect to
Taxes for any period ending on or before the Effective Time, taking into account
any extension of time to file granted to or obtained on behalf of Associated and
the Associated Subsidiaries, (ii) all Taxes that are due prior to the Effective
Time have been paid or will be paid (other than Taxes which (1) are not yet
delinquent or (2) are being contested in good faith and have not been finally
determined), (iii) as of the date hereof, no deficiency for any Tax has been
asserted or assessed by a taxing authority against Associated or any of the
Associated Subsidiaries which deficiency has not been paid other than any
deficiency being contested in good faith and (iv) Associated and the Associated
Subsidiaries have provided adequate reserves (in accordance with generally
accepted accounting principles) in their financial statements for any Taxes that
have not been paid, whether or not shown as being due on any returns.
30
(b) To the knowledge of Associated, there are no material
disputes pending, or claims asserted in writing for, Taxes or assessments upon
Associated, or any of the Associated Subsidiaries, nor has Associated or any of
the Associated Subsidiaries been requested in writing to give any currently
effective waivers extending the statutory period of limitation applicable to any
federal or state income tax return for any period which disputes, claims,
assessments or waivers would have, individually or in the aggregate, a Material
Adverse Effect on Associated and the Associated Subsidiaries, taken as a whole.
(c) There are no Tax liens upon any property or assets of
Associated or any of the Associated Subsidiaries except liens for current Taxes
not yet due and except for liens which have not had and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Associated and the Associated Subsidiaries, taken as a whole.
(d) Neither Associated nor any of the Associated Subsidiaries
has been required to include in income any adjustment pursuant to Section 481 of
the Code by reason of a voluntary change in accounting method initiated by
Associated or any of the Associated Subsidiaries, and the IRS has not initiated
or proposed any such adjustment or change in accounting method, in either case
which adjustment or change would have, individually or in the aggregate, a
Material Adverse Effect on Associated and the Associated Subsidiaries, taken as
a whole.
(e) Except as set forth in the financial statements described
in Section 3.07, neither Associated nor any of the Associated Subsidiaries has
entered into a transaction which is being accounted for under the installment
method of Section 453 of the Code, which would have, individually or in the
aggregate, a Material Adverse Effect on Associated and the Associated
Subsidiaries, taken as a whole.
SECTION 3.14. Derivative Instruments. All Derivative
Instruments to which Associated or any Associated Subsidiary is a party or to
which any of their properties or assets may be subject were entered into in the
ordinary course of business and, to the knowledge of Associated, in accordance
with prudent banking practice and applicable rules, regulations, and policies of
the regulatory agencies and with counterparties believed to be financially
responsible at the time and, to knowledge of Associated, are legal, valid, and
binding obligations enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization, or similar laws
affecting the rights of creditors generally, and the availability of equitable
remedies), and, to the knowledge of Associated, are in full force and effect.
Associated and each Associated Subsidiary has duly performed in all material
respects all of its obligations under any such Derivative Instruments, and to
the knowledge of Associated, there are no breaches, violations, or defaults or
allegations or assertions of such by any party thereunder except for any such
breaches, violations, or defaults or allegations or assertions which would not,
individually or
31
in the aggregate, have a Material Adverse Effect on Associated and the
Associated Subsidiaries, taken as a whole.
SECTION 3.15. Regulatory Approvals. Associated is not aware of
any aspect of, or issues relating to, its or the Associated Subsidiaries'
operations and business that would prevent the condition of Closing set forth in
Section 6.01(c) from being satisfied.
SECTION 3.16. Brokers. Except as contemplated by or referenced
in the March 26, 1997 letter agreement between Sandler O'Neill & Partners, L.P.
("Sandler O'Neill") and Associated, a true and complete copy of which Associated
has delivered to FFC, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Associated or any Associated Subsidiary.
SECTION 3.17. Pooling of Interest and Tax Matters. Neither
Associated nor, to the knowledge of Associated, any of its affiliates has
through the date of this Agreement taken or agreed to take any action that would
prevent Associated from accounting for the business combination to be effected
by the Merger as a pooling of interests in accordance with generally accepted
accounting principles or would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code. Associated has no reason to
believe that the Merger will not qualify as a pooling of interests or as a
reorganization under Section 368(a) of the Code.
SECTION 3.18. Vote Required. The requisite affirmative vote of
holders of a majority of the outstanding shares of the Associated Common Stock
with respect to authorization of additional shares of Associated Common Stock in
accordance with the Associated's Articles of Incorporation and the issuance of
shares of Associated Common Stock in connection with the Merger pursuant to the
rules of the NASDAQ is the only vote of the holders of any class or series of
Associated's capital stock necessary with respect to the Merger.
SECTION 3.19. Fairness Opinion. Associated has received an
opinion from Sandler O'Neill to the effect that in its opinion, the
consideration to be paid to shareholders of FFC under this Agreement is fair to
such shareholders from a financial point of view ("Associated Fairness
Opinion"), and Sandler O'Neill has consented to the inclusion of the Associated
Fairness Opinion in the Form S-4.
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ARTICLE IV
COVENANTS OF FFC AND ASSOCIATED
SECTION 4.01. Affirmative Covenants. Each of FFC and
Associated hereby covenants and agrees with the other that prior to the
Effective Time, unless the prior written consent of the other shall have been
obtained and except as otherwise contemplated herein, FFC will, and will cause
each FFC Subsidiary to, and Associated will, and will cause each Associated
Subsidiary to, conduct their respective businesses in the ordinary course of
business in a manner consistent with past practice, use their respective
reasonable best efforts to preserve intact their respective business
organizations, keep available the services of their respective current officers,
employees and consultants and to preserve their respective current business
relationships.
SECTION 4.02. Negative Covenants. Except set forth in Section
4.02 of the Associated Disclosure Schedule or the FFC Disclosure Schedule, as
applicable, and except as specifically contemplated by this Agreement, from the
date of this Agreement until the Effective Time, each of FFC and Associated
shall not do, and, in the case of FFC, permit the FFC Subsidiaries to do, and,
in the case of Associated, permit the Associated Subsidiaries to do, without the
prior written consent of Associated or FFC, as applicable, any of the following:
(a) adjust, split, combine or reclassify any capital stock,
declare or pay any dividend on, or make any other distribution in
respect of, its outstanding shares of capital stock, except for
quarterly dividend declarations and payments in accordance with past
practice and in per share amounts not materially in excess of
historical per share dividend amounts; provided, however, that after
the date of this Agreement, each of Associated and FFC shall coordinate
with the other the declaration of any dividends in respect of
Associated Common Stock and FFC Common Stock and the record dates and
payment dates relating thereto, it being the intention of the parties
hereto that holders of Associated Common Stock or FFC Common Stock
shall not receive two dividends, or fail to receive one dividend, for
any quarter with respect to their shares of Associated Common Stock
and/or FFC Common Stock and any shares of Associated Common Stock any
such holder receives in exchange therefor in the Merger;
(b) (i) redeem, purchase or otherwise acquire any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options,
warrants, conversion or other rights to acquire any shares of its
capital stock or any such securities or obligations, (ii) effect any
reorganization or recapitalization, (iii) purchase or otherwise acquire
any assets or stock of any corporation, bank or other business for
consideration which in the
33
aggregate exceeds $10 million, or (iv) liquidate, sell, dispose of or
encumber any assets for consideration which in the aggregate exceeds
$25 million;
(c) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares of
any class of its capital stock (including shares held in treasury) or
any rights, warrants or options to acquire, any such shares;
(d) propose or adopt any amendments to its articles of
incorporation or bylaws;
(e) change any of its methods of accounting in effect at
December 31, 1996, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year
ending December 31, 1996, except as may be required by law or generally
accepted accounting principles;
(f) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money (other
than (x) short-term indebtedness incurred to refinance short-term
indebtedness or (y) indebtedness among its corporate affiliates), or
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity;
(g) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract or agreement, or make any change in any of its material leases
or material contracts, other than renewals of such contracts and leases
without material adverse changes of terms;
(h) increase in any manner the compensation or fringe benefits
of any of its employees or pay any pension or retirement allowance not
required by any existing plan or agreement to any such employees or
become a party to, amend or commit itself to any pension, retirement,
profit sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee other than, in each
case, in the ordinary course of business consistent with past practice,
or accelerate the vesting of any stock options or other stock-based
compensation;
(i) settle any claim, action or proceeding involving money
damages, except in the ordinary course of business consistent with past
practices;
(j) take any action that would prevent or impede the Merger
from qualifying (i) for pooling of interests accounting treatment or
(ii) as a reorganization
34
within the meaning of Section 368 of the Code: provided, however that
nothing contained herein shall limit the ability of Associated or FFC
to exercise its rights under the FFC Stock Option Agreement or the
Associated Stock Option Agreement, respectively;
(k) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in any of the
conditions to the Merger set forth in Article VI not being satisfied or
in a violation of any provision of this Agreement, except, in each
case, as may be required by applicable law;
(l) take any action or fail to take any action which
individually or in the aggregate can be reasonably expected to have a
Material Adverse Effect on, in the case of FFC, FFC and the FFC
Subsidiaries, taken as a whole or, in the case of Associated,
Associated and the Associated Subsidiaries, taken as a whole; or
(m) agree in writing or otherwise to do any of the foregoing.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Registration Statement. (a) As promptly as
practicable after the execution of this Agreement, (i) FFC and Associated shall
prepare and file with the SEC preliminary proxy materials which shall constitute
the joint proxy statement of Associated and FFC (such joint proxy statement as
amended or supplemented is referred to herein as the "Joint Proxy Statement")
and (ii) Associated shall prepare and file a registration statement on Form S-4
(together with any amendments thereto, the "Registration Statement"), in which
the Joint Proxy Statement shall be included as a prospectus, with the SEC with
respect to the registration of the Associated Common Stock to be issued in the
Merger. Associated and FFC shall each use its reasonable best efforts to cause
the Registration Statement to become effective as soon as reasonably
practicable. FFC will furnish to Associated all information concerning FFC and
the FFC Subsidiaries required to be set forth in the Registration Statement and
Associated will provide FFC and its counsel the opportunity to review such
information as set forth in the Registration Statement and Joint Proxy
Statement. Associated and FFC will each render to the other its full cooperation
in preparing, filing, prosecuting the filing of, and amending the Registration
Statement such that it comports at all times with the requirements of the
Securities Act and the Exchange Act. Each of Associated and FFC will promptly
advise the other if at any time prior to the Effective Time any information
provided by it for inclusion in the Registration Statement or the Joint Proxy
Statement
35
appears to have been, or shall have become, incorrect or incomplete and will
furnish the information necessary to correct such misstatements or omissions. As
promptly as practicable after the Registration Statement shall have become
effective, each of FFC and Associated will mail the Joint Proxy Statement to its
respective shareholders. Associated shall also take any action required to be
taken under any applicable Blue Sky Laws in connection with the issuance of the
shares of Associated Common Stock to be issued as set forth in this Agreement
and FFC and the FFC Subsidiaries shall furnish all information concerning FFC
and the FFC Subsidiaries, and the holders of Shares and other assistance as
Associated may reasonably request in connection with such action.
(b) (i) The Joint Proxy Statement shall include the
recommendation of the Board of Directors of FFC to the shareholders of FFC in
favor of approval and adoption of this Agreement and approval of the Merger;
provided, however, that, in connection with recommending approval of a Superior
Competing Transaction (as defined in Section 5.05), the Board of Directors of
FFC may, at any time prior to such time as the shareholders of FFC shall have
adopted and approved this Agreement and approval of the Merger in accordance
with Wisconsin Law, withdraw, modify or change any such recommendation to the
extent that the Board of Directors of FFC determines in good faith, after
consultation with and based upon the advice of independent legal counsel, that
the failure to so withdraw, modify or change its recommendation would cause the
Board of Directors of FFC to breach its fiduciary duties to FFC's shareholders
under applicable law and, notwithstanding anything to the contrary contained in
this Agreement, any such withdrawal, modification or change of recommendation
shall not constitute a breach of this Agreement by FFC.
(ii) The Joint Proxy Statement shall include the
recommendation of the Board of Directors of Associated to the shareholders of
Associated in favor of approval of the authorization of additional shares of
Associated Common Stock and the issuance of the shares of Associated Common
Stock in the Merger; provided, however, that, in connection with recommending
approval of a Superior Competing Transaction, the Board of Directors of
Associated may, at any time prior to such time as the shareholders of FFC shall
have adopted and approved this Agreement in accordance with Wisconsin Law
withdraw, modify, or change any such recommendation to the extent that the Board
of Directors of Associated determines in good faith, after consultation with and
based upon the advice of independent legal counsel, that the failure to so
withdraw, modify or change its recommendation would cause the Board of Directors
of Associated to breach its fiduciary duties to Associated's shareholders under
applicable law and, notwithstanding anything to the contrary contained in this
Agreement, any such withdrawal, modification or change of recommendation shall
not constitute a breach of this Agreement by Associated.
