-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, S6kN2jzb9mpURuly1uTcCoITpHljC8+ZYpgn54OQJijBnCDXEMQZGA0sn7Op+Q4O AwPO0uWxIbeAGCSam0Bgvg== 0000062741-94-000028.txt : 19940822 0000062741-94-000028.hdr.sgml : 19940822 ACCESSION NUMBER: 0000062741-94-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARSHALL & ILSLEY CORP/WI/ CENTRAL INDEX KEY: 0000062741 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 390968604 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01220 FILM NUMBER: 94544467 BUSINESS ADDRESS: STREET 1: 770 N WATER ST CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4147657801 10-Q 1 10-Q FOR 06/30/94 (2ND QUARTER) FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1994 --------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _____________ Commission file number 0 - 1220 -------------------------------- MARSHALL & ILSLEY CORPORATION ----------------------------- (Exact name of registrant as specified in its charter) Wisconsin 39-0968604 --------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 770 North Water Street Milwaukee, Wisconsin 53202 -------------------- ----- (Address of principal executive offices) (Zip Code) (414) 765 - 7801 ---------------- (Registrant's telephone number, including area code) None ---- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class July 31, 1994 ----- ---------------- Common Stock, $1.00 Par Value 95,002,020 Page 1 PART 1 - FINANCIAL INFORMATION MARSHALL & ILSLEY CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) ($000's except share data) June 30 December 31 June 30 Assets 1994 1993 1993 - - ------ ------------ ------------ ------------ Cash and cash equivalents: Cash and due from banks $728,451 $667,114 $582,519 Federal funds sold and security resale agreements 61,208 49,336 68,036 Money market funds 106,675 68,184 57,694 ------------ ------------ ------------ Total cash and cash equivalents 896,334 784,634 708,249 Trading securities 2,303 2,852 12,263 Other short-term investments 32,619 50,121 61,684 Investment securities held to maturity, market value $389,441 ($341,877 December 31, and $1,068,633 June 30, 1993) 389,342 335,400 1,050,483 Investment securities available for sale at market value June 30, 1994 (amortized cost December 31 and June 30, 1993). Market value $2,211,117 and $1,579,516 at December 31 and June 30, 1993, respectively. 2,016,777 2,237,158 1,553,813 ------------ ------------ ------------ Total investment securities 2,406,119 2,572,558 2,604,296 Loans 8,746,851 8,617,400 8,200,144 Less: Allowance for loan losses 149,371 133,600 129,335 ------------ ------------ ------------ Net loans 8,597,480 8,483,800 8,070,809 Premises and equipment, net 287,827 299,801 285,637 Accrued interest and other assets 289,983 292,171 277,133 ------------ ------------ ------------ Total Assets $12,512,665 $12,485,937 $12,020,071 ============ ============ ============ Liabilities and Shareholders' Equity - - ------------------------------------ Deposits: Noninterest bearing $2,063,092 $2,290,233 $2,010,259 Interest bearing 7,570,335 7,881,576 7,717,119 ------------ ------------ ------------ Total deposits 9,633,427 10,171,809 9,727,378 Funds purchased and security repurchase agreements 1,011,509 515,028 584,598 Other short-term borrowings 164,954 201,688 158,103 Long-term borrowings 383,562 234,418 186,781 Accrued expenses and other liabilities 251,524 248,481 244,393 ------------ ------------ ------------ Total liabilities 11,444,976 11,371,424 10,901,253 Shareholders' equity: Series A convertible preferred stock, $1.00 par value; 348,944 shares issued (185,314 shares December 31 and June 30, 1993) 349 185 185 Common stock, $1.00 par value; 99,497,416 shares issued (102,073,005 December 31, and 89,643,790 June 30, 1993) 99,497 102,073 89,644 Additional paid-in capital 200,295 238,130 239,580 Retained earnings 870,338 897,123 838,832 Less: Treasury common stock, at cost; 4,254,535 shares (5,821,786 December 31, and 2,639,066 June 30, 1993) 88,224 121,106 46,924 Deferred compensation 1,511 1,892 2,499 Net unrealized losses on securities available for sale, net of related taxes 13,055 - - ------------ ------------ ------------ Total shareholders' equity 1,067,689 1,114,513 1,118,818 ------------ ------------ ------------ Total Liabilities and Shareholders' Equity$12,512,665 $12,485,937 $12,020,071 ============ ============ ============ See notes to financial statements. Page 2 MARSHALL & ILSLEY CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) ($000's except per share data) Three Months Ended June 30, ----------------------------- 1994 1993 Interest income: ------------ ------------ Loans $165,668 $160,769 Investment securities: Taxable 26,653 31,405 Exempt from Federal income taxes 4,384 5,271 Trading securities 42 45 Short-term investments 1,792 1,366 ------------ ------------ Total interest income 198,539 198,856 Interest expense: Deposits 61,710 68,442 Short-term borrowings 10,138 4,880 Long-term borrowings 5,980 5,274 ------------ ------------ Total interest expense 77,828 78,596 ------------ ------------ Net interest income 120,711 120,260 Provision for loan losses 13,001 4,440 ------------ ------------ Net interest income after provision for loan losses 107,710 115,820 Other income: Data processing services 38,612 34,083 Trust services 14,564 15,209 Other customer services 29,949 30,420 Net securities gains (losses) (7,470) 551 Other 7,959 10,059 ------------ ------------ Total other income 83,614 90,322 Other expense: Salaries and employee benefits 82,400 78,303 Net occupancy 9,291 9,206 Equipment 15,150 14,032 Payments to regulatory agencies 5,896 5,751 Processing charges 4,549 4,189 Supplies and printing 3,260 3,282 Professional services 3,729 2,970 Merger / Restructuring 76,562 - Other 30,123 22,161 ------------ ------------ Total other expense 230,960 139,894 ------------ ------------ Income (loss) before income taxes (39,636) 66,248 Provision (benefit) for income taxes (2,575) 22,831 ------------ ------------ Net income (loss) ($37,061) $43,417 ============ ============ Net income (loss) per common share: Primary ($0.39) $0.42 Fully diluted (0.39) 0.40 Dividends paid per common share 0.15 0.14 Weighted average common shares outstanding: Primary 95,480 103,707 Fully diluted 95,480 109,630 See notes to financial statements Page 3 MARSHALL & ILSLEY CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) ($000's except per share data) Six Months Ended June 30, ----------------------------- 1994 1993 Interest income: ------------ ------------ Loans $325,739 $319,948 Investment securities: Taxable 53,106 64,446 Exempt from Federal income taxes 8,498 11,127 Trading securities 86 88 Short-term investments 3,074 3,274 ------------ ------------ Total interest income 390,503 398,883 Interest expense: Deposits 123,306 139,467 Short-term borrowings 16,991 9,915 Long-term borrowings 11,960 10,481 ------------ ------------ Total interest expense 152,257 159,863 ------------ ------------ Net interest income 238,246 239,020 Provision for loan losses 16,953 8,751 ------------ ------------ Net interest income after provision for loan losses 221,293 230,269 Other income: Data processing services 76,211 64,886 Trust services 30,134 30,692 Other customer services 60,049 59,359 Net securities gains (losses) (6,653) 2,560 Other 16,957 20,117 ------------ ------------ Total other income 176,698 177,614 Other expense: Salaries and employee benefits 166,552 156,141 Net occupancy 19,394 18,703 Equipment 31,019 28,108 Payments to regulatory agencies 11,830 11,611 Processing charges 9,423 8,342 Supplies and printing 6,622 6,570 Professional services 5,791 5,507 Merger / Restructuring 76,562 - Other 50,423 43,288 Total other expense ------------ ------------ 377,616 278,270 Income before income taxes ------------ ------------ Provision for income taxes 20,375 129,613 18,923 44,267 Net income ------------ ------------ $1,452 $85,346 Net income per common share: ============ ============ Primary $0.01 $0.82 Fully Diluted $0.01 $0.79 Dividends paid per common share $0.29 $0.26 Weighted average common shares outstanding: Primary Fully diluted 99,707 103,473 99,724 109,638 See notes to financial statements Page 4 MARSHALL & ILSLEY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ($000's) Six Months Ended June 30, ----------------------------- 1994 1993 ------------ ------------ Net Cash Provided by Operating Activities $181,997 $106,372 Cash Flows From Investing Activities: Net decrease in securities with maturities of three months or less 18,550 39,500 Proceeds from sales of securities available for sale 567,963 13,995 Proceeds from maturities of longer term securities 560,825 908,441 Purchases of longer term securities (1,005,889) (644,226) Net increase in loans (237,673) (221,190) Purchases of assets to be leased (43,531) (43,605) Principal payments on lease receivables 57,347 51,807 Fixed asset purchases, net (21,795) (32,230) Other 4,726 3,401 ------------ ------------ Net cash provided by (used in) investing activities (99,477) 75,893 Cash Flows From Financing Activities: Net decrease in deposits (538,209) (316,691) Proceeds from issuance of commercial paper 777,733 585,977 Payments for maturity of commercial paper (800,562) (574,655) Net increase in other short-term borrowings 488,149 88,805 Proceeds from issuance of long-term debt 173,330 7,319 Payments of long-term debt (19,216) (15,244) Dividends paid (28,227) (26,684) Purchases of treasury stock (31,045) (24,749) Other 7,227 (2,619) ------------ ------------ Net cash provided by (used in) financing activities 29,180 (278,541) ------------ ------------ Net increase (decrease) in cash and cash equivalents 111,700 (96,276) Cash and cash equivalents, beginning of year 784,634 804,525 ------------ ------------ Cash and cash equivalents, end of period $896,334 $708,249 ============ ============ Supplemental cash flow information: Cash paid during the period for: Interest $148,493 $160,155 Income taxes 51,054 46,800 See notes to financial statements Page 5 MARSHALL & ILSLEY CORPORATION Notes to Financial Statements June 30, 1994 & 1993 (Unaudited) 1.The accompanying unaudited consolidated financial statements should be read in conjunction with Marshall & Ilsley Corporation's ("Corporation") 1993 Annual Report on Form 10-K. The unaudited financial information included in this report reflects all adjustments (consisting only of normal recurring accruals) which are necessary for a fair statement of the financial position and results of operations as of and for the three and six months ended June 30, 1994 and 1993. The results of operations for the three and six months ended June 30, 1994 and 1993 are not necessarily indicative of results to be expected for the entire year. 2.The accompanying unaudited consolidated financial statements have been restated to give effect to the merger of Valley Bancorporation (Valley) with and into the Corporation. Significant intercompany balances and transactions between the Corporation and Valley have been eliminated in the combination and certain adjustments have been made to conform the presentation of Valley's financial information with that of the Corporation. In accordance with the terms of the merger, which was consummated May 31, 1994, each share of Valley Common Stock was converted into the right to receive 1.72 shares of the Corporation's Common Stock (approximately 35.7 million shares) in a tax-free reorganization which was accounted for as a pooling of interests. Net interest income and net income of the previously separate enterprises for the three months ended March 31, 1994 prior to the consummation of the merger and a reconciliation of net interest income and net income of the Corporation as previously reported for the three months and six months ended June 30, 1993 to the amounts for those periods in the accompanying consolidated financial statements as restated for the pooling of interest are as follows ($000's): Three Three Six Months Months Months Ended Ended Ended March 31 June 30 June 30 Net interest income: 1994 1993 1993 ------------ ------------ ------------ Corporation $74,296 $77,708 $154,282 Valley Bancorporation 43,239 42,552 84,738 ------------ ------------ ------------ Combined $117,535 $120,260 $239,020 ============ ============ ============ Net income: Corporation $28,174 $31,933 $62,968 Valley Bancorporation 10,339 11,484 22,378 ------------ ------------ ------------ Combined $38,513 $43,417 $85,346 ============ ============ ============ 3.The Corporation has 5,000,000 shares of preferred stock authorized, of which, the Board of Directors has designated 3,000,000 shares (500,000 shares in 1993) as Series A convertible, with a $100 value per share for conversion and liquidation purposes. 4.The Corporation has 160,000,000 (80,000,000 in 1993) shares of its $1.00 par value common stock authorized. Page 6 MARSHALL & ILSLEY CORPORATION Notes to Financial Statements - Concluded June 30, 1994 & 1993 (Unaudited) 5.The Corporation's loan portfolio consists of the following ($000's): June 30 December 31 June 30 1994 1993 1993 ------------ ------------ ------------ Commercial financial & agricultural $2,714,224 $2,591,930 $2,617,960 Real estate: Construction 323,324 333,609 266,341 Residential Mortgage 2,197,178 2,164,503 2,103,060 Commercial Mortgage 2,041,005 1,909,229 1,736,822 ------------ ------------ ------------ Total real estate 4,561,507 4,407,341 4,106,223 Personal 1,213,537 1,361,571 1,228,012 Lease financing 257,583 256,558 247,949 ------------ ------------ ------------ $8,746,851 $8,617,400 $8,200,144 ============ ============ ============ 6.Effective January 1, 1994, the Corporation adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Accordingly, investment securities classified as available for sale at June 30, 1994 are carried at fair value with fair value adjustments, net of their related income tax effects, reported as a component of shareholders' equity. Investment securities classified as available for sale at December 31 and June 30, 1993, are carried at amortized cost in the accompanying consolidated balance sheets. Investment securities, by type, held by the Corporation are as follows ($000's): June 30 December 31 June 30 1994 1993 1993 ------------ ------------ ------------ Investment securities held to maturity: U.S. treasury and government agencies $61,320 - $585,679 State and Political Subdivisions 323,131 $326,154 375,788 Other 4,891 9,246 89,016 ------------ ------------ ------------ Investment securities held to maturity 389,342 335,400 1,050,483 ------------ ------------ ------------ Investment securities available for sale: U.S. treasury and government agencies 1,921,242 2,139,867 1,509,813 State and Political Subdivisions 250 - - Other 95,285 97,291 44,000 ------------ ------------ ------------ Investment securities available for sale 2,016,777 2,237,158 1,553,813 ------------ ------------ ------------ Total Investment Securities $2,406,119 $2,572,558 $2,604,296 ============ ============ ============ Page 7 MARSHALL & ILSLEY CORPORATION CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited) ($000's) Three Months Ended June 30, ----------------------------- 1994 1993 ------------ ------------ Assets - - ------ Cash and due from banks $616,759 $600,666 Short-term investments 184,303 173,761 Trading securities 3,814 4,405 Investment securities: Taxable 2,131,093 2,218,761 Tax-exempt 358,442 418,799 ------------ ------------ Total investment securities 2,489,535 2,637,560 Loans: Commercial 2,715,109 2,622,726 Real estate 4,500,855 4,170,071 Personal 1,211,482 1,078,651 Lease financing 256,655 246,203 ------------ ------------ 8,684,101 8,117,651 Less: Allowance for loan losses 139,989 129,073 ------------ ------------ Total loans 8,544,112 7,988,578 Premises and equipment, net 290,743 276,231 Accrued interest and other assets 297,445 268,334 ------------ ------------ Total Assets $12,426,711 $11,949,535 ============ ============ Liabilities and Shareholders' Equity - - ------------------------------------ Deposits: Noninterest bearing $2,036,599 $1,938,127 Interest bearing 7,672,608 7,727,857 ------------ ------------ Total deposits 9,709,207 9,665,984 Funds purchased and security repurchase agreements 887,636 596,628 Other short-term borrowings 130,182 93,764 Long-term borrowings 348,715 237,846 Accrued expenses and other liabilities 234,113 221,780 ------------ ------------ Total liabilities 11,309,853 10,816,002 Shareholders' equity 1,116,858 1,133,533 ------------ ------------ Total Liabilities and Shareholders' Equity $12,426,711 $11,949,535 ============ ============ Page 8 MARSHALL & ILSLEY CORPORATION CONSOLIDATED AVERAGE BALANCE SHEETS (Unaudited) ($000's) Six Months Ended June 30, ----------------------------- 1994 1993 ------------ ------------ Assets - - ------ Cash and due from banks $625,045 $592,406 Short-term investments 170,034 201,307 Trading securities 3,866 4,385 Investment securities: Taxable 2,172,571 2,243,835 Tax-exempt 359,591 423,429 ------------ ------------ 2,532,162 2,667,264 Total investment securities Loans: Commercial 2,666,138 2,583,960 Real estate 4,497,497 4,121,405 Personal 1,207,613 1,068,346 Lease financing 255,589 244,941 ------------ ------------ 8,626,837 8,018,652 Less: Allowance for loan losses 137,905 127,584 ------------ ------------ Total loans 8,488,932 7,891,068 Premises and equipment, net 289,809 274,956 Accrued interest and other assets 291,514 267,269 ------------ ------------ Total Assets $12,401,362 $11,898,655 ============ ============ Liabilities and Shareholders' Equity - - ------------------------------------ Deposits: Noninterest bearing $2,038,855 $1,890,895 Interest bearing 7,721,772 7,738,560 ------------ ------------ Total deposits 9,760,627 9,629,455 Funds purchased and security repurchase agreements 844,557 606,972 Other short-term borrowings 121,093 83,594 Long-term borrowings 322,235 238,608 Accrued expenses and other liabilities 226,590 221,023 ------------ ------------ Total liabilities 11,275,102 10,779,652 Shareholders' equity 1,126,260 1,119,003 ------------ ------------ Total Liabilities and Shareholders' Equity $12,401,362 $11,898,655 ============ ============ Page 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 1994 AND 1993 __________________________________________ For the second quarter of 1994, the Corporation recorded a net loss of $37.1 million compared to net income $43.4 million for the same period a year ago. Fully diluted net loss per share amounted to $.39 for the second quarter of 1994 compared to fully diluted net income per share of $.40 for the second quarter of 1993. The second quarter loss is attributable to a one-time merger/restructuring charge and an increase in loan loss provision associated with the May 31, 1994 acquisition of Valley Bancorporation (Valley). In addition, security losses and other miscellaneous charges were taken in the quarter. The following table summarizes the unusual items reported in the second quarter of 1994. Per Share Decrease _______________________ After-Tax Charge Primary Fully Diluted _____________ _______ _____________ Recognition of $76.6 million merger/restructuring charge $59.5 million $.62 $.62 Additional loan loss provisions of $8.9 million 5.8 million .06 .06 Security losses of $7.3 million 4.6 million .05 .05 Other miscellaneous charges of $8.5 million 6.2 million .07 .07 _____________ ____ ____ $76.1 million $.80 $.80 ============= ==== ==== Net income for the second quarter of 1994 would have been $39.0 million and fully diluted earnings per share would have amounted to $.38 per share had the above charges not been recorded. The table below summarizes the merger/restructuring charge recorded at June 30, 1994 (amounts in millions): MERGER/RESTRUCTURING CHARGES Executive Contracts $26.4 Employee Severance Costs 14.9 Computer and Software 12.7 System Conversion Costs 2.9 Facilities and Equipment 4.2 Investment Advisors 3.4 Accounting, Legal and Other Professional Fees 3.9 Other 8.2 ______ $76.6 ====== The executive contract accrual of $26.4 million represents the present value of the amounts due to certain Valley executives under their former employment contracts. As of June 30, 1994, $10.3 million had been paid and the remaining liability is expected to be paid beginning in 1997. As part of the on-going merger and restructuring, the Corporation anticipates a reduction in its work force. As of June 30, the Corporation accrued the severance costs for all employees who have been formally notified of job loss and the costs associated with other identified employees who have not been notified. The severance policy, which has been distributed to all employees, generally provides for a minimum of 2 weeks of severance payments up to a maximum of 52 weeks depending upon years of service and job classification with certain adjustments if subsequent employment is found during the severance period. The computer and software charge represents the write-off of Valley's capitalized costs associated with its own internal data processing function. The systems conversion cost estimate of $2.9 million is the cost associated with the one time conversion and standardization of Valley's records to M&I's data processing systems. As part of the merger, duplicative branch offices and other corporate facilities will be sold or leases terminated. In addition, certain excess furniture and equipment will also be disposed of. The estimated loss on lease terminations and equipment disposals amounted to $4.2 million. The estimated net gain on sale of excess facilities, which is not considered to be significant, will be recorded when realized. Investment advisor, accounting, legal and other professional fees present amounts incurred to consummate the mergers. Other miscellaneous charges amounted to $8.2 million and included a $3.2 million charge associated with the curtailment of Valley's defined benefit pension plan at May 31, 1994. Beginning in June, 1994 former Valley employees became eligible to participate in M&I's defined contribution pension plan. Also included were costs to eliminate duplicate customer accounts, unusable capitalized inventory costs and write-offs of other costs not deemed to be realizable due to the merger. As part of the approval of the merger, certain branch divestures were required by the regulatory agencies. These required branch divestures with deposits of approximately $270 million along with the resulting approximate net gain of $24 million, will be recorded when realized during the second half of 1994. It is not anticipated that these sales will have a material impact on the financial condition of the company. While no assurances can be given, the estimated annual cost savings to be achieved by the combined companies beginning in 1995 is estimated to be approximately $36 million. These cost savings are the result of operating efficiencies and the elimination of duplicate functions due to affiliate mergers and economies of scale. Management presently estimates that approximately 40% of the annual cost savings will be achieved in the second half of this year. The Corporation also increased the loan loss provision at several former Valley banks in order to raise their reserve levels to be more in line with the M&I Banks. The additional provision of $8.9 million increased Valley's allowance for loan loss to nonperforming loan ratio from 164% to 195% at June 30. It is not anticipated that this one-time increase in provision levels will result in lower provision levels in the future. Security losses of $7.3 million of the reported $7.5 million were realized in the second quarter of 1994 to reposition our balance sheet in light of current interest rates. Approximately $568 million of securities with a remaining average maturity of one year were sold. The proceeds were reinvested in higher yielding securities with an average maturity of less than two years. The securities sold were classified as available for sale, therefore, the resulting realized loss has no impact on shareholders' equity. Other miscellaneous charges included a goodwill asset adjustment of $2.7 million, other real estate write-downs of $1.8 million and other accrual related adjustments such as professional fees not resulting from the merger/restructuring. PROVISION FOR LOAN LOSSES AND CREDIT QUALITY ____________________________________________ Excluding the above noted additional provision for certain Valley banks of $8.9 million, the provision for loan losses would have amounted to $4.1 million in the second quarter of 1994 compared to $4.0 million in the first quarter of 1994 and $4.4 million in the second quarter of 1993. The adjusted 1994 provision level reflects the relatively stable trend in nonperforming assets since year- end 1993 and net charge-offs in relation to the allowance for loan losses. Nonperforming assets at June 30, 1994 were $69.8 million, relatively unchanged from the first quarter of 1994. Nonaccrual loans, the largest component of nonperforming assets, increased $4.8 million or 10.8% since March 31, 1994 while other real estate owned (OREO) declined by $4.3 million. All major categories of nonaccrual loans, other than personal loans, increased in the second quarter compared to the prior quarter. The decline in OREO was due to the sales of properties during the quarter and write-downs. Net charge-offs in the second quarter of 1994 amounted to $.8 million or .04% of average loans annualized. While slightly higher than the first quarter of 1994, the amount is below that reported in any quarter in 1993. The allowance for loan losses was $149.4 million or 1.71% of total loans at June 30, 1994 compared to $137.2 million or 1.59% of total loans at March 31, 1994 and $129.3 million or 1.58% of total loans at June 30, 1993. The coverage of the allowance for