(c) No amendment or supplement to the Joint Proxy Statement or
the Registration Statement will be made by Associated or FFC without the
approval of the other party (which will not be unreasonably withheld).
Associated and FFC each will advise the
36
other, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Associated Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Joint Proxy Statement, or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(d) Associated shall promptly prepare and submit to the Nasdaq
a listing application covering the shares of Associated Common Stock issuable in
the Merger, and shall use its reasonable best efforts to obtain, prior to the
Effective Time, approval for the listing of such Associated Common Stock,
subject to official notice of issuance and FFC shall cooperate with Associated
with respect to such listing.
(e) The information supplied by Associated for inclusion in
the Registration Statement or the Joint Proxy Statement shall not, at (i) the
time the Registration Statement is declared effective, (ii) the time the Joint
Proxy Statement (or any amendment or supplement thereto), is first mailed to the
shareholders of Associated and FFC and (iii) the time of any Shareholders'
Meetings, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time
any event or circumstance relating to Associated or any Associated Subsidiary,
or their respective officers or directors, should be discovered by Associated
that should be set forth in an amendment or a supplement to the Registration
Statement the Joint Proxy Statement, Associated shall promptly inform FFC. All
documents that FFC is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material aspects with the applicable requirements of the Securities Act and the
rules and regulations promulgated thereunder and the Exchange Act and the rules
and regulations thereunder.
(f) The information supplied by FFC for inclusion in the
Registration Statement or the Joint Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Joint Proxy
Statement (or any amendment or supplement thereto), is first mailed to the
shareholders of Associated and FFC and (iii) the time of any Shareholders'
Meetings, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time
any event or circumstance relating to FFC or any FFC Subsidiary, or their
respective officers or directors, should be discovered by FFC that should be set
forth in an amendment or a supplement to the Registration Statement or the Joint
Proxy Statement, FFC shall promptly inform Associated. All documents that
Associated is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
rules and regulations
37
promulgated thereunder and the Exchange Act and the rules and regulations
promulgated thereunder.
SECTION 5.02. Meetings of Shareholders. (a) FFC and its
officers and directors shall (i) cause a meeting of FFC's shareholders to
consider the Merger (the "FFC Meeting") to be duly called and held as soon as
practicable to consider and vote upon the plan of Merger and any related matters
in accordance with the applicable provisions of applicable law, (ii) submit this
Agreement and the plan of Merger to FFC's shareholders together with, subject to
the fiduciary duties of the FFC's Board of Directors under applicable law as
advised by counsel, a recommendation for approval by the Board of Directors of
FFC, (iii) solicit the approval thereof by FFC's shareholders by mailing or
delivering to each shareholder a Joint Proxy Statement, and (iv) subject to the
fiduciary duties of the FFC's Board of Directors under applicable law as advised
by counsel, use their reasonable efforts to obtain the approval of the plan of
Merger by the requisite percentage of FFC's shareholders.
(b) Associated and its officers and directors shall (i) cause
a meeting of Associated's shareholders to consider the authorization of
additional shares of Associated Common Stock and the issuance of shares of
Associated Common Stock in connection with the Merger (the "Associated Meeting";
and together with the FFC Meeting, the "Shareholders' Meetings") to be duly
called and held as soon as practicable to consider and vote upon the issuance of
additional shares of Associated Common Stock in connection with the Merger and
any related matters in accordance with the applicable provisions of applicable
law, (ii) submit such proposal to Associated's shareholders together with,
subject to the fiduciary duties of Associated's Board of Directors under
applicable law as advised by counsel, a recommendation for approval by the Board
of Directors of Associated, (iii) solicit the approval thereof by Associated's
shareholders by mailing or delivering to each shareholder a Joint Proxy
Statement, and (iv) subject to the fiduciary duties of Associated's Board of
Directors under applicable law as advised by counsel, use their reasonable
efforts to obtain the approval of the Merger by the requisite percentage of
Associated's shareholders.
(c) Each of FFC and Associated will consult with the other and
use its reasonable best efforts to hold their respective meetings on the same
day.
SECTION 5.03. Access to Information; Confidentiality. (a)
Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which Associated or FFC or any of their respective
subsidiaries is a party or pursuant to applicable Law, from the date of this
Agreement to the Effective Time, Associated and FFC shall (and shall cause their
respective subsidiaries to): (i) provide to the other (and its officers,
directors, employees, accountants, consultants, legal counsel, agents,
investment bankers, advisors and other representatives (collectively,
"Representatives")) access at reasonable times upon prior notice to the
officers, employees, agents, properties, offices and
38
other facilities of the other and its subsidiaries and to the books and records
thereof and (ii) furnish promptly to the other party and its Representatives
such information concerning the business, properties, contracts, assets,
liabilities, personnel and other aspects with respect to it and its subsidiaries
as the requesting party may reasonably request.
(b) The parties shall comply with and shall cause their
respective Representatives to comply with, all their respective obligations
under the Confidentiality Agreements entered into by the parties (the
"Confidentiality Agreements"), it being understood that the parties hereto shall
have the rights as beneficiaries under such agreements.
(c) No investigation pursuant to this Section 5.03 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
SECTION 5.04. Appropriate Action; Consents; Filings. FFC and
Associated and Merger Sub shall use all reasonable efforts to (i) take, or cause
to be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable law to consummate and make
effective the transactions contemplated by this Agreement; (ii) obtain all
consents, licenses, permits, waivers, approvals, authorizations or orders
required under Law (including, without limitation, all foreign and domestic
(federal, state and local) governmental and regulatory rulings and approvals and
parties to contracts) in connection with the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby and thereby, including, without limitation, the Merger; and
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (A)
the Securities Act and the Exchange Act and the rules and regulations
thereunder, and any other applicable federal or state securities laws; (B) any
applicable federal or state banking laws (including, without limitation, filing
a notice with the Federal Reserve Board with respect to approval of the Merger
under the BHCA and the applicable regulations promulgated thereunder); and (C)
any other applicable law (including, without limitation, any applicable state
insurance laws); provided that Associated and FFC shall cooperate with each
other in connection with the making of all such filings, including providing
copies of all such documents to the non-filing party and its advisors prior to
filing. FFC and Associated shall furnish all information required for any
application or other filing to be made pursuant to the rules and regulations of
any applicable law (including all information required to be included in the
Joint Proxy Statement and the Registration Statement) in connection with the
transactions contemplated by this Agreement. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use all reasonable efforts to take all such necessary
action.
39
SECTION 5.05. No Solicitation of Transactions. (a) FFC shall
immediately cease and cause to be terminated any existing discussions or
negotiations relating to a Competing Proposal (as defined below), other than
with respect to the Merger, with any parties conducted heretofore. FFC will not,
directly or indirectly, and will instruct its Representatives not to, directly
or indirectly, initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Competing Proposal, or enter into or maintain
discussions or negotiate with any person in furtherance of or relating to such
inquiries or to obtain a Competing Proposal, or agree to or endorse any
Competing Proposal, or authorize or permit any Representative of FFC or any of
its subsidiaries to take any such action, and FFC shall use its reasonable best
efforts to cause the Representatives of FFC and the FFC Subsidiaries not to take
any such action, and FFC shall promptly notify Associated if any such inquiries
or proposals are made regarding a Competing Proposal, and FFC shall keep
Associated informed, on a current basis, of the status and terms of any such
proposals; provided, however, that prior to such time as the shareholders of FFC
shall have adopted and approved this Agreement in accordance with Wisconsin Law,
nothing contained in this Section 5.05 shall prohibit the Board of Directors of
FFC from (i), in connection with a Superior Competing Transaction (as defined
below), furnishing information to, or entering into discussions or negotiations
with, any person that makes an unsolicited bona fide proposal to acquire FFC
pursuant to a merger, consolidation, share exchange, business combination or
other similar transaction, if, and only to the extent that, (A) the Board of
Directors of FFC, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is required
for the Board of Directors of FFC to comply with its fiduciary duties to
shareholders imposed by Wisconsin Law, (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such person, FFC provides
written notice to Associated to the effect that it is furnishing information to,
or entering into discussions or negotiations with, such person, (C) prior to
furnishing such information to such person, FFC receives from such person an
executed confidentiality agreement with terms no less favorable to FFC than
those contained in the Confidentiality Agreements, and (D) FFC keeps Associated
informed, on a current basis, of the status and details of any such discussions
or negotiations; or (ii) complying with Rule 14e-2 promulgated under the
Exchange Act.
(b) Associated shall immediately cease and cause to be
terminated any existing discussions or negotiations relating to a Competing
Proposal, other than with respect to the Merger, with any parties conducted
heretofore. Associated will not, directly or indirectly, and will instruct its
Representatives not to, directly or indirectly, initiate, solicit or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing Proposal,
or enter into or maintain discussions or negotiate with any person in
furtherance of or relating to such inquiries or to obtain a Competing Proposal,
or agree to or endorse any Competing Proposal, or authorize
40
or permit any Representative of Associated or any of its subsidiaries to take
any such action, and Associated shall use its reasonable best efforts to cause
the Representatives of Associated and Associated Subsidiaries not to take any
such action, and Associated shall promptly notify FFC if any such inquiries or
proposals are made regarding a Competing Proposal, and Associated shall keep FFC
informed, on a current basis, of the status and terms of any such proposals;
provided, however, that prior to such time as the shareholders of Associated
shall have adopted and approved this Agreement in accordance with Wisconsin Law,
nothing contained in this Section 5.05 shall prohibit the Board of Directors of
Associated from (i) in connection with a Superior Competing Transaction,
furnishing information to, or entering into discussions or negotiations with,
any person that makes an unsolicited bona fide proposal to acquire Associated
pursuant to a merger, consolidation, share exchange, business combination or
other similar transaction, if, and only to the extent that, (A) the Board of
Directors of Associated, after consultation with and based upon the written
advise of independent legal counsel, determines in good faith that such action
is required for the Board of Directors of Associated to comply with its
fiduciary duties to shareholders imposed by Wisconsin Law, (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person, Associated provides written notice to FFC to the effect that
it is furnishing information to, or entering into discussions or negotiations
with, such person, (C) prior to furnishing such information to such person,
Associated receives from such person an executed confidentiality agreement with
terms no less favorable to Associated than those contained in the
Confidentiality Agreements, and (D) Associated keeps FFC informed, on a current
basis, of the status and details of any such discussions or negotiations; or
(ii) complying with Rule 14e-2 promulgated under the Exchange Act.
(c) For purposes of this Agreement, "Competing Proposal" shall
mean any of the following involving FFC or any FFC Subsidiary, on the one hand,
or Associated or any Associated Subsidiary, on the other hand: any inquiry,
proposal or offer from any person relating to any direct or indirect acquisition
or purchase of a business that constitutes 15% or more of the net revenues, net
income or the assets of Associated or FFC, as applicable, and its subsidiaries,
taken as a whole, or 15% or more of any class of equity securities of Associated
or FFC, as applicable,or any of its subsidiaries, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 15% or
more of any class of equity securities of Associated or FFC, as applicable, or
any of its subsidiaries, any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Associated or FFC, as applicable, or any of its subsidiaries, other than the
transactions contemplated by this Agreement.
(d) For purposes of this Agreement "Superior Competing
Transaction" shall mean any of the following involving FFC or any FFC
Subsidiary, on the one hand, or Associated or any Associated Subsidiary, on the
other hand: any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or
41
similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the combined voting power of the shares of Associated Common
Stock or FFC Common Stock, as applicable, then outstanding or all or
substantially all the assets of Associated or FFC, as applicable, and otherwise
on terms which the Board of Directors of Associated or FFC, as applicable,
determines in its good faith judgement (based on the opinion of a financial
advisor of nationally recognized reputation) to be more favorable to its
shareholders than the Merger and for which financing, to the extent required, is
then committed or which if not committed is, in the good faith judgment of its
Board of Directors, reasonably capable of being obtained by such third party.
SECTION 5.06. Indemnification. (a) From and after the
Effective Time, Associated and the Surviving Corporation shall, jointly and
severally, indemnify, defend and hold harmless the present and former officers,
directors and employees of FFC (collectively, the "Indemnified Parties") against
all losses, expenses, claims, damages, liabilities or amounts that are paid in
settlement of (with the approval of Associated and the Surviving Corporation,
which will not be unreasonably withheld), or otherwise in connection with, any
claim, action, suit, proceeding or investigation (a "Claim"), based in whole or
in part on the fact that such person is or was such a director, officer or
employee and arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement), in each case to the fullest extent permitted under Wisconsin
Law and Associated's corporate governance documents (and shall pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted under Wisconsin Law, upon
receipt from the Indemnified Party to whom expenses are advanced of the
undertaking to repay such advances).