loan losses to nonperforming loans increased from 242% at March 31, 1994 to 244% at the end of the current quarter. The following tables present certain credit quality information and statistics at June 30, 1994 as well as the previous four quarters. CONSOLIDATED CREDIT QUALITY INFORMATION ($000's) 1994 1993 _________________ ___________________________ Second First Fourth Third Second Quarter Quarter Quarter Quarter Quarter _________________ ___________________________ NONPERFORMING ASSETS Nonaccrual $ 49,384 $ 44,571 $ 44,186 $ 49,965 $ 55,467 Renegotiated 4,328 4,019 4,263 5,024 5,162 Past Due 90 Days or More 7,613 8,028 7,906 7,013 7,145 _________________ __________________________ Total Nonperforming Loans 61,325 56,618 56,355 62,002 67,774 Other Real Estate Owned 8,494 12,813 12,928 14,533 15,811 _________________ __________________________ Total Nonperforming Assets $ 69,819 $ 69,431 $ 69,283 $ 76,535 $ 83,585 ================= ========================== ALLOWANCE FOR LOAN LOSSES $149,371 $137,174 $133,600 $131,662 $129,335 ================= ========================== NONACCRUAL LOANS BY TYPE Commercial Commercial, Financial & Agricultural $ 11,410 $ 9,856 $ 10,055 $ 14,404 $ 22,715 Lease Financing Receivables 2,106 2,756 2,868 3,524 2,816 _________________ __________________________ Total Commercial 13,516 12,612 12,923 17,928 25,531 Real Estate Construction and Land Development 3,135 493 538 169 -- Commercial Mortgage 20,188 19,357 18,433 18,656 16,473 Residential Mortgage 10,062 9,492 9,631 10,409 10,356 _________________ __________________________ Total Real Estate 33,385 29,342 28,602 29,234 26,829 Personal 2,483 2,617 2,661 2,803 3,107 _________________ __________________________ Total Nonaccrual Loans $ 49,384 $ 44,571 $ 44,186 $ 49,965 $ 55,467 ================== ========================== 1994 1993 _________________ ___________________________ Second First Fourth Third Second Quarter Quarter Quarter Quarter Quarter _________________ ___________________________ NET LOAN AND LEASE CHARGE-OFFS Loan and Lease Charge-offs $ 3,543 $ 2,287 $ 6,404 $ 3,613 $ 4,310 Loan and Lease Recoveries 2,739 1,909 2,292 1,540 2,027 _________________ __________________________ Net Loan and Lease Charge-offs $ 804 $ 378 $ 4,112 $ 2,073 $ 2,283 ================= ========================== CONSOLIDATED STATISTICS Net Charge-offs to Average Loans Annualized 0.04% 0.02% 0.19% 0.10% 0.11% Total Nonperforming Loans to Total Loans 0.70 0.66 0.65 0.74 0.83 Total Nonperforming Assets to Total Loans and Other Real Estate Owned 0.80 0.80 0.80 0.91 1.02 Allowance for Loan Losses to Total Loans 1.71 1.59 1.55 1.57 1.58 Allowance for Loan Losses to Nonperforming Loans 244 242 237 212 191 NET INTEREST INCOME ___________________ Net interest income in the second quarter of 1994 was $120.7 million compared to $120.3 million for the same period one year ago, a slight increase of $.4 million. The benefit of the increase in the average volume of earning assets, primarily loans, together with the benefit of the decline in cost of interest bearing liabilities offset the decline in yields on earning assets and the increased volume of both short-term and long-term borrowings fueled in part by the slow growth in deposits. In the second quarter of 1994, average earning assets increased $428.4 million or 3.9% compared to the same period one year ago. Average loan growth of $566.5 million or 7.0% was offset, in part, by a decline in average securities of $148.0 million. The growth and composition of the Corporation's quarterly average loan portfolio for the current quarter and previous four quarters are reflected below (amounts in millions): 1994 1993 _________________ ____________________________________ Annual Second First Fourth Third Second Growth Quarter Quarter Quarter Quarter Quarter PCT _________________ ____________________________________ Commercial Loans $ 2,715 $ 2,616 $ 2,558 $ 2,566 $ 2,623 3.5% Real Estate Loans Construction 321 331 321 282 255 25.6 Commercial Mortgages 2,031 2,016 1,939 1,865 1,780 14.1 Residential Mortgages 2,149 2,147 2,190 2,152 2,135 0.7 ________________ __________________________________ Total Real Estate Loans 4,501 4,494 4,450 4,299 4,170 7.9 Personal Loans Personal Loans 952 948 953 914 878 8.5 Student Loans 259 256 228 206 201 29.0 ________________ __________________________________ Total Personal Loans 1,211 1,204 1,181 1,120 1,079 12.3 Lease Financing Receivables 257 255 255 250 246 4.2 ________________ __________________________________ Total Consolidated Average Loans $ 8,684 $ 8,569 $ 8,444 $ 8,235 $ 8,118 7.0% ================ ================================== Each major category of loans increased since the second quarter of 1993. The Corporation's average commercial portfolio grew 3.5% while the portfolio of average loans to individuals increased 8.5% reflecting continued confidence by both the business and consumer sectors since last year. Average interest bearing liabilities grew $383 million or 4.4% for the three months ended June 30, 1994, compared to the same period in 1993. The increase in average noninterest bearing deposits of $98 million or 5.1% was partially offset by a $55 million or .7% decline in interest bearing deposits. Average short-term borrowings increased $327.4 million or 47.4% in response to the slow growth in total average deposits. Average long-term borrowings increased $111 million or 46.6% due primarily to the $100 million ten year 6.375% subordinated notes which were issued in July 1993 for general corporate purposes including financing the common share repurchase program announced in April 1993. Since the announcement, the Corporation has cumulatively repurchased 6.4 million common shares at an aggregate cost of approximately $145.8 million through June 30, 1994. The estimated impact of the program in the second quarter of 1994 compared to the same period last year was to increase interest expense by approximately $1.9 million. During the second quarter of 1994, the Corporation's banking subsidiaries began offering Bank Notes. The Bank Notes provide an additional funding source along with those traditionally available to our banking affiliates. As of June 30, the total outstanding amounted to $139.7 million. These notes were issued for a two-year term and have floating interest rates. The composition of the Corporation's quarterly average deposits for the current quarter and prior year's quarters are as follows (amounts in millions): 1994 1993 _________________ ____________________________________ Annual Second First Fourth Third Second Growth Quarter Quarter Quarter Quarter Quarter PCT _________________ ____________________________________ Noninterest Bearing Commercial $ 1,271 $ 1,270 $ 1,352 $ 1,270 $ 1,227 3.6% Personal 444 426 424 405 402 10.4 Other 322 345 395 360 309 4.1 ________________ __________________________________ Total Noninterest Bearing Deposits 2,037 2,041 2,171 2,035 1,938 5.1 Interest Bearing Savings & NOW 2,477 2,455 2,454 2,377 2,291 8.1 Money Market 1,481 1,523 1,574 1,534 1,507 (1.7) Other CDs & Time Deposits 3,233 3,313 3,369 3,422 3,503 (7.7) CDs Greater than $100 481 478 480 419 427 12.4 ________________ __________________________________ Total Interest Bearing Deposits 7,672 7,769 7,877 7,752 7,728 (0.7) ________________ __________________________________ Total Consolidated Average Deposits $ 9,709 $ 9,810 $10,048 $ 9,787 $ 9,666 0.4% ================ ================================== The overall interest margin was positively impacted by the growth in average earning assets. The decline in yields on average interest earning assets of 31 basis points offset, in part, by the decrease in cost of average interest bearing liabilities of 19 basis points, reduced the interest margin by $4.2 million this quarter compared to the same period last year. This decrease was mitigated by the increase in the average volume of earning assets which provided a positive impact on the net margin of $4.6 million. While the margin as a percent of average earning assets declined in the second quarter of 1994 compared to the same period a year ago, the margin is up slightly from the 4.31% yield in the first quarter of 1994. The security losses realized in the second quarter should provide a positive impact on the margin over the next eighteen months. At the present time, the Corporation is not involved in any derivative product arrangements. Yield & Cost Analysis 1994 1993 ($000's) ____________________________ _____________________________ Average Average Average Yield or Average Yield or Balance Interest Cost Balance Interest Cost ____________________________ _____________________________ Loans $ 8,684,101 $166,215 7.68% $ 8,117,651 $161,228 7.97% Investment Securities: Taxable 2,131,093 26,653 5.02 2,218,761 31,405 5.68 Tax Exempt 358,442 6,144 6.88 418,799 7,802 7.47 Other Short-term Investments 188,117 1,840 3.92 178,166 1,413 3.18 ____________________________ ____________________________ Total Interest Earning Assets $11,361,753 $200,852 7.09% $10,933,377 $201,848 7.40% ============================ ============================ Money Market Savings $ 1,480,798 $ 9,265 2.51% $ 1,506,555 $ 9,851 2.62% Regular Savings & NOW 2,476,670 12,956 2.10 2,290,553 13,183 2.31 Other CDs & Time Deposits 3,234,606 34,792 4.31 3,503,358 40,976 4.69 CD's Greater than $100 480,534 4,697 3.92 427,391 4,432 4.16 ____________________________ ____________________________ Total Interest Bearing Deposits 7,672,608 61,710 3.23 7,727,857 68,442 3.55 Short-term Borrowings 1,017,818 10,138 4.00 690,392 4,880 2.84 Long-term Borrowings 348,715 5,980 6.88 237,846 5,274 8.89 ____________________________ ____________________________ Total Interest Bearing Liabilities $ 9,039,141 $ 77,828 3.45% $ 8,656,095 $ 78,596 3.64% ============================ ============================ Net Interest Margin (FTE) as a Percent of Average Earning Assets $123,024 4.34% $123,252 4.52% ================ ================ OTHER INCOME ____________ Total other income was $83.6 million for the second quarter of 1994, a decline of $6.7 million or 7.4% over the $90.3 million earned in the second quarter of 1993. The decline was due to security losses of $7.5 million realized in the second quarter of 1994 compared to $0.6 million of gains taken in the same period last year. Fees from data processing services grew $4.5 million or 13.3% and amounted to $38.6 million this quarter compared to $34.1 million for the same period last year. During the second quarter of 1993, a customer terminated its processing agreement because it was acquired and paid a large contract termination fee. Had the payment not been made in 1993, data processing revenue for the second quarter of 1994 would have increased 29.0%. Trust fees declined $.6 million or 4.2% due to lack of continued growth while fees from other customer services declined 1.5% or $.5 million primarily due to a decrease in service charges on commercial deposit accounts. Other income decreased $2.1 million or 20.9% this quarter compared to the same quarter last year. The decline in revenue from the origination and sale of mortgage loans to the secondary market accounted for the majority of the decrease. OTHER EXPENSE _____________ Total noninterest expense for the three months ended June 30, 1994 amounted to $231.0 million compared to $139.9 million reported last year. Excluding the merger/restructuring charge, total other expense increased $14.5 million or 10.4%. Salaries and employee benefits, the largest component of noninterest expense, increased $4.1 million or 5.2%. M&I Data Services, Inc. (DSI), the Corporation's data processing subsidiary, contributed $1.1 million of the increase through additional overtime and a 8.2% increase in average FTE employees (174) which includes, in part, the effect of the acquisition of a data processing center which was completed during the third quarter of 1993. Also contributing to the increase in salaries and benefits was a $1.0 million increase in benefit expense which is primarily due to the lowering of the discount rates used in determining certain benefit liabilities at the end of 1993. DSI also contributed approximately 86% of the increase in equipment expense. Other noninterest expense increased $7.9 million from $22.2 million in the second quarter of 1993 to $30.1 million in the current quarter. Included in other miscellaneous expense for the second quarter of 1994 as compared to the second quarter of the prior year is other real estate write-downs of $1.8 million, an environmental liability accrual of $.8 million and goodwill asset adjustments of $2.7 million. This line item is also affected by the capitalization of costs, net of amortization, associated with software development and data processing conversions. During the second quarter of 1994, the amount of cost capitalized, net of amortization, was less than the amount recorded in the second quarter of 1993 by approximately $0.6 million and was primarily associated with unaffiliated conversion activity. INCOME TAXES ____________ The income tax benefit for the three months ended June 30, 1994 amounted to $2.6 million compared to an income tax provision of $22.8 million for the three months ended June 30, 1993. The decline in the effective tax rate for the second quarter of 1994 compared to the same period last year was primarily due to certain charges recorded in the quarter which are nondeductible in accordance with the Internal Revenue Code. SIX MONTHS ENDED JUNE 30, 1994 AND 1993 ______________________________________ For the six months ended June 30, 1994 the Corporation recorded net income of $1.5 million compared to $85.3 million for the six months ended June 30, 1993. Fully diluted net income per share amounted to $.01 compared to $.79 for the prior year. Net income for the six months ended June 30, 1994 would have been $77.6 million and fully diluted net income per share would have amounted to $.75 per share had the $76.1 million of unusual charges not been recorded in the second quarter of 1994. The decline in operating earnings was due to a slight decrease in net interest income and higher net noninterest expense. CAPITAL RESOURCES _________________ As part of the common share repurchase program, the Corporation began acquiring common shares in anticipation of the conversion of its $50 million 8.5% convertible notes. In May, $16.4 million of the notes were converted into 1,870,057 shares of common stock. As provided for in the note agreement, the noteholder, subsequent to conversion, exchanged the newly acquired common shares for 163,630 shares of Series A preferred stock. The impact of the adoption of FAS 115 and change in the interest rate environment resulted in a decrease in shareholders' equity of $13.1 million at June 30, 1994. Shareholders' equity to total assets was 8.53% at June, 1994. The Corporation continues to have a strong capital base and its regulatory capital ratios remain significantly above the defined minimum regulatory ratios as shown in the following tables as of June 30, 1994. RISK-BASED CAPITAL RATIOS ($ in thousands) Amount Ratio __________ ______ Tier 1 capital $1,031,445 11.21% Tier 1 capital minimum requirement 368,205 4.00 __________ ______ Excess $ 663,240 7.21% ========== ====== Total capital $1,267,151 13.77% Total capital minimum requirement 736,409 8.00 Excess $ 530,742 $5.77% ========== ====== Risk-adjusted assets $9,205,116 LEVERAGE RATIO ($ in millions) Amount Ratio ___________________ ____________ Tier 1 capital to adjusted total assets $1,031,445 8.32% Minimum leverage requirement (1) 371,709 - 619,515 3.00 - 5.00 ___________________ ____________ Excess $659,736 - $411,930 5.32 - 3.32% =================== ============ Adjusted average total assets $12,390,303 (1) The 3% Ratio Shown is effective for banking organizations which have received the top bank rating from their principal federal banking regulator. Organizations receiving lower ratings are required to meet a higher minimum Leverage Ratio of between 4% and 5%. PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K _________________________________________ A. Exhibits 3(a) Restate Articles of Incorporation, as amended 3(b) By-laws, as amended 10(a) Marshall & Ilsley Corporation Assumption Agreement dated May 31, 1994 assuming rights, obligations and interests of Valley Bancorporation under various stock option plans incorporated herein by reference to Exhibit 10.1 to Marshall & Ilsley Corporation's Registration Statement on Form S-8 (Reg. No. 33-53897) (b) Valley Bancorporation 1992 Incentive Stock Plan incorporated herein by reference to Exhibit A to Valley Bancorporation's 1992 Annual Meeting Proxy Statement dated March 25, 1992 (the "March 25, 1992 Proxy Statement") (c) Valley Bancorporation 1992 Outside Directors' Stock Option Plan incorporated herein by reference to Exhibit B to the March 25, 1992 Proxy Statement (d) Valley Bancorporation 1988 Nonqualified Stock Option Plan incorporated herein by reference to Exhibit A to Valley Bancorporation's 1988 Annual meeting Proxy Statement dated March 22, 1988 (e) Valley Bancorporation 1986 Amended and Restated Stock Option Plan incorporated herein by reference to Exhibit A to Valley Bancorporation's 