(b) Any Indemnified Party wishing to claim indemnification
under this Section 5.06, upon learning of any such Claim, shall notify
Associated and the Surviving Corporation (although the failure so to notify
Associated and the Surviving Corporation shall not relieve either thereof from
any liability that Associated or the Surviving Corporation may have under this
Section 5.06, except to the extent such failure materially prejudices such
party). Associated and the Surviving Corporation shall have the right to assume
the defense thereof and if such right is exercised Associated and the Surviving
Corporation shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Associated and the Surviving Corporation elect not to assume such defense or
there is a conflict of interest between Associated and the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and, in such case, Associated and the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that (i) Associated and the Surviving Corporation shall not, in
connection with any one such action or proceeding or separate but substantially
similar
42
actions or proceedings arising out of the same general allegations, be liable
for the fees and expenses of more than one separate firm of attorneys at any
time for all Indemnified Parties except to the extent that local counsel, in
addition to such parties' regular counsel, is necessary or desirable in order to
effectively defend against such action or proceeding, (ii) Associated, the
Surviving Corporation and the Indemnified Parties will cooperate in the defense
of any such matter, or (iii) Associated and the Surviving Corporation shall not
be liable for any settlement effected without its prior written consent, which
consent will not be unreasonably withheld or delayed, and provided, further,
that the Surviving Corporation shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and not subject to
further appeal, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. No Indemnified Party shall
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release, in form and substance reasonably
satisfactory to such Indemnified Party, from all liability in respect of such
claim or litigation for which such Indemnified Party would be entitled to
indemnification hereunder.
(c) Associated shall use its reasonable best efforts to cause
to be maintained in effect for not less than two years after the Effective Time
(except to the extent not generally available in the market) directors' and
officers' liability insurance and fiduciary liability insurance that is
substantially equivalent in coverage to FFC's current insurance; provided,
however, that Associated shall not be required to pay an annual premium for such
insurance in excess of 150% of the last annual premium paid prior to the date of
this Agreement, and in such case shall purchase as much comparable coverage as
possible for such amount.
(d) This Section 5.06 is intended to be for the benefit of,
and shall be enforceable by, the Indemnified Parties referred to herein, their
heirs and personal representatives and shall be binding on Associated and Merger
Sub and the Surviving Corporation and their respective successors and assigns.
SECTION 5.07. Obligations of Merger Sub. Associated shall take
all action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to conditions
set forth in this Agreement.
SECTION 5.08. Pooling Affiliates. (a) As soon as practicable
after the date of this Agreement, FFC shall deliver to Associated a list of
names and addresses of those persons, in FFC's reasonable judgment, at the
record date for its shareholders' approval the Merger, who were affiliates
within the meaning of Rule 145 of the rules and regulations promulgated under
the Securities Act or otherwise applicable SEC accounting releases with respect
to pooling-of-interests accounting treatment (each such person, a "Pooling
Affiliate")
43
of FFC. FFC shall provide Associated such information and documents as
Associated shall reasonably request for purposes of reviewing such list. FFC
shall use its reasonable best efforts to deliver or cause to be delivered to
Associated, as soon as practicable after the date of this Agreement, an
affiliate letter in the form attached hereto as Exhibit 5.08(a), executed by
each of the Pooling Affiliates of FFC identified in the foregoing list.
Associated shall be entitled to issue appropriate stop transfer instructions to
the transfer agent for the Associated Common Stock, consistent with the terms of
such Letters.
(b) As soon as practicable after the date of this Agreement,
Associated shall deliver to FFC a list of names and addresses of the Pooling
Affiliates of Associated. Associated shall provide FFC such information and
documents as FFC shall reasonably request for purposes of reviewing such list.
Associated shall use its reasonable best efforts to deliver or cause to be
delivered to FFC, as soon as practicable after the date of this Agreement, an
affiliate letter in the form attached hereto as Exhibit 5.08(b), executed by
each of the Pooling Affiliates of Associated identified in the foregoing list.
SECTION 5.09. Executive Agreements and Employee Severance. (a)
Associated agrees to cause the Surviving Corporation and each relevant FFC
Subsidiary to honor, without modification (except as provided in Section 5.09(b)
below), and perform its obligations under, the contracts, plans and arrangements
listed in Section 5.09 of FFC Disclosure Schedule.
(b) Notwithstanding any provisions of the contracts, plans and
arrangements listed in Section 5.09 of the FFC Disclosure Schedule, the
following contracts, plans and arrangements shall be treated as follows:
(i) FFC's Directors' Retirement Plan, effective November 18,
1992 (the "Directors' Plan"), shall be terminated immediately after the
Effective Time of the Merger, and, accordingly, (a) each person serving
as a director of FFC on the date hereof ("Current Directors") shall
receive in a lump sum cash payment his fully vested benefits
thereunder, with no reduction as a result of any Current Director
having not attained age 70, and (b) each former director of FFC who is
currently receiving benefits under the Directors' Plan shall receive
benefits as provided under Section 4.6 of the Directors' Plan.
(ii) Each of the persons subject to the employment and
severance agreements listed in Section 5.09 of the FFC Disclosure
Schedule who delivers a written consent to Parent prior to the
Effective Time, which consent permits the payment of benefits in
accordance herewith, shall be paid the benefits specified at Section
5.09(b)(ii) of the FFC Disclosure Schedule (the "Benefits") in lieu of
any severance benefits which otherwise would be due to such person
following termination upon the Merger. Associated shall provide the
Benefits to such persons upon the first
44
to occur of (x) two years following the Effective Time; (y) termination
of such employee by reason of death or disability, or for other than
"Cause" or (z) resignation of such employee for "Good Reason";
provided, however, that post-retirement continuation of healthcare
benefits will be provided only upon the occurrence of (y) or (z) above,
on or prior to the second anniversary of the Effective Time. In the
event of the termination of any such person for Cause or a resignation
without Good Reason occurring prior to the second anniversary of the
Effective Time, such person shall have no right to the Benefits or to
any other severance benefits under the relevant agreements listed in
Section 5.09 of the Disclosure Schedule or any other plan, program or
arrangement. The term "Cause" means personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, or regulation involving dishonesty or breach of trust, which
is a crime punishable by imprisonment for a term exceeding one year, or
otherwise involving unsafe or unsound banking practices, willful
violation or being the subject of a final cease-and-desist order. The
term "Good Reason" means a reduction in the compensation, or material
reduction in the benefits, position, authority, duties or
responsibilities of the employee from those which existed prior to the
date hereof; a reduction in the employee's job stature as reflected in
his title; or a change by more than 50 miles of the location of the
employee's job; provided, however, that nothing herein shall be
construed to mean that the mere fact that an employee's position is
with a subsidiary of a public company rather than in a public company
itself constitutes Good Reason. Neither execution and delivery of the
aforementioned consent or payment of the Benefits shall constitute a
waiver or satisfaction, or otherwise effect the terms of the employment
and severance agreements listed in Section 5.09 of the FFC Disclosure
Schedule, except with respect to the right to receive severance
benefits following termination upon the Merger.
This Section 5.09(b) is intended to be for the benefit of, and shall be
enforceable by, the individuals subject to the provisions of Section 5.09(b)(i)
and (b)(ii) above, their heirs, and personal representatives, and shall be
binding on Associated and Merger Sub and the Surviving Corporation and their
respective successors and assigns.
(c) Following the Merger, it is the intent of Associated and
the Surviving Corporation that such entities will, and will cause any of their
respective direct and indirect subsidiaries to, in connection with reviewing
candidates for employment positions, give equal opportunity for such positions
to employees of Associated and any Associated Subsidiaries and of FFC and any
FFC Subsidiaries. In addition, for purposes of the Associated Work Force
Management Plan (the "Work Force Plan"), employees of FFC will be deemed
associates of Associated, and will be accorded equal priority in the hiring
process. Furthermore, effective as of the Effective Time, Associated shall adopt
an amendment to its Work Force Plan (as well as conforming amendments to
Associated's Severance Pay Plan)
45
which covers the employees of Associated and the Associated subsidiaries, which
plan, as amended, shall include the terms set forth in Section 5.09(c) of the
Associated Disclosure Schedule.
SECTION 5.10. Notification of Certain Matters. FFC shall give
prompt notice to Associated, and Associated shall give prompt notice to FFC, of
(i) the occurrence, or non-occurrence, of any event the occurrence, or
non-occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate, and (ii) any failure of
FFC or Associated, as the case may be, to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.10
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 5.11. Public Announcements. Associated and FFC shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation and with
mutual consent of both parties, except as may be required by law or any listing
agreement with the Nasdaq Stock Market.
SECTION 5.12. Expenses. (a) All Expenses (as described below)
incurred by Associated and FFC shall be borne by the party which has incurred
the same, except that the parties shall share equally in the cost of printing
and filing the Registration Statement and the Joint Proxy Statement with the SEC
and all other regulatory filing fees incurred in connection with this Agreement.
(b) "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
the party and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation and execution of this
Agreement, FFC Stock Option Agreement and the Associated Stock Option Agreement,
the solicitation of shareholder approvals and all other matters related to the
closing of the transactions contemplated hereby.
SECTION 5.13. Delivery of Shareholder List. FFC shall arrange
to have its transfer agent deliver to Associated or its designee, from time to
time prior to the Effective Time, a true and complete list setting forth the
names and addresses of the shareholders of FFC, their holdings of stock as of
the latest practicable date, and such other shareholder information as
Associated may reasonably request.
SECTION 5.14. Letters of Accountants. (a) FFC shall use its
reasonable efforts to cause to be delivered to Associated a "comfort" letter of
Ernst & Young LLP,
46
FFC's independent public accountants, dated and delivered the date on which the
Registration Statement shall become effective, and addressed to Associated, in
the form, scope and content contemplated by Statement on Auditing Standards No.
72 issued by the American Institute of Certified Public Accountants, Inc. ("SAS
72"), relating to the financial statements and other financial data with respect
to FFC and its consolidated subsidiaries included or incorporated by reference
in the Joint Proxy Statement and such other matters as may be reasonably
required by Associated, and based upon procedures carried out to a specified
date not earlier than five days prior to the date thereof.
(b) Associated shall use its reasonable efforts to cause to be
delivered to FFC a "comfort" letter of KPMG Peat Marwick LLP, Associated's
independent public accountants, dated the date on which the Registration
Statement shall become effective, and addressed to FFC, in the form, scope and
content contemplated by SAS 72, relating to the financial statements and other
financial data with respect to Associated and its consolidated subsidiaries
included in or incorporated by reference in the Joint Proxy Statement and such
other matters as may be reasonably required by FFC, and based upon procedures
carried out to a specified date not earlier than five days prior to the date
thereof.
SECTION 5.15. FFC Reports. (a) FFC shall timely file all
required FFC Reports, each of which (i) shall be prepared in all material
respects in accordance with, in the case of filings with the SEC, the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the SEC thereunder, and in the case of all other FFC Reports, the
requirements of any Regulatory Agency applicable to such FFC Reports and (ii)
shall not at the time they are filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in FFC SEC Reports filed after the
date of this Agreement and prior to the Effective Time shall be prepared in
accordance with the published rules and regulations of the SEC and generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and each shall present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of FFC and
its consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which are not expected,
individually or in the aggregate, to have a FFC Material Adverse Effect).
SECTION 5.16. Associated Reports. (a) Associated shall timely
file all required Associated Reports, each of which (i) shall be prepared in all
material respects in accordance with, in the case of filings with the SEC, the
requirements of the Securities Act
47
and the Exchange Act and the rules and regulations of the SEC thereunder, and in
the case of all other Associated Reports, the requirements of any Regulatory
Agency applicable to such Associated Reports and (ii) shall not at the time they
are filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Associated SEC Reports filed
after the date of this Agreement and prior to the Effective Time shall be
prepared in accordance with the published rules and regulations of the SEC and
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated and each shall present fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of Associated and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein (subject, in the case
of unaudited statements, to normal and recurring year-end adjustments which are
not expected, individually or in the aggregate, to have a Associated Material
Adverse Effect).
SECTION 5.17. Pooling. Associated and FFC shall take all
reasonable actions to insure pooling of interest treatment for the Merger
including, without limitation, FFC shall rescind its share buy-back program
approved by its Board of Directors on April 22, 1997.
ARTICLE VI
CONDITIONS OF MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective by the SEC
under the Securities Act. No stop order suspending the effectiveness of
the Registration Statement shall have been issued by the SEC and no
proceedings for that purpose shall, on or prior to the Effective Time,
have been initiated or, to the knowledge of Associated or FFC,
threatened by the SEC. Associated shall have received all other federal
or state securities permits and other authorizations necessary to issue
Associated Common Stock in exchange for FFC Common Stock and to
consummate the Merger.
48
(b) Shareholder Approvals. (i) This Agreement and the Merger
shall have been approved and adopted by the requisite vote of the
shareholders of FFC. (ii) Authorization for additional shares of
Associated Common Stock and issuance of shares of Associated Common
Stock in connection with the Merger shall have each been approved by
the requisite vote of the shareholders of Associated.
(c) Regulatory Approvals. All requisite approvals of this
Agreement and the transactions contemplated hereby shall have been
received from the Federal Reserve Board and any other applicable
regulatory authority, and all conditions required to be satisfied prior
to the Effective Time imposed by the terms of such approvals shall have
been satisfied and all waiting periods relating to such approvals shall
have expired.
(d) Nasdaq Listing. The shares of Associated Common Stock that
are to be issued to the shareholders of FFC upon consummation of the
Merger shall have been authorized for listing on the Nasdaq Stock
Market's National Market, subject to notice of issuance.
(e) No Order. No federal or state governmental or regulatory
authority or other agency or commission, or federal or state court of
competent jurisdiction, shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect restricting, preventing or prohibiting
consummation of the transactions contemplated by this Agreement.
(f) No Challenge. There shall not be pending any action,
proceeding or investigation before any court or administrative agency
or by any government agency or any other person (i) challenging or
seeking material damages in connection with the Merger or (ii) seeking
to restrain, prohibit or limit the exercise of full rights of ownership
or operation by Associated or the Associated Subsidiaries of all or any
portion of the business or assets of FFC or any FFC Subsidiary, which
in either case has or would have a Material Adverse Effect on
Associated and the Associated Subsidiaries, taken as a whole, or a
Material Adverse Effect on FFC and FFC Subsidiaries, taken as a whole.
(g) Pooling Opinions. Each of Associated and FFC shall have
received an opinion from each of KPMG Peat Marwick LLP and Ernst &
Young LLP to the effect that the Merger qualifies for pooling of
interests accounting treatment if consummated in accordance with this
Agreement.
(h) Associated Tax Opinion. Associated and FFC shall have
received an opinion of Shearman & Sterling, special counsel for
Associated, based on appropriate
49
representations of Associated, FFC and, if required by applicable
regulations, any other party, and upon assumptions and qualifications
that are appropriate and reasonably satisfactory to FFC, to the effect
that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and
that Associated, Merger Sub and FFC will each be a party to that
reorganization within the meaning of Section 368(b) of the Code, dated
the date of the Effective Time, shall have been delivered and shall not
have been withdrawn or modified.
SECTION 6.02. Additional Conditions to Obligations of
Associated. The obligations of Associated and Merger Sub to effect the Merger
are also subject to the following conditions:
(a) Representation and Warranties. Each of the representations
and warranties of FFC set forth in this Agreement shall be true and
correct in all material respects as of the Closing Date (as defined in
Section 8.01) (except to the extent such representations and warranties
speak only as of an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of
such date) as though made as of the Closing Date. Associated shall have
received a certificate of the Chief Executive Officer of FFC dated the
Closing Date to that effect.
(b) Agreements and Covenants. FFC shall have performed or
complied in all material respects with all obligations required to be
performed by it under this Agreement on or prior to the Effective Time.
Associated shall have received a certificate of the Chief Executive
Officer of FFC dated the Closing Date to that effect.
(c) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings
required to be made by FFC for the authorization, execution and
delivery of this Agreement and the consummation by it of the
transactions contemplated hereby shall have been obtained and made by
FFC, except when the failure to obtain or make the same, individually
or in the aggregate, would not have a Material Adverse Effect on FFC
and FFC Subsidiaries, taken as a whole, or the Associated and the
Associated Subsidiaries, taken as a whole.
(d) Affiliate Letters. Associated shall have received from
each person who is identified as a Pooling Affiliate of FFC a signed
affiliate letter in the form attached hereto as Exhibit 5.08(a).
SECTION 6.03. Additional Conditions to Obligations of FFC. The
obligation of FFC to effect the Merger is also subject to the following
conditions:
50
(a) Representations and Warranties. Each of the
representations and warranties of Associated set forth in this
Agreement shall be true and correct in all material respects as of the
Closing Date (except to the extent such representation and warranties
speak as of an earlier date, in which case such representation and
warranties shall be true and correct in all material respects as of
such earlier date) as though made at the Closing Date. FFC shall have
received a certificate of the President of Associated dated the
Effective Time to that effect.
(b) Agreements and Covenants. Associated and Merger Sub shall
have performed or complied in all material respects with all
obligations required to be performed by it under this Agreement on or
prior to the Effective Time. FFC shall have received a certificate of
the President of Associated dated the Closing Date to that effect.
(c) Consents Obtained. All consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings
required to be made by Associated and Merger Sub for the authorization,
execution and delivery of this Agreement and the consummation by it of
the transactions contemplated hereby shall have been obtained and made
by Associated, except when the failure to obtain or make the same,
individually or in the aggregate, would not have a Material Adverse
Effect on FFC and FFC Subsidiaries, taken as a whole, or the Associated
and the Associated Subsidiaries, taken as a whole.
(d) Affiliate Letters. FFC shall have received from each
person who is identified as a Pooling Affiliate of Associated a signed
affiliate letter in the form attached hereto as Exhibit 5.08(b).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the shareholders of FFC and
Associated:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Associated and FFC;
(b) by either Associated or FFC if either (i) the Effective
Time shall not have occurred on or before March 31, 1998; provided that
the right to terminate this Agreement under this Section 7.01(b) shall
not be available to any party whose failure
51
to fulfill any obligation under this Agreement has been the cause of,
or resulted in, the failure of the Effective Time to occur on or before
such date or (ii) any injunction preventing the consummation of the
Merger shall have become final and nonappealable;
(c) by Associated, if there has been a breach of any material
representation, warranty, covenant or agreement on the part of FFC set
forth in this Agreement, or if any representation or warranty of FFC
shall have become untrue, in either case such that the conditions set
forth in Section 6.02(a) or Section 6.02(b) would not be satisfied and
such breach is not cured within 30 days after written notice thereof to
FFC by Associated;
(d) by FFC, if there has been a breach of any material
representation, warranty, covenant or agreement on the part of
Associated set forth in this Agreement, or if any representation or
warranty of Associated shall have become untrue, in either case such
that the conditions set forth in Section 6.03(a) or Section 6.03(b)
would not be satisfied and such breach is not cured within 30 days
after written notice thereof to Associated by FFC;
(e) by either Associated or FFC, if at a duly called and held
shareholders' meeting therefor, this Agreement and the transactions
contemplated hereby shall fail to receive the requisite vote for
approval and adoption by FFC's shareholders;
(f) by either Associated or FFC, if at a duly called and held
shareholders' meeting therefor, the authorization of additional shares
of Associated Common Stock and the issuance of shares of Associated
Common Stock in connection with the Merger pursuant to this Agreement
shall fail to receive the requisite vote for approval by Associated's
shareholders;
(g) by FFC, if there shall exist a proposal for a Superior
Competing Transaction with respect to Associated and the Board of
Directors Associated shall have withdrawn or modified in a manner
adverse to FFC its approval and recommendation of this Agreement or its
approval of the Merger or any other transaction contemplated hereby or
if the Board of Directors of Associated shall have approved or
recommended such Superior Competing Transaction; or
(h) by Associated, if there shall exist a proposal for a
Superior Competing Transaction with respect to FFC and the Board of
Directors of FFC shall have withdrawn or modified in any manner adverse
to Associated its approval and recommendation of this Agreement or its
approval of the Merger or any of the transaction contemplated hereby or
if the Board of Directors FFC shall have approved or recommend such
Superior Competing Transaction.
52
SECTION 7.02. Effect of Termination. Except as provided in
Section 8.02, in the event of termination of this Agreement pursuant to Section
7.01, this Agreement shall forthwith become void, there shall be no liability
under this Agreement on the part of Associated, Merger Sub or FFC or any of
their respective officers or directors and all rights and obligations of each
party hereto shall cease; provided that notwithstanding anything to the contrary
in this Agreement, none of Associated, Merger Sub or FFC shall be released from
any liabilities or damages arising out of its willful breach of any provision of
this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the shareholders of FFC, no amendment may be
made which would reduce the amount or change the type of consideration into
which each Share shall be converted pursuant to this Agreement upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 7.04. Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Closing. Subject to the terms and conditions of
this Agreement, the closing (the "Closing") of the Merger will take place at
10:00 a.m. on a date and place specified by the parties, which shall be no later
than three business days after the satisfaction or waiver (subject to applicable
law) of the latest to occur of the conditions set forth in Article VI unless
extended by mutual agreement of the parties (the "Closing Date").
SECTION 8.02. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article VII, except that the agreements set forth in Article I shall
survive the Effective Time indefinitely and those set forth in Section 5.03(b),
5.12, 7.02 and Article VIII hereof shall survive termination indefinitely.
53
SECTION 8.03. Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made as of the date delivered or mailed if delivered
personally or mailed by registered or certified or overnight mail (postage
prepaid, return receipt requested) to the parties at the following addresses (or
such other address for a party as shall be specified by like changes of address)
and shall be effective upon receipt:
(a) If to Associated or Merger Sub:
Associated Banc-Corp
112 North Adams Street
Green Bay, Wisconsin 54307
Attention: Brian R. Bodager, General Counsel
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Creighton O'M. Condon
(b) If to FFC:
First Financial Corporation
1305 Main Street
Stevens Point, Wisconsin 54481
Attention: Robert M. Salinger, General Counsel
With a copy to:
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Stuart G. Stein
SECTION 8.04. Certain Definitions. For purposes of this
Agreement, the term:
(a) "beneficial owner" with respect to any Shares, means a
person who shall be deemed to be the beneficial owner of such Shares
(i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which person or any of
its affiliates or associates (as such term is defined in Rule 12b-2 of
54
the Exchange Act) has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding, (iii) which
are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any Shares, or (iv) pursuant to Section
13(d) of the Exchange Act and any rules or regulations promulgated
thereunder;
(b) "business day" means any day other than a day on which
banks in Wisconsin are required or authorized to be closed;
(c) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management or policies of a person, whether through the
ownership of stock or as trustee or executor, by contract or credit
arrangement or otherwise;
(d) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d) of the Exchange Act).
SECTION 8.05. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 8.06. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 8.07. Entire Agreement. This Agreement, together with
the Disclosure Schedules and Exhibits hereto, constitutes the entire agreement
of the parties and supersedes all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly
55
provided herein, is not intended to confer upon any other person any rights or
remedies hereunder.
SECTION 8.08. Assignment. This Agreement shall not be assigned
by operation of law or otherwise.
SECTION 8.09. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under of by
reason of this Agreement.
SECTION 8.10. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Wisconsin,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
SECTION 8.11. Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
56
IN WITNESS WHEREOF, Associated, Merger Sub and FFC have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ASSOCIATED BANC-CORP
By: /s/ H.B. Conlon
------------------------
Name: H.B. Conlon
Title: Chief Executive Officer
BADGER MERGER CORP.
By: /s/ H.B. Conlon
-------------------------
Name: H.B. Conlon
Title: Chief Executive Officer
FIRST FINANCIAL CORPORATION
By: /s/ John C. Seramur
-------------------------
Name: John C. Seramur
Title: Chief Executive Officer
EXHIBIT 5.08(a)
FORM OF AFFILIATE LETTER
[ ], 1997
Associated Banc-Corp
112 North Adams Street
P.O. Box 13307
Green Bay, WI 54307-3307
Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of First Financial Corporation, a Wisconsin
corporation (the "Company"), as the term "affiliate" is (i) defined for purposes
of paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in
and for purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Merger Agreement dated as of May 14,
1997 (the "Agreement"), among Associated Banc-Corp, a Wisconsin corporation
("Associated"), Badger Merger Corp., a Wisconsin corporation ("Merger Sub"), and
the Company, Merger Sub will be merged with and into the Company (the "Merger").
As a result of the Merger, I may receive shares of common
stock, par value $.01 per share, of Associated (the "Associated Securities"). I
would receive such shares in exchange for, respectively, shares (or options for
shares) owned by me of common stock, par value $1.00 per share, of the Company
(the "Company Securities").
I represent, warrant and covenant to Associated that in the
event I receive any Associated Securities as a result of the Merger:
A. I will not make any sale, transfer or other disposition of
the Associated Securities in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
Associated Securities, to the extent I felt necessary, with my counsel
or counsel for the Company.