1987 Annual Meeting Proxy Statement dated March 30, 1987 (f) Change of control Agreement between Marshall & Ilsley Corporation and Peter M. Platten, III incorporated herein by reference to Exhibit 10.3(a) to Marshall & Ilsley Corporation's Registration Statement on Form S-4 (Reg. No. 33-51753) (g) Employment Agreement between Marshall & Ilsley Corporation and Gary A. Lichtenberg incorporated herein by reference herein to Exhibit 10.3(c) to Marshall & Ilsley Corporation's Registration Statement on Form S-4 (Reg No. 33-51753) (h) Marshall & Ilsley Corporation 1994 Long-Term Incentive Plan incorporated herein by reference to Appendix A to Marshall & Ilsley Corporation's 1994 Annual Meeting Proxy Statement dated July 15, 1994 11 Statements re computation of earnings per share 12 Marshall & Ilsley Corporation Computation of Ratio of Earnings to Fixed Changes. The Company will provide a copy of any instrument defining the rights of holders of long-term debt to the commission upon request. B. Reports on Form 8-K 1 A Form 8-K dated may 17, 1994 was filed which included Valley Bancorporation's Quarterly Report on Form 10-Q for the period ended March 31, 1994 2 A Form 8-K dated May 31, 1994 was filed which (i) reported the merger with Valley Bancorporation, effective May 31, 1994, and (ii) contained the Item 7(a) financial statements of Valley Bancorporation and the Item 7(b) pro forma financial information SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MARSHALL & ILSLEY CORPORATION (Registrant) /s/ P. R. Justiliano ____________________________________ P. R. Justiliano Senior Vice President and Corporate Controller (Chief Accounting Officer) /s/ J. E. Sandy ___________________________________ J. E. Sandy Vice President August 15, 1994 EX-3 2 EXHIBIT 3(A)/ARTICLES OF INCORPORATION AMENDMENT TO ARTICLES OF INCORPORATION OF MARSHALL & ILSLEY CORPORATION The undersigned, in his official capacity as Secretary of Marshall & Ilsley Corporation, a corporation duly organized under the laws of the State of Wisconsin (the "Corporation"), hereby certifies that in accordance with Section 180.1002 of the Wisconsin Statutes, the following Amendment was duly adopted: "Section 6(a) of Article III of the Corporation's Restated Articles of Incorporation shall be amended to increase the number of shares of Preferred Stock designated as Class A Preferred Stock from 500,000 shares to "2,000,000" shares." Except as set forth above, Article III shall remain in full force and effect without further amendment or modification. The Amendment to the Articles of Incorporation of Marshall & Ilsley Corporation was adopted by the Board of Directors of the Corporation on April 14, 1994. Executed in duplicate this 15th day of April, 1994. MARSHALL & ILSLEY CORPORATION By:/s/ M.A. Hatfield ___________________________ M.A. Hatfield, Secretary This instrument was drafted by: Scott A. Moehrke Godfrey & Kahn, S.C. 780 North Water Street Milwaukee, Wisconsin 53202 RESTATED ARTICLES OF INCORPORATION OF MARSHALL & ILSLEY CORPORATION These Restated Articles of Incorporation are executed by the undersigned to supersede and replace the heretofore existing Articles of Incorporation and amendments thereto of Marshall & Ilsley Corporation, a corporation organized under the laws of the State of Wisconsin: ARTICLE I The name of the corporation is Marshall & Ilsley Corporation (the "Corporation"). ARTICLE II The Corporation may engage in any lawful activity within the purpose for which corporations may be organized under the Wisconsin Business Corporation Law; provided, however, that the Corporation shall not engage in any activities prohibited by the United States Bank Holding Company Act of 1956. ARTICLE III The aggregate number of shares which the Corporation shall have the authority to issue, the designation of each class of shares, the authorized number of shares of each class of par value and the par value thereof per share, shall be as follows: Designation Par Value Authorized of Class Per Share Number of Shares Preferred Stock. . . . . . . . $1.00 5,000,000 Common Stock . . . . . . . . . $1.00 160,000,000 Any and all such shares of Common Stock and Preferred Stock may be issued for such consideration, not less than the par value thereof, as shall be fixed from time to time by the Board of Directors. Any and all such shares so issued, the full consideration for which has been paid or delivered, shall be deemed fully paid stock and shall not be liable to any further call or assessment thereon, and the holders of such shares shall not be liable for any further payments except as otherwise provided by the laws of the State of Wisconsin. The preferences, limitations and relative rights of such classes shall be as follows: (1) Designation of Series. The Preferred Stock may from time to time as hereinafter provided, be divided into and issued in one or more series, and the Board of Directors is hereby expressly authorized to establish one or more series, to fix and determine the variations as among series and to fix and determine, prior to the issuance of any shares of a particular series, the following designations, terms, limitations and relative rights and preferences of such series: (a) The designations of such series and the number of shares which shall constitute such series, which number may at any time, or from time to time, be increased or decreased (but not below the number of shares thereof then outstanding) by the Board of Directors unless the Board of Directors shall have otherwise provided in establishing such series; (b) The voting rights to which the holders of the shares of such series are entitled, if any; (c) The yearly rate of dividends on the shares of such series, the dates in each year upon which such dividend shall be payable and, if such dividend shall be cumulative, the date or dates from which such dividend shall be cumulative; (d) The amount per share payable on the shares of such series in the event of the liquidation or dissolution or winding up of the Corporation (whether voluntary or involuntary); (e) The terms, if any, on which the shares of such series shall be redeemable, and, if redeemable, the amount per share payable thereon in the case of the redemption thereof (which amount may vary with regard to (i) shares redeemed on different dates; and (ii) shares redeemed through the operation of a sinking fund, if any, applicable to such shares, from the amount payable with respect to shares otherwise redeemed); (f) The extent to and manner in which a sinking fund, if any, shall be applied to the redemption or purchase of the shares of such series, and the terms and provisions relative to the operation of such fund; (g) The terms, if any, on which the shares of such series shall be convertible into shares of any other class or of any other series of the same or any other class and, if so convertible, the price or prices or the rate or rates of conversion, including the method, if any, for adjustments of such prices or rates, and any other terms and conditions applicable thereto; and (h) Such other terms, limitations and relative rights and preferences, if any, of such series as the Board of Directors may lawfully fix and determine and as shall not be inconsistent with the laws of the State of Wisconsin or these Amended and Restated Articles of Incorporation. All shares of the same series of Preferred Stock shall be identical in all respects, except that shares of any one series issued at different times may differ as to dates from which any cumulative dividends thereon shall be cumulative. All shares of the Preferred Stock of all series shall be equal and shall be identical in all respects, except as permitted by the foregoing provisions of this paragraph (1). (2) Dividends. The holders of Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available therefor, dividends at the annual rate fixed by the Board of Directors with respect to each series of shares and no more. Such dividends shall be payable on such dates and in respect of such periods in such year as may be fixed by the Board of Directors to the holders of record thereof on such date as may be determined by the Board of Directors. Such dividends shall be paid or declared and set apart for payment for each dividend period before any dividend (other than a dividend payable solely in Common Stock) for the same period shall be paid upon or set apart for payment on the Common Stock, and, if dividends on the Preferred Stock shall be cumulative, all unpaid dividends thereon for any past dividend period shall be fully paid or declared and set apart for payment, but without interest, before any dividend (other than a dividend payable solely in Common Stock) shall be paid upon or set apart for payment on the Common Stock. The holders of Preferred Stock shall not, however, be entitled to participate in any other or additional earnings or profits of the Corporation, except for such premiums, if any, as may be payable in case of redemption, liquidation, dissolution or winding up. (3) Redemption. In the event that the shares of any series of the Preferred Stock shall be made redeemable as provided in subparagraph (e) of paragraph (1), above, the Corporation may, at its option, redeem at any time or from time to time all or any part of such shares, upon notice duly given as hereinafter provided, by paying for each share the redemption price then applicable thereto fixed by the Board of Directors as provided in subparagraph (e) of paragraph (1), above. Notice of every such redemption shall be mailed at least thirty (30) days prior to the date fixed for such redemption to the holders of record of the shares called for redemption at their respective addresses as shown on the stock records of the Corporation. In case of a redemption of a part of a series of Preferred Stock at the time outstanding, the Corporation shall select by lot, in such manner as the Board of Directors may determine, the shares so to be redeemed. On or before the date fixed for a redemption specified therein, the Corporation shall deposit funds sufficient to redeem such shares with a bank or trust company in good standing, as designated in such notice, organized under the laws of the United States or of the State of Wisconsin, doing business in the City of Milwaukee, Wisconsin, and having a capital, surplus and undivided profit aggregating at least $50,000,000.00, according to its last published statement of condition, in trust for the pro rata benefit of the holders of the shares called for redemption, and if the name and address of such bank or trust company and the deposit or intent to deposit the redemption funds in such trust account shall have been stated in such notice of redemption, and the Corporation shall have given such bank or trust company irrevocable instructions and authorization to pay the amount payable upon redemption to the proper holders upon surrender of certificates representing such shares, then, from and after the mailing of such notice and the making of such deposit, all shares so called for redemption shall no longer be deemed to be outstanding for any purpose whatsoever and the right to receive dividends thereon and all rights of the holders of such shares in or with respect to such shares of the Corporation shall forthwith cease and terminate, except only the right of the holders thereof to receive from such bank or trust company the amount payable upon redemption together with all accrued but unpaid dividends to the date fixed for redemption, without interest, upon the surrender of the certificates representing the shares to be redeemed, and the right to exercise privileges of conversion, if any, on or before the date fixed for redemption or such earlier date as may be fixed for the expiration thereof. Any funds so deposited by the Corporation which shall not be required for such redemption because of the exercise of any right of conversion subsequent to the time of such deposit shall be released and repaid to the Corporation upon its request. Any funds so deposited and unclaimed at the end of five (5) years (or such shorter period as shall be provided by law) after the date fixed for redemption shall be released and repaid to the Corporation, after which holders of the shares called for redemption shall no longer look to the said bank or trust company but shall look only to the Corporation, or to others, as the case may be, for payment of any lawful claim for such funds which the holders of said shares may still have. Any interest accrued on funds so deposited shall be paid to the Corporation from time to time. (4) Reissue of Shares. Shares of the Preferred Stock which shall have been converted, redeemed, purchased or otherwise acquired by the Corporation, whether through the operation of a sinking fund or otherwise, shall be retired and restored to the status of authorized but unissued shares, but may be reissued only as a part of the Preferred Stock other than the series of which they were originally a part. (5) Liquidation. In the event of liquidation, dissolution or winding up (whether voluntary or involuntary) of the Corporation, the holders of shares of Preferred Stock shall be entitled to be paid the full amount payable on such shares upon the liquidation, dissolution or winding up of the Corporation fixed by the Board of Directors with respect to such shares as provided in subparagraph (d) of paragraph (1), above, before any amount shall be paid to the holders of the Common Stock. After payment to holders of the Preferred Stock of the full preferential amounts to which they are entitled, the remaining assets of the Corporation shall be distributed ratably among the holders of the Common Stock. (6) Designation of Rights and Preferences Series A Convertible Preferred Stock. (a) Designation of Series. There is hereby established effective February 14, 1986 from the authorized preferred stock a series of preferred stock to be designated as Series A Convertible Preferred Stock, consisting of 500,000 shares, and having the powers, rights, limitations, restrictions and preferences set forth herein. The number of shares designated as Series A Convertible Preferred Stock may at any time, or from time to time, be increased or decreased (but not below the number of shares thereof then outstanding or then reserved for issuance in connection with the conversion of any securities of the Company) by the Board of Directors. (b) Voting Rights. The holders of Series A Convertible Preferred Stock shall have only such right to vote as provided by Sections 180.64(2) and 180.52 of the Wisconsin Statutes or by other applicable law. (c) Dividends. The holders of all issued and outstanding shares of Series A Convertible Preferred Stock shall be entitled to receive cash dividends when and as cash dividends are declared and become payable with respect to the Common Stock of the Corporation, in an amount, in the case of each holder of shares of Series A Convertible Preferred Stock with respect to each cash dividend declared with respect to the Common Stock, equal to the amount of the cash dividend that such holder would have received with respect to the resulting shares of Common Stock had he converted such shares of Preferred Stock into Common Stock immediately before the declaration of such dividend with respect to the Common Stock. Dividends on the Series A Convertible Preferred Stock shall be noncumulative. The holders of Series A Convertible Preferred Stock shall not be entitled to participate in any other or additional earnings or profits of the Corporation, except for such premiums, if any, as may be payable in case of liquidation, dissolution or winding up. (d) Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of the Common Stock or any other series or class of stock of the Corporation ranking junior to the Series A Convertible Preferred Stock upon liquidation, dissolution or winding up, the holders of the shares of the Series A Convertible Preferred Stock shall be entitled to receive $100 per share plus an amount equal to all dividends, if any, which have accrued thereon as the result of the declaration of dividends on the Common Stock but which remain unpaid to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation to be paid or distributed to the holders of the shares of the Series A Convertible Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and the preferential amount, if any, to be paid or distributed to the holders of any other preferred stock ranking as to liquidation, dissolution or winding up, on a parity with the Series A Convertible Preferred Stock, then such assets shall be distributed among the holders of Series A Convertible Preferred Stock and such other preferred stock, if any, ratably in accordance with the respective amounts that would be payable upon liquidation, dissolution or winding up to such holders with respect to such shares of Series A Convertible Preferred Stock and such other preferred stock, if any, if all preferential amounts payable thereon were paid in full. For the purposes of this subparagraph (d), a consolidation or merger of the Corporation with one or more corporations shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary. Subject to the rights of the holders of shares of any series or class of stock ranking on a parity with or prior to the Series A Convertible Preferred Stock upon liquidation, dissolution or winding up, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the Series A Convertible Preferred Stock as provided in this subparagraph d, but not prior thereto, the holders of the Common Stock or any other series or class of stock ranking junior to the Series A Convertible Preferred Stock upon liquidation, dissolution or winding up shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the Series A Convertible Preferred Stock shall not be entitled to share therein. (e) Conversion Rights. The holders of shares of Series A Convertible Preferred Stock shall have the right, at their option, to convert such shares into shares of Common Stock of the Corporation at any time on and subject to the following terms and conditions: (i) The shares of Series A Convertible Preferred Stock shall be convertible at the offices of the transfer agent or agents for the Series A Convertible Preferred Stock and at such other office or offices, if any, as the Board of Directors may designate, into fully paid and nonassessable shares (except as provided in Section 180.40(6) of the Wisconsin Statutes) of Common Stock of the Corporation, at the conversion price, determined as hereinafter provided, in effect at the time of conversion, each share of Series A Convertible Preferred Stock being valued at $100 for the purpose of such conversion. The price at which shares of Common Stock shall be delivered upon conversion (herein called the "Conversion Price") shall be initially $78.75 per share of Common Stock, except that the initial Conversion Price applicable to shares of Series A Convertible Preferred Stock issued in exchange for Common Stock shall be the weighted average purchase price paid for such Common Shares as determined in good faith by the Board of Directors of the Company. The Conversion Price shall be adjusted in certain instances as provided in subparagraph (e)(iii), (iv), (v), (vi), (ix), (x) and (xi) below. (ii) In order to convert shares of Series A Convertible Preferred Stock into Common Stock, the holder thereof shall surrender at any office hereinabove mentioned the certificate or certificates therefor, duly endorsed or assigned to the Corporation or in blank, and give written notice to the Corporation at said office that such holder elects to convert such shares. Any such notice shall be irrevocable. No payment or adjustment shall be made upon conversion on account of any dividends, if any, which have accrued as the result of the declaration of dividends on the Common Stock on the shares of Series A Convertible Preferred Stock surrendered for conversion, but which remain unpaid, but payment or adjustment shall be made on account of any dividends payable with respect to the Common Stock issued upon conversion. Shares of Series A Convertible Preferred Stock shall be deemed to have been converted immediately prior to the close of business on the day of the surrender of such shares for conversion in accordance with the foregoing provisions, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of Common Stock at such time. As promptly as practicable on or after the conversion date, the Corporation shall issue and shall deliver at said office a certificate or certificates for the number of full shares of Common Stock issued upon such conversion, together with payment in lieu of any fraction of a share, as hereinafter provided, to the person or persons entitled to receive the same. (iii) In case the Corporation shall pay or make a dividend or other distribution on any class of Capital Stock of the Corporation in Common Stock, the Conversion Price shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the day fixed for the determination of shareholders entitled to receive such dividend or other distribution and of which the denominator shall be the sum of such number of shares plus the total number of shares constituting such dividend or other distribution, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For purposes of this subparagraph (e)(iii), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. (iv) In case the Corporation shall issue rights or warrants to all holders of its Common Stock, entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share (determined as provided in subparagraph (e)(viii) below) of the Common Stock on the date fixed for the determination of shareholders entitled to receive such rights or warrants, the Conversion Price shall be reduced by multiplying such Conversion Price by a fraction of which the numerator shall be the sum of the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate offering price for all of the shares of Common Stock so offered for subscription or purchase would purchase at such current market price and of which the denominator shall be the sum of the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this subparagraph (e)(iv), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not issue any rights or warrants in respect of shares of Common Stock held in the treasury of the Corporation. (v) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares, the Conversion Price shall be proportionately reduced, and, conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares, the Conversion Price shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of business on the day following the date upon which such subdivision or combination becomes effective. (vi) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its Common Stock, evidences of its indebtedness or assets (including securi- ties, but excluding any rights or warrants referred to in subparagraph (e)(iv) above, any dividend or distribution paid in cash out of earned surplus of the Corporation and any dividend or distribution referred to in subparagraph (e)(iii) above), the Conversion Price shall be adjusted by multiplying such Conversion Price by a fraction of which the numerator shall be the difference of the current market price per share (determined as provided in subparagraph (e)(viii) below) of the Common Stock on the date fixed for the determination of the shareholders entitled to receive such distribution less the then fair market value (as determined by the Board of Directors, whose good faith determination shall be conclusive) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of the then outstanding Common Stock, and of which the denominator shall be such current market price per share of the Common Stock, such adjustment to become effective immediately after the opening of business on the day following the date fixed for such determination. For purposes of this subparagraph (e)(vi), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation. The Corporation will not distribute any evidences of its indebtedness or assets with respect to shares of Common Stock held in the treasury of the Corporation. (vii) A reclassification (including any reclassifi- cation upon a consolidation or merger of which the Corporation is the continuing corporation) of the Common Stock into securities including securities other than the Common Stock shall be deemed to involve (aa) a distribution of such securities other than Common Stock into which the Common Stock is reclassified to all holders of Common Stock (and the effective date of such reclassification shall be deemed to be "the date fixed for the determination of shareholders entitled to receive such distribution" within the meaning of subparagraph (e)(vi) above) and (bb) a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number of shares of Common Stock outstanding immediately thereafter (and the effective date of such reclassification shall be deemed to be "the date upon which such subdivision or combination becomes effective" within the meaning of subparagraph (e)(v), above). (viii) For the purpose of any computation under subparagraph (e)(iv), (vi), and (x), the current market price per share of Common Stock on any date shall be deemed to be 90% (100%, in the case of subparagraph (e)(xvi) of (aa) the average of the daily closing prices for the five (5) consecutive business days commencing ten (10) business days before the date in question. The closing price for each day shall be the last reported sales price regular way or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case on any exchange on which the Common Stock is listed or admitted to trading selected by the Board of Directors, or (bb) if the Common Stock is not listed or admitted to trading on any such exchange