C. I have been advised that the issuance of Associated
Securities to me pursuant to the Merger has been registered with the Commission
under the Act on a Registration Statement on Form S-4. However, I have also been
advised that,
2
because I may be deemed to have been an affiliate of the Company at the
time the Merger was submitted for a vote of the shareholders of the
Company and the distribution by me of the Associated Securities has not
been registered under the Act, I may not sell, transfer or otherwise
dispose of Associated Securities issued to me in the Merger unless (i)
such sale, transfer or other disposition has been registered under the
Act, (ii) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, or (iii) in the opinion of
counsel reasonably acceptable to Associated, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
D. I understand that Associated is under no obligation to
register the sale, transfer or other disposition of the Associated
Securities by me or on my behalf under the Act or to take any other
action necessary in order to make compliance with an exemption from
such registration available.
E. I also understand that stop transfer instructions will be
given to Associated's transfer agents with respect to the Associated
Securities and that there will be placed on the certificates for the
Associated Securities issued to me, or any substitutions therefor, a
legend stating in substance:
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933 APPLIES. THE SHARES EVIDENCED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED MAY 14, 1997 BETWEEN THE REGISTERED HOLDER
HEREOF AND ASSOCIATED, A COPY OF WHICH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICES OF ASSOCIATED."
F. I also understand that unless the transfer by me of my
Associated Securities has been registered under the Act or is a sale
made in conformity with the provisions of Rule 145, Associated reserves
the right to put the following legend on the certificates issued to my
transferee:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH
A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY
3
NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933."
The undersigned understands and agrees that the legends set
forth in paragraphs E and F above shall be removed by delivery of substitute
certificates without such legend if the undersigned shall have delivered to
Associated a copy of a letter from the staff of the Commission, or an opinion of
counsel in form and substance reasonably satisfactory to Associated, to the
effect that such legend is not required for purposes of the Act.
I further represent to and covenant with Associated that I
will not, during the 30 days prior to the Effective Time (as defined in the
Agreement), sell, transfer or otherwise dispose of any shares of the Company
Securities or shares of the capital stock of Associated that I may hold and,
furthermore, that I will not sell, transfer or otherwise dispose of any shares
of Associated Securities received by me in the Merger or any other shares of the
capital stock of Associated until after such time as results covering at least
30 days of combined operations of the Company and Associated have been published
by Associated, in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the Commission on
Form 10-K, 10-Q, or 8-K, or any other public filing or announcement which
includes the combined results of operations.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
--------------------------
Name:
Accepted this __ day of
__________, 1997 by
ASSOCIATED BANC-CORP
By:
-----------------------
Name:
Title:
EXHIBIT 5.08(b)
FORM OF AFFILIATE LETTER
[ ], 1997
First Financial Corporation
1305 Main Street
Stevens Point, WI 54481
Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Associated Banc-Corp., a Wisconsin corporation
("Associated"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series, Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Merger Agreement dated as of May14,
1997 (the "Agreement") among Associated, Badger Merger Corp., a Wisconsin
corporation ("Merger Sub"), and First Financial Corporation, a Wisconsin
corporation (the "Company"), Merger Sub will be merged with and into the Company
(the "Merger").
I represent, warrant and covenant to the Company as follows:
A. I will not make any sale, transfer or other disposition of shares of
common stock, par value $.01 per share, of Associated (the "Associated
Securities") in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed
the requirements of such documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Associated Securities, to
the extent I felt necessary, with my counsel or counsel for Associated.
I further represent to and covenant with the Company that I will not,
during the 30 days prior to the Effective Time (as defined in the Agreement),
sell, transfer or otherwise dispose of any shares of the Associated Securities
or shares of the capital stock of Associated that I may hold and, furthermore,
that I will not sell, transfer or otherwise dispose of any shares of Associated
Securities or any other shares of the capital stock of Associated until after
such time as results covering at least 30 days of combined operations of the
Company and Associated have been published by Associated, in the form of a
quarterly earnings report, an effective registration statement filed with the
Commission, a report to the
2
Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the combined results of operations.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of Associated as described in the first paragraph
of this letter, or as a waiver of any rights I may have to object to any claim
that I am such an affiliate on or after the date of this letter.
Very truly yours,
--------------------------
Name:
Accepted this __ day of
__________, 1997 by
FIRST FINANCIAL CORPORATION
By:
------------------------------
Name:
Title:
Exhibit A
FIRST FINANCIAL CORPORATION
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 14, 1997, by and
between First Financial Corporation, a Wisconsin corporation (the "Issuer"), and
Associated Banc-Corp, a Wisconsin corporation ("Grantee").
WHEREAS, concurrently with the execution and delivery of this
Agreement, Issuer, Grantee, and Badger Merger Corp., a Wisconsin corporation and
a wholly owned subsidiary of Grantee, are entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), which provides
for, among other things, upon the terms and subject to the conditions thereof,
the merger of Merger Sub with and into Issuer (the "Merger");
WHEREAS, as a condition to Grantee's willingness to enter into
the Merger Agreement, Grantee has requested that the Issuer agree, and in order
to induce Grantee to enter into the Merger Agreement, Issuer has so agreed, to
grant to Grantee an option with respect to certain shares of Issuer's common
stock on the terms and subject to the conditions set forth herein; and
WHEREAS, as a condition to Issuer's willingness to enter into
the Merger Agreement, the Issuer has requested that Grantee agree, and in order
to induce the Issuer to enter into the Merger Agreement, Grantee has so agreed,
to grant to Issuer an option with respect to certain shares of Grantee's common
stock on substantially the same terms as set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants, representations, warranties and agreements contained herein
and in the Merger Agreement; and intending to be legally bound hereby, the
parties agree as follows:
1. Grant of Option. Issuer hereby grants Grantee an
irrevocable option (the "Stock Option") to purchase up to (a) 7,245,877 shares
(the "Option Shares") of common stock, $1.00 par value per share, of Issuer (the
"Issuer Common Stock") or (b) if, immediately prior to exercise, such number of
shares of Issuer Common Stock is less than 19.9% of the issued and outstanding
shares of Issuer Common Stock at the time of exercise of the Stock Option, such
greater number of shares of Issuer Common Stock as equals 19.9% of the issued
and outstanding shares of Issuer Common Stock at such time of exercise of the
Stock Option, in the manner set forth below, at a price of $ 23.25 per share
(the "Exercise Price"), payable in cash in accordance with Section 4 hereof.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in the Merger Agreement.
2. Exercise of Option. (a) Subject to the provisions of
Sections 2(c) and (d), the Stock Option may be exercised by Grantee, in whole or
in part, at any time or from time to time following the occurrence of a Purchase
Event (as defined below), provided that, except as provided in the last sentence
of this Section 2(a), the Stock Option shall terminate and be of no further
force and effect upon the earliest to occur of (i) the Effective Time, (ii) 12
months after the first occurrence of
2
a Purchase Event and (iii) termination of the Merger Agreement in accordance
with its terms prior to the occurrence of a Purchase Event (provided that the
Stock Option shall not terminate for a period of 12 months following any
occurrence specified in Sections 2(b)(iv)(A) or 2(b)(v)(A); and provided further
that any purchase of shares upon exercise of the Stock Option shall be subject
to compliance with applicable law, including the Bank Holding Company Act of
1956, as amended (the "BHC Act"). Notwithstanding the termination of the Stock
Option, Grantee shall be entitled to purchase the Option Shares with respect to
which it has exercised the Stock Option in accordance with the terms hereof
prior to the termination of the Stock Option. The termination of the Stock
Option shall not affect any rights hereunder which by their terms extend beyond
the date of such termination.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person or a "group" (as such term is
defined under the Exchange Act) of which such person is a member, would
acquire beneficial ownership (as such term is defined in Rule 13d-3 of
the Exchange Act), or the right to acquire beneficial ownership, of 15%
or more of the then outstanding Issuer Common Stock (any such offer, a
"Tender Offer"), and the Board of Directors shall not have recommended
against such tender offer or exchange offer within 10 business days of
such commencement or filing or at any time thereafter shall recommend
acceptance thereof;
(ii) Issuer or any subsidiary of Issuer shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person
(other than Grantee or any subsidiary of Grantee) to (A) effect a
merger, consolidation or other business combination involving Issuer or
any of its subsidiaries (other than internal mergers, reorganizing
actions or consolidations involving only existing subsidiaries of
Issuer), (B) sell, lease or otherwise dispose of assets of Issuer or
its subsidiaries aggregating 15% or more of the consolidated assets,
net revenues or net income of Issuer and its subsidiaries or (C) issue,
sell or otherwise dispose of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 15% or more of the voting power of Issuer or any of its
subsidiaries (any of the foregoing, an "Acquisition Transaction");
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, shares of Issuer Common
Stock (other than trust account shares) aggregating 15% or more of the
then outstanding Issuer Common Stock;
(iv) (A) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held
for the purpose of voting on the Merger Agreement, (B) such meeting
shall not have been held or shall have been cancelled prior to
termination of the Merger Agreement or (C) Issuer's Board of Directors
shall have withdrawn
3
or modified in a manner adverse to Grantee or to Grantee's ability to
consummate the transactions contemplated by the Merger Agreement the
recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Grantee or
any subsidiary of Grantee) shall have (X) publicly announced, or taken
actions which have resulted in public disclosure of, a proposal, or
publicly disclosed an intention to make a proposal, to engage in an
Acquisition Transaction and shall not have withdrawn such proposal at
least 10 business days prior to the stockholders' meeting to consider
the Merger (provided that any public disclosures to the effect that
such person intends to or may make another proposal shall result in the
original proposal not being deemed to have been withdrawn) or (Y) filed
an application (or given a notice), whether in draft or final form, to
the Federal Reserve Board, the OCC, the FDIC or any other governmental
or regulatory authority for approval to engage in an Acquisition
Transaction; provided; that the Stock Option shall not be exercisable
upon the occurrence specified in Section 2(b)(iv)(A) above unless and
until any of the events specified in Section 2(b)(ii) or (iii) above
shall have occurred; or
(v) (A) there shall exist a willful or intentional breach
under the Merger Agreement by Issuer and such breach would entitle
Grantee to terminate the Merger Agreement; and (B) within 12 months
from the date of such breach, any of the events specified in Section
2(b)(ii) or (iii) above shall have occurred.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Stock Option,
it shall send to Issuer a written notice (an "Exercise Notice" and the date of
which being herein referred to as a "Notice Date") specifying (i) the total
number of Option Shares that it intends to purchase pursuant to such exercise
and (ii) a place and date not earlier than three business days nor later than 20
business days from the Notice Date for the closing of such purchase (a "Closing
Date"); provided that if any closing of the purchase and sale pursuant to the
Stock Option (a "Closing") cannot be consummated by reason of any applicable
order, injunction, decree, judgment, law or regulation, the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been terminated; and
provided further, without limiting the foregoing, that if prior notification to
or approval of the Federal Reserve Board, the OCC, the FDIC or any other
governmental or regulatory authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(A) any required notification period has expired or been terminated or (B) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
(d) Notwithstanding Section 2(c), in no event shall any
Closing Date occur later than 18 months after the related Notice Date, and if
such Closing shall not have occurred within 18 months after such Notice Date due
to the failure to obtain any required approval of the Federal Reserve Board, the
OCC, the FDIC or any other governmental or regulatory authority, the exercise of
the Stock Option or Substitute Option effected on such date shall be deemed to
have expired. In
4
the event (i) Grantee receives official notice that any such approval required
for the purchase of Option Shares will not be issued or granted or (ii) a
Closing Date shall not have occurred within 18 months after the related Notice
Date due to the failure to obtain any such approval, Grantee shall be entitled
to exercise its rights to exercise the Stock Option in connection with the
resale of Issuer Common Stock or other securities pursuant to a registration
statement as provided in Section 9. The provisions of this Section 2 and Section
4 shall apply with appropriate adjustments to any such exercise.
3. Conditions to Closing. The obligation of Issuer to issue
Option Shares to Grantee hereunder is subject to the conditions that (a) all
consents, approvals, orders or authorizations of, or registrations, declarations
or filings with, the Federal Reserve Board, the OCC, the FDIC or any other
governmental or regulatory authority, if any, required in connection with the
issuance of Option Shares hereunder shall have been obtained or made, as the
case may be, and (b) no order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint preventing such
issuance shall be in effect.
4. Closing. At any Closing, (a) Issuer will deliver to Grantee
a certificate or certificates in definitive form, such certificate or
certificates to be registered in the name of Grantee, Merger Sub or such other
affiliate of Grantee as Grantee shall designate in the Exercise Notice and shall
bear the legend set forth in Section 11, representing the number of Option
Shares designated by Grantee in its Exercise Notice, which Option Shares shall
be free and clear of all Liens, and (b) Grantee will deliver to Issuer the
aggregate Exercise Price for the Option Shares so designated and being purchased
at such Closing by wire transfer of immediately available funds to a bank
account designated by Issuer.
5. Representations and Warranties of Issuer. Issuer represents
and warrants to Grantee that (a) Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin and has
full corporate power and authority to execute and deliver this Agreement and,
subject to any approvals referred to herein, to consummate the transactions
contemplated hereunder, (b) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Issuer and no other corporate proceedings
on the part of Issuer are necessary to approve this Agreement and to consummate
the transactions contemplated hereby, (c) this Agreement has been duly and
validly executed and delivered by Issuer and (assuming due authorization,
execution and delivery by Grantee) this Agreement constitutes a valid and
binding obligation of Issuer, enforceable against Issuer in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally, (d) Issuer has
taken all necessary corporate action to authorize and reserve for issuance and
to permit it to issue, upon exercise of the Stock Option, and at all times from
the date hereof through the expiration of the Stock Option will have so
reserved, the requisite number of unissued shares of Issuer Common Stock
necessary to permit exercise in full of the Stock Option, all of which, upon
their issuance and delivery in accordance with the terms of this Agreement, will
be validly issued, fully paid and nonassessable (except as provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law), (e) upon delivery of
such shares of Issuer Common Stock to Grantee upon exercise of the Stock Option,
Grantee will acquire valid title to all of such shares, free and clear of any
and all Liens of any nature whatsoever, (f) the execution and delivery of this
Agreement by Issuer does not, and the performance
5
of this Agreement by Issuer will not (1) violate the certificate of
incorporation or by-laws of Issuer, (2) conflict with or violate any statute,
rule, regulation, order, judgment or decree applicable to Issuer or by which it
or any of its assets or properties is bound or affected or (3) result in any
breach or violation of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give rise to any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of any Lien on any of the property or assets of Issuer pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, or other
instrument or obligation to which Issuer or any of its subsidiaries is a party
or by which Issuer or any of its assets or properties is bound or affected
(except, in the case of clauses (2) and (3) above, for violations, breaches or
defaults which would not, individually or in the aggregate, have a Material
Adverse Effect on Issuer) and (g) any provisions of the Wisconsin Business
Corporation Law or Issuer's Articles of Incorporation prohibiting certain
business combinations shall not apply to Grantee in respect of Grantee's
acquisition of some or all of the Option Shares and (h) Grantee will not as a
result of its exercise of the Stock Option, become subject to any anti-takeover
provisions, plans or arrangements in place at Issuer.
6. Representations and Warranties of Grantee. Grantee
represents and warrants to Issuer that (a) Grantee is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wisconsin and has full corporate power and authority to execute and deliver this
Agreement and, subject to any approvals referred to herein, to consummate the
transactions contemplated hereunder, (b) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of Grantee and no other
corporate proceedings on the part of Grantee are necessary to approve this
Agreement and to consummate the transactions contemplated hereby, (c) this
Agreement has been duly executed and delivered by Grantee and (assuming due
authorization, execution and delivery by Issuer) this Agreement constitutes a
valid and binding obligation of Grantee, enforceable against Grantee in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally, (d) the execution and delivery of this Agreement by Grantee does not,
and the performance of this Agreement by Grantee will not (1) violate the
certificate of incorporation or bylaws of Grantee, (2) conflict with or violate
any statute, rule, regulation, order, judgment or decree applicable to Grantee
or by which it or any of its properties or assets is bound or affected or (3)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give rise to any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any of the property or assets of Grantee pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license, or
other instrument or obligation to which Grantee is a party or by which Grantee
or any of its properties or assets is bound or affected (except, in the case of
clauses (2) and (3) above, for violations, breaches, or defaults which would
not, individually or in the aggregate, have a Material Adverse Effect on
Grantee) and (e) any Option Shares acquired upon exercise of the Stock Option
will be, and the Stock Option is being, acquired by Grantee for its own account
and not with a view to the public distribution or resale thereof in any manner
which would be in violation of applicable United States securities laws.
7. Adjustment upon Changes in Capitalization; Substitute
Option. (a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, split-up, recapitalization, combination, exchange of shares or
similar transaction, the type and number of shares or securities
6
subject to the Stock Option, and the Exercise Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that Grantee shall receive upon exercise of the Stock
Option the number and class of shares or other securities or property that
Grantee would have received in respect of Issuer Common Stock if the Stock
Option had been exercised immediately prior to such event or the record date
therefor, as applicable.
(b) In the event that Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
shall be changed into or exchanged for stock or other securities of Issuer or
any other person or cash or any other property, or the shares of Issuer Common
Stock outstanding immediately prior to the consummation of such merger shall
after such merger represent less than 50% of the outstanding voting securities
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Stock Option shall, upon
the consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (A) the Acquiring Corporation
(as defined below) or (B) any person that controls the Acquiring Corporation
(any such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Stock Option; provided that the exercise price therefor and number of shares
subject thereto shall be as set forth in this Section 7; provided further that
the Substitute Option shall be exercisable immediately upon issuance without the
occurrence of a Purchase Event; and provided further that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Stock Option
(subject to the variations described in the foregoing provisos), such terms
shall be as similar as possible and in no event less advantageous to Grantee.
Substitute Option Issuer shall also enter into an agreement with Grantee in
substantially the same form as this Agreement (subject to the variations
described in the foregoing provisos), which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock (as defined below) as is equal to the
Assigned Value (as defined below) multiplied by the number of shares of Issuer
Common Stock for which the Stock Option was theretofore exercisable, divided by
the Average Price (as defined below), rounded up to the nearest whole share. The
exercise price per share of Substitute Common Stock of the Substitute Option
(the "Substitute Option Price") shall then be equal to the Exercise Price
multiplied by a fraction in which the numerator is the number of shares of
Issuer Common Stock for which the Stock Option was theretofore exercisable and
the denominator is the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of outstanding Substitute
7
Common Stock but for the limitation in the first sentence of this Section 7(e),
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in the first sentence of this Section 7(e) over (ii) the value of the
Substitute Option after giving effect to the limitation in the first sentence of
this Section 7(e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that controls the
Acquiring Corporation assume in writing all the obligations of Issuer hereunder
and take all other actions that may be necessary so that the provisions of this
Section 7 are given full force and effect (including, without limitation, any
action that may be necessary so that the holders of the other shares of common
stock issued by Substitute Option Issuer are not entitled to exercise any rights
by reason of the issuance or exercise of the Substitute Option and the shares of
Substitute Common Stock are otherwise in no way distinguishable from or have
lesser economic value than other shares of common stock issued by Substitute
Option Issuer (other than any diminution in value resulting from the fact that
the shares of Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision)).
(g) For purposes hereof, the following terms have the
following meanings:
(1) "Acquiring Corporation" means (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation and (iii) the transferee of all or
substantially all of Issuer's assets or deposits.
(2) "Assigned Value" means the highest of (A) the price per
share of Issuer Common Stock at which a Tender Offer has been made
after the date hereof and prior to the consummation of the
consolidation, merger or sale referred to in Section 7(b), (B) the
price per share to be paid by any third party or the consideration per
share to be received by holders of Issuer Common Stock, in each case
pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 7(b), (C) the
highest closing sales price per share for Issuer Common Stock quoted on
the National Association of Securities Dealers' Automated Quotation
System (the "NASDAQS") or, if the shares of Issuer Common Stock are not
quoted thereon, on the principal trading market on which such shares
are traded as reported by a recognized source) during the 12-month
period immediately preceding the consolidation, merger or sale referred
to in Section 7(b) and (D) in the event the transaction referred to in
Section 7(b) is a sale of all or substantially all of Issuer's assets
and/or deposits, an amount equal to (i) the sum of the price paid in
such sale for such assets and/or deposits and the current market value
of the remaining assets of Issuer, as determined by a nationally
recognized investment banking firm selected by Grantee, divided by (ii)
the number of shares of Issuer Common Stock outstanding at such time.
In the event that a Tender Offer is made for Issuer Common Stock or an
agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
selected by Grantee.
8
(3) "Average Price" means the average closing sales price per
share of a share of Substitute Common Stock quoted on the NASDAQS (or,
if the shares of Substitute Common Stock are not quoted thereon, on the
principal trading market on which such shares are traded as reported by
a recognized source) for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if
Substitute Option Issuer is Issuer, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls such person, as
Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
8. Cash-out Rights. If and to the extent the Stock Option is
not exercisable with respect to any of the Option Shares due to Article 9 of the
Articles of Incorporation of the Issuer, Grantee has the right to, and may with
respect to such Option Shares which are not exercisable, in its sole
determination, elect to receive a cash payment in an amount equal to (A) the
amount by which (1) the "Market/Tender Offer Price" for shares of Issuer Common
Stock as of the date Grantee gives notice of its intent to exercise its rights
under this Section 8 (defined as the higher of (x) the highest price per share
of Issuer Common Stock paid as of such date pursuant to any tender or exchange
offer or other Acquisition Proposal and (y) the average of the closing sale
prices of shares of Issuer Common Stock on the NASDAQS or, if not quoted
thereon, the principal trading market on which such shares are traded by a
recognized source for the 10 trading days immediately preceding such date)
exceeds (2) the Exercise Price, multiplied by the number of such Option Shares.
9. Registration Rights. (a) Issuer shall, if requested by
Grantee at any time and from time to time (a) within three years of the first
exercise of the Stock Option or (b) for 30 business days following the
occurrence of either of the events set forth in clauses (i) and (ii) of Section
2(d), as expeditiously as possible prepare and file up to two registration
statements under the Securities Act if such registration is necessary in order
to permit the sale or other disposition of any or all shares of securities that
have been acquired by or are issuable to Grantee upon exercise of the Stock
Option in accordance with the intended method of sale or other disposition
stated by Grantee, including a "shelf' registration statement under Rule 415
under the Securities Act or any successor provision, and Issuer shall use its
best efforts to qualify such shares or other securities under any applicable
state securities laws. Grantee agrees to use its best efforts to cause, and to
cause any underwriters of any sale or other disposition to cause, any sale or
other disposition pursuant to such registration statement to be effected on a
widely distributed basis so that upon consummation thereof no purchaser or
transferee shall own beneficially more than 4.9% of the then outstanding voting
power of Issuer. Issuer shall use all reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers of
other parties which are required therefor and to keep such registration
statement effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. Any registration statement prepared and
filed under this Section 9, and any sale covered thereby, shall be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
fees and disbursements of Grantee's counsel related thereto.
9
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain a required approval for
an exercise of the Stock Option as described in Section 2(d), the closing of the
sale or other disposition of Issuer Common Stock or other securities pursuant to
such registration statement shall occur substantially simultaneously with the
exercise of the Stock Option.
(c) The obligations of Issuer under this Section 9 to file a
registration statement and to maintain its effectiveness may be suspended for
one or more periods of time not exceeding 60 days in the aggregate if the Board
of Directors of Issuer shall have determined that the filing of such
registration statement or the maintenance of its effectiveness would require
premature disclosure of nonpublic information that would materially and
adversely affect Issuer.
(d) If during the time periods referred to in the first
sentence of Section 9(a) Issuer effects a registration under the Securities Act
of Issuer Common Stock for its own account or for any other stockholders of
Issuer (other than on Form S-4 or Form S-8, or any successor form), Issuer shall
allow Grantee the right to participate in such registration, and such
participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 10; provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer.
(e) Grantee shall provide all information reasonably requested
by Issuer for inclusion in any registration statement to be filed hereunder. In
connection with any registration pursuant to this Section 9, Issuer and Grantee
shall provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution in
connection with such registration.
10. Restrictive Legends. Each certificate representing Option
Shares issued to Grantee hereunder shall initially be endorsed with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. SUCH
SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS
SET FORTH IN THE STOCK OPTION AGREEMENT, DATED MAY 14, 1997, A COPY OF
WHICH MAY BE OBTAINED FROM THE ISSUER HEREOF.
11. NASDAQS Listing. Upon any exercise of the Stock Option,
Issuer shall use its best efforts to cause the shares of Issuer Common Stock to
be acquired in connection with such exercise of the Stock Option to be approved
for listing on the NASDAQS and each other securities exchange on which such
shares are listed as soon as practicable after such exercise.
12. Assignment; Third Party Beneficiaries. (a) Neither this
Agreement nor any of the rights, interests or obligations of any party hereunder
shall be assigned by any of the parties
10
hereto (whether by operation of law or otherwise) without prior written consent
of the other party; provided that Grantee may assign all or any part of its
rights hereunder to (i) any affiliate thereof or (ii) any person after the
occurrence of a Purchase Event. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. This Agreement
(including the documents and instruments referred to herein) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(b) Any Option Shares sold by a party in compliance with the
provisions of Section 9 shall, upon consummation of such sale, be free of the
restrictions imposed with respect to such shares by this Agreement. In no event
will any transferee of any Option Shares be entitled to the rights of Grantee
hereunder.
(c) Certificates representing shares sold in a registered
public offering pursuant to Section 9 shall not be required to bear the legend
set forth in Section 10.
13. Enforcement of the Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
14. Entire Agreement. This Agreement and the Merger Agreement
(together with the other documents and instruments referred to in the Merger
Agreement) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
15. Further Assurances. Each party will execute and deliver
all such further documents and instruments and take all such further action as
may be necessary in order to consummate the transactions contemplated hereby.
16. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
17. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return
11
receipt requested) or delivered by express courier (with confirmation) to the
parties at the following addresses (or such other address for a party as shall
be specified by like notice):
(a) If to Grantee, to:
Associated Banc-Corp
112 North Adams Street
Green Bay, Wisconsin 54307
Attention: Brian R. Bodager, General Counsel
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Creighton O'M. Condon
and
(b) If to Issuer, to:
First Financial Corporation
1305 Main Street
Stevens Point, Wisconsin 54481
Attention: Robert M. Salinger, General Counsel
With a copy to:
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Stuart G. Stein
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without regard
to any applicable conflicts of law.
19. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
20. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
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21. Expenses. Except as otherwise expressly provided herein or
in the Merger Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
22. Amendments; Waiver. This Agreement may be amended by the
parties hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties hereto, or, in the
case of a waiver, by an instrument signed on behalf of the party waiving
compliance.
IN WITNESS WHEREOF, Issuer and Grantee have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
FIRST FINANCIAL CORPORATION
By:
----------------------------
Name:
Title:
ASSOCIATED BANC-CORP
By:
----------------------------
Name:
Title:
Exhibit B
ASSOCIATED BANC-CORP
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 14, 1997, by and
between Associated Bank-Corp, a Wisconsin corporation (the "Issuer"), and First
Financial Corporation, a Wisconsin corporation ("Grantee").
WHEREAS, concurrently with the execution and delivery of this
Agreement, Issuer, Badger Merger Corp., a Wisconsin corporation and a wholly
owned subsidiary of Issuer ("Merger Sub"), and Grantee are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides for, among other things, upon the terms and subject
to the conditions thereof, the merger of Merger Sub with and into Grantee (the
"Merger");
WHEREAS, as a condition to Grantee's willingness to enter into
the Merger Agreement, Grantee has requested that the Issuer agree, and in order
to induce Grantee to enter into the Merger Agreement, Issuer has so agreed, to
grant to Grantee an option with respect to certain shares of Issuer's common
stock on the terms and subject to the conditions set forth herein; and
WHEREAS, as a condition to Issuer's willingness to enter into
the Merger Agreement, the Issuer has requested that Grantee agree, and in order
to induce the Issuer to enter into the Merger Agreement, Grantee has so agreed,
to grant to Issuer an option with respect to certain shares of Grantee's common
stock on substantially the same terms as set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants, representations, warranties and agreements contained herein
and in the Merger Agreement; and intending to be legally bound hereby, the
parties agree as follows:
1. Grant of Option. Issuer hereby grants Grantee an
irrevocable option (the "Stock Option") to purchase up to (a) 4,465,361 shares
(the "Option Shares") of common stock, $0.01 par value per share, of Issuer (the
"Issuer Common Stock") or (b) if, immediately prior to exercise, such number of
shares of Issuer Common Stock is less than 19.9% of the issued and outstanding
shares of Issuer Common Stock at the time of exercise of the Stock Option, such
greater number of shares of Issuer Common Stock as equals 19.9% of the issued
and outstanding shares of Issuer Common Stock at such time of exercise of the
Stock Option, in the manner set forth below, at a price of $32.50 per share (the
"Exercise Price"), payable in cash in accordance with Section 4 hereof.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in the Merger Agreement.
2. Exercise of Option. (a) Subject to the provisions of
Sections 2(c) and (d), the Stock Option may be exercised by Grantee, in whole or
in part, at any time or from time to time following the occurrence of a Purchase
Event (as defined below), provided that, except as provided in the last sentence
of this Section 2(a), the Stock Option shall terminate and be of no further
force and effect upon the earliest to occur of (i) the Effective Time, (ii) 12
months after the first occurrence of
2
a Purchase Event and (iii) termination of the Merger Agreement in accordance
with its terms prior to the occurrence of a Purchase Event (provided that the
Stock Option shall not terminate for a period of 12 months following any
occurrence specified in Sections 2(b)(iv)(A) or 2(b)(v)(A); and provided further
that any purchase of shares upon exercise of the Stock Option shall be subject
to compliance with applicable law, including the Bank Holding Company Act of
1956, as amended (the "BHC Act"). Notwithstanding the termination of the Stock
Option, Grantee shall be entitled to purchase the Option Shares with respect to
which it has exercised the Stock Option in accordance with the terms hereof
prior to the termination of the Stock Option. The termination of the Stock
Option shall not affect any rights hereunder which by their terms extend beyond
the date of such termination.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person or a "group" (as such term is
defined under the Exchange Act) of which such person is a member, would
acquire beneficial ownership (as such term is defined in Rule 13d-3 of
the Exchange Act), or the right to acquire beneficial ownership, of 15%
or more of the then outstanding Issuer Common Stock (any such offer, a
"Tender Offer"), and the Board of Directors shall not have recommended
against such tender offer or exchange offer within 10 business days of
such commencement or filing or at any time thereafter shall recommend
acceptance thereof;
(ii) Issuer or any subsidiary of Issuer shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person
(other than Grantee or any subsidiary of Grantee) to (A) effect a
merger, consolidation or other business combination involving Issuer or
any of its subsidiaries (other than internal mergers, reorganizing
actions or consolidations involving only existing subsidiaries of
Issuer), (B) sell, lease or otherwise dispose of assets of Issuer or
its subsidiaries aggregating 15% or more of the consolidated assets,
net revenues or net income of Issuer and its subsidiaries or (C) issue,
sell or otherwise dispose of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 15% or more of the voting power of Issuer or any of its
subsidiaries (any of the foregoing, an "Acquisition Transaction");
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, shares of Issuer Common
Stock (other than trust account shares) aggregating 15% or more of the
then outstanding Issuer Common Stock;
(iv) (A) the holders of Issuer Common Stock shall not have
approved the increase in the number of authorized shares of Issuer
Common Stock or the issuance of Issuer Common Stock in connection with
the Merger at the meeting of such shareholders held for the purpose of
voting on the increase in the number of authorized shares of Issuer
Common
3
Stock and the issuance of Issuer Common Stock in connection with the
Merger, (B) such meeting shall not have been held or shall have been
cancelled prior to termination of the Merger Agreement or (C) Issuer's
Board of Directors shall have withdrawn or modified in a manner adverse
to Grantee or to Grantee's ability to consummate the transactions
contemplated by the Merger Agreement the recommendation of Issuer's
Board of Directors with respect to the Merger Agreement, in each case
after any person (other than Grantee or any subsidiary of Grantee)
shall have (X) publicly announced, or taken actions which have resulted
in public disclosure of, a proposal, or publicly disclosed an intention
to make a proposal, to engage in an Acquisition Transaction and shall
not have withdrawn such proposal at least 10 business days prior to the
stockholders' meeting to consider the increase in the number of
authorized shares of Issuer Common Stock or the issuance of Issuer
Common Stock in connection with the Merger (provided that any public
disclosures to the effect that such person intends to or may make
another proposal shall result in the original proposal not being deemed
to have been withdrawn) or (Y) filed an application (or given a
notice), whether in draft or final form, to the Federal Reserve Board,
the OCC, the FDIC or any other governmental or regulatory authority for
approval to engage in an Acquisition Transaction; provided that the
Stock Option shall not be exercisable upon the occurrence specified in
Section 2(b)(iv)(A) above unless and until any of the events specified
in Section 2 (b)(ii) or (iii) above shall have occurred; or
(v) (A) there shall exist a willful or intentional breach
under the Merger Agreement by Issuer and such breach would entitle
Grantee to terminate the Merger Agreement; and (B) within 12 months
from the date of such breach, any of the events specified in Section
2(b)(ii) or (iii) above shall have occurred.
As used in this Agreement, "person" shall have the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event Grantee wishes to exercise the Stock Option,
it shall send to Issuer a written notice (an "Exercise Notice" and the date of
which being herein referred to as a "Notice Date") specifying (i) the total
number of Option Shares that it intends to purchase pursuant to such exercise
and (ii) a place and date not earlier than three business days nor later than 20
business days from the Notice Date for the closing of such purchase (a "Closing
Date"); provided that if any closing of the purchase and sale pursuant to the
Stock Option (a "Closing") cannot be consummated by reason of any applicable
order, injunction, decree, judgment, law or regulation, the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which such restriction on consummation has expired or been terminated; and
provided further, without limiting the foregoing, that if prior notification to
or approval of the Federal Reserve Board, the OCC, the FDIC or any other
governmental or regulatory authority is required in connection with such
purchase, Grantee shall promptly file the required notice or application for
approval and shall expeditiously process the same (and Issuer shall cooperate
with Grantee in the filing of any such notice or application and the obtaining
of any such approval), and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case may be,
(A) any required notification period has expired or been terminated or (B) such
approval has been obtained, and in either event, any requisite waiting period
has passed.
4
(d) Notwithstanding Section 2(c), in no event shall any
Closing Date occur later than 18 months after the related Notice Date, and if
such Closing shall not have occurred within 18 months after such Notice Date due
to the failure to obtain any required approval of the Federal Reserve Board, the
OCC, the FDIC or any other governmental or regulatory authority, the exercise of
the Stock Option or Substitute Option effected on such date shall be deemed to
have expired. In the event (i) Grantee receives official notice that any such
approval required for the purchase of Option Shares will not be issued or
granted or (ii) a Closing Date shall not have occurred within 18 months after
the related Notice Date due to the failure to obtain any such approval, Grantee
shall be entitled to exercise its rights to exercise the Stock Option in
connection with the resale of Issuer Common Stock or other securities pursuant
to a registration statement as provided in Section 8. The provisions of this
Section 2 and Section 4 shall apply with appropriate adjustments to any such
exercise.
3. Conditions to Closing. The obligation of Issuer to issue
Option Shares to Grantee hereunder is subject to the conditions that (a) all
consents, approvals, orders or authorizations of, or registrations, declarations
or filings with, the Federal Reserve Board, the OCC, the FDIC or any other
governmental or regulatory authority, if any, required in connection with the
issuance of Option Shares hereunder shall have been obtained or made, as the
case may be, and (b) no order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint preventing such
issuance shall be in effect.
4. Closing. At any Closing, (a) Issuer will deliver to Grantee
a certificate or certificates in definitive form, such certificate or
certificates to be registered in the name of Grantee, or such other affiliate of
Grantee as Grantee shall designate in the Exercise Notice and shall bear the
legend set forth in Section 11, representing the number of Option Shares
designated by Grantee in its Exercise Notice, which Option Shares shall be free
and clear of all Liens, and (b) Grantee will deliver to Issuer the aggregate
Exercise Price for the Option Shares so designated and being purchased at such
Closing by wire transfer of immediately available funds to a bank account
designated by Issuer.
5. Representations and Warranties of Issuer. Issuer represents
and warrants to Grantee that (a) Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin and has
full corporate power and authority to execute and deliver this Agreement and,
subject to any approvals referred to herein, to consummate the transactions
contemplated hereunder, (b) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Issuer and no other corporate proceedings
on the part of Issuer are necessary to approve this Agreement and to consummate
the transactions contemplated hereby, (c) this Agreement has been duly and
validly executed and delivered by Issuer and (assuming due authorization,
execution and delivery by Grantee) this Agreement constitutes a valid and
binding obligation of Issuer, enforceable against Issuer in accordance with its
terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally, (d) Issuer has
taken all necessary corporate action to authorize and reserve for issuance and
to permit it to issue, upon exercise of the Stock Option, and at all times from
the date hereof through the expiration of the Stock Option will have so
reserved, the requisite number of unissued shares of Issuer Common Stock
necessary to permit exercise in full of the Stock Option, all of which, upon
their issuance and delivery in accordance with the terms of this Agreement, will
be validly issued, fully paid and nonassessable
5
(except as provided in Section 180.0622(2)(b) of the Wisconsin Business
Corporation Law), (e) upon delivery of such shares of Issuer Common Stock to
Grantee upon exercise of the Stock Option, Grantee will acquire valid title to
all of such shares, free and clear of any and all Liens of any nature
whatsoever, (f) the execution and delivery of this Agreement by Issuer does not,
and the performance of this Agreement by Issuer will not (1) violate the
certificate of incorporation or by-laws of Issuer, (2) conflict with or violate
any statute, rule, regulation, order, judgment or decree applicable to Issuer or
by which it or any of its assets or properties is bound or affected or (3)
result in any breach or violation of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give rise
to any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of any Lien on any of the property or assets of Issuer
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, or other instrument or obligation to which Issuer or any of its
subsidiaries is a party or by which Issuer or any of its assets or properties is
bound or affected (except, in the case of clauses (2) and (3) above, for
violations, breaches or defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on Issuer) and (g) any provisions of
the Wisconsin Business Corporation Law or Issuer's Articles of Incorporation
prohibiting certain business combinations shall not apply to Grantee in respect
of Grantee's acquisition of some or all of the Option Shares and (h) Grantee
will not, as a result of its exercise of the Stock Option, become subject to any
anti-takeover provisions, plans or arrangements in place at Issuer.
6. Representations and Warranties of Grantee. Grantee
represents and warrants to Issuer that (a) Grantee is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wisconsin and has full corporate power and authority to execute and deliver this
Agreement and, subject to any approvals referred to herein, to consummate the
transactions contemplated hereunder, (b) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of Grantee and no other
corporate proceedings on the part of Grantee are necessary to approve this
Agreement and to consummate the transactions contemplated hereby, (c) this
Agreement has been duly executed and delivered by Grantee and (assuming due
authorization, execution and delivery by Issuer) this Agreement constitutes a
valid and binding obligation of Grantee, enforceable against Grantee in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or equity and by
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally, (d) the execution and delivery of this Agreement by Grantee does not,
and the performance of this Agreement by Grantee will not (1) violate the
certificate of incorporation or bylaws of Grantee, (2) conflict with or violate
any statute, rule, regulation, order, judgment or decree applicable to Grantee
or by which it or any of its properties or assets is bound or affected or (3)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give rise to any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any of the property or assets of Grantee pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license, or
other instrument or obligation to which Grantee is a party or by which Grantee
or any of its properties or assets is bound or affected (except, in the case of
clauses (2) and (3) above, for violations, breaches, or defaults which would
not, individually or in the aggregate, have a Material Adverse Effect on
Grantee) and (e) any Option Shares acquired upon exercise of the Stock Option
will be, and the Stock Option is being, acquired by Grantee for its own account
and not with a view to the public distribution or resale thereof in any manner
which would be in violation of applicable United States securities laws.
6
7. Adjustment upon Changes in Capitalization; Substitute
Option. (a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, split-up, recapitalization, combination, exchange of shares or
similar transaction, the type and number of shares or securities subject to the
Stock Option, and the Exercise Price therefor, shall be adjusted appropriately,
and proper provision shall be made in the agreements governing such transaction,
so that Grantee shall receive upon exercise of the Stock Option the number and
class of shares or other securities or property that Grantee would have received
in respect of Issuer Common Stock if the Stock Option had been exercised
immediately prior to such event or the record date therefor, as applicable.
(b) In the event that Issuer shall enter into an agreement (i)
to consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the shares of Issuer
Common Stock outstanding immediately prior to the consummation of such merger
shall be changed into or exchanged for stock or other securities of Issuer or
any other person or cash or any other property, or the shares of Issuer Common
Stock outstanding immediately prior to the consummation of such merger shall
after such merger represent less than 50% of the outstanding voting securities
of the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee or one of its
subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Stock Option shall, upon
the consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (A) the Acquiring Corporation
(as defined below) or (B) any person that controls the Acquiring Corporation
(any such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Stock Option; provided that the exercise price therefor and number of shares
subject thereto shall be as set forth in this Section 7; provided further that
the Substitute Option shall be exercisable immediately upon issuance without the
occurrence of a Purchase Event; and provided further that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Stock Option
(subject to the variations described in the foregoing provisos), such terms
shall be as similar as possible and in no event less advantageous to Grantee.
Substitute Option Issuer shall also enter into an agreement with Grantee in
substantially the same form as this Agreement (subject to the variations
described in the foregoing provisos), which shall be applicable to the
Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock (as defined below) as is equal to the
Assigned Value (as defined below) multiplied by the number of shares of Issuer
Common Stock for which the Stock Option was theretofore exercisable, divided by
the Average Price (as defined below), rounded up to the nearest whole share. The
exercise price per share of Substitute Common Stock of the Substitute Option
(the "Substitute Option Price") shall then be equal to the Exercise Price
multiplied by a fraction in which the numerator is the number of shares of
Issuer Common Stock for which the Stock Option was theretofore exercisable and
the denominator is the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
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(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of outstanding Substitute
Common Stock but for the limitation in the first sentence of this Section 7(e),
Substitute Option Issuer shall make a cash payment to Grantee equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in the first sentence of this Section 7(e) over (ii) the value of the
Substitute Option after giving effect to the limitation in the first sentence of
this Section 7(e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee.
(f) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that controls the
Acquiring Corporation assume in writing all the obligations of Issuer hereunder
and take all other actions that may be necessary so that the provisions of this
Section 7 are given full force and effect (including, without limitation, any
action that may be necessary so that the holders of the other shares of common
stock issued by Substitute Option Issuer are not entitled to exercise any rights
by reason of the issuance or exercise of the Substitute Option and the shares of
Substitute Common Stock are otherwise in no way distinguishable from or have
lesser economic value than other shares of common stock issued by Substitute
Option Issuer (other than any diminution in value resulting from the fact that
the shares of Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision)).
(g) For purposes hereof, the following terms have the
following meanings:
(1) "Acquiring Corporation" means (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving corporation and (iii) the transferee of all or
substantially all of Issuer's assets or deposits.
(2) "Assigned Value" means the highest of (A) the price per
share of Issuer Common Stock at which a Tender Offer has been made
after the date hereof and prior to the consummation of the
consolidation, merger or sale referred to in Section 7(b), (B) the
price per share to be paid by any third party or the consideration per
share to be received by holders of Issuer Common Stock, in each case
pursuant to the agreement with Issuer with respect to the
consolidation, merger or sale referred to in Section 7(b), (C) the
highest closing sales price per share for Issuer Common Stock quoted on
the National Association of Securities Dealers' Automated Quotation
System (the "NASDAQS") (or, if the shares of Issuer Common Stock are
not quoted thereon, on the principal trading market on which such
shares are traded as reported by a recognized source) during the
12-month period immediately preceding the consolidation, merger or sale
referred to in Section 7(b) and (D) in the event the transaction
referred to in Section 7(b) is a sale of all or substantially all of
Issuer's assets and/or deposits, an amount equal to (i) the sum of the
price paid in such sale for such assets and/or deposits and the current
market value of the remaining assets of Issuer, as determined by a
nationally recognized investment banking firm selected by Grantee,
divided by (ii) the number of shares of Issuer Common Stock outstanding
at such time. In the event that a Tender Offer is made for Issuer
Common Stock or an agreement is entered into for a merger
8
or consolidation involving consideration other than cash, the value of
the securities or other property issuable or deliverable in exchange
for Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Grantee.
(3) "Average Price" means the average closing sales price per
share of a share of Substitute Common Stock quoted on the NASDAQS (or,
if the shares of Substitute Common Stock are not quoted thereon, on the
principal trading market on which such shares are traded as reported by
a recognized source) for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided that if
Substitute Option Issuer is Issuer, the Average Price shall be computed
with respect to a share of common stock issued by Issuer, the person
merging into Issuer or by any company which controls such person, as
Grantee may elect.
(4) "Substitute Common Stock" means the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
8. Registration Rights. (a) Issuer shall, if requested by
Grantee at any time and from time to time (a) within three years of the first
exercise of the Stock Option or (b) for 30 business days following the
occurrence of either of the events set forth in clauses (i) and (ii) of Section
2(d), as expeditiously as possible prepare and file up to two registration
statements under the Securities Act if such registration is necessary in order
to permit the sale or other disposition of any or all shares of securities that
have been acquired by or are issuable to Grantee upon exercise of the Stock
Option in accordance with the intended method of sale or other disposition
stated by Grantee, including a "shelf' registration statement under Rule 415
under the Securities Act or any successor provision, and Issuer shall use its
best efforts to qualify such shares or other securities under any applicable
state securities laws. Grantee agrees to use its best efforts to cause, and to
cause any underwriters of any sale or other disposition to cause, any sale or
other disposition pursuant to such registration statement to be effected on a
widely distributed basis so that upon consummation thereof no purchaser or
transferee shall own beneficially more than 4.9% of the then outstanding voting
power of Issuer. Issuer shall use all reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or waivers of
other parties which are required therefor and to keep such registration
statement effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. Any registration statement prepared and
filed under this Section 9, and any sale covered thereby, shall be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
fees and disbursements of Grantee's counsel related thereto.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain a required approval for
an exercise of the Stock Option as described in Section 2(d), the closing of the
sale or other disposition of Issuer Common Stock or other securities pursuant to
such registration statement shall occur substantially simultaneously with the
exercise of the Stock Option.
9
(c) The obligations of Issuer under this Section 8 to file a
registration statement and to maintain its effectiveness may be suspended for
one or more periods of time not exceeding 60 days in the aggregate if the Board
of Directors of Issuer shall have determined that the filing of such
registration statement or the maintenance of its effectiveness would require
premature disclosure of nonpublic information that would materially and
adversely affect Issuer.
(d) If during the time periods referred to in the first
sentence of Section 8(a) Issuer effects a registration under the Securities Act
of Issuer Common Stock for its own account or for any other stockholders of
Issuer (other than on Form S-4 or Form S-8, or any successor form), Issuer shall
allow Grantee the right to participate in such registration, and such
participation shall not affect the obligation of Issuer to effect two
registration statements for Grantee under this Section 8 ; provided that, if the
managing underwriters of such offering advise Issuer in writing that in their
opinion the number of shares of Issuer Common Stock requested to be included in
such registration exceeds the number which can be sold in such offering, Issuer
shall include the shares requested to be included therein by Grantee pro rata
with the shares intended to be included therein by Issuer.
(e) Grantee shall provide all information reasonably requested
by Issuer for inclusion in any registration statement to be filed hereunder. In
connection with any registration pursuant to this Section 8, Issuer and Grantee
shall provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution in
connection with such registration.
9. Restrictive Legends. Each certificate representing Option
Shares issued to Grantee hereunder shall initially be endorsed with a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE. SUCH
SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS
SET FORTH IN THE STOCK OPTION AGREEMENT, DATED MAY 14, 1997, A COPY OF
WHICH MAY BE OBTAINED FROM THE ISSUER HEREOF.
10. NASDAQS Listing. Upon any exercise of the Stock Option,
Issuer shall use its best efforts to cause the shares of Issuer Common Stock to
be acquired in connection with such exercise of the Stock Option to be approved
for listing on the NASDAQS and each other securities exchange on which such
shares are listed as soon as practicable after such exercise.
11. Assignment; Third Party Beneficiaries. (a) Neither this
Agreement nor any of the rights, interests or obligations of any party hereunder
shall be assigned by any of the parties hereto (whether by operation of law or
otherwise) without prior written consent of the other party; provided that
Grantee may assign all or any part of its rights hereunder to (i) any affiliate
thereof or (ii) any person after the occurrence of a Purchase Event. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. This Agreement (including the documents and instruments referred
10
to herein) is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
(b) Any Option Shares sold by a party in compliance with the
provisions of Section 9 shall, upon consummation of such sale, be free of the
restrictions imposed with respect to such shares by this Agreement. In no event
will any transferee of any Option Shares be entitled to the rights of Grantee
hereunder.
(c) Certificates representing shares sold in a registered
public offering pursuant to Section 8 shall not be required to bear the legend
set forth in Section 9.
12. Enforcement of the Agreement. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
13. Entire Agreement. This Agreement and the Merger Agreement
(together with the other documents and instruments referred to in the Merger
Agreement) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
14. Further Assurances. Each party will execute and deliver
all such further documents and instruments and take all such further action as
may be necessary in order to consummate the transactions contemplated hereby.
15. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
16. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or delivered by express
courier (with confirmation) to the parties at the following addresses (or such
other address for a party as shall be specified by like notice):
(a) if to Grantee, to:
First Financial Corporation
1305 Main Street
Stevens Point, Wisconsin 54481
Attention: Robert M. Salinger, General Counsel
11
With a copy to:
Hogan & Hartson, L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Stuart G. Stein
and
(b) if to Issuer, to:
Associated Banc-Corp
112 North Adams Street
Green Bay, Wisconsin 54307
Attention: Brian R. Bodager, General Counsel
With a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Creighton O'M. Condon
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without regard
to any applicable conflicts of law.
18. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
20. Expenses. Except as otherwise expressly provided herein or
in the Merger Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
21. Amendments; Waiver. This Agreement may be amended by the
parties hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties hereto, or, in the
case of a waiver, by an instrument signed on behalf of the party waiving
compliance.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
ASSOCIATED BANC-CORP
By:
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Name:
Title:
FIRST FINANCIAL CORPORATION
By:
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Name:
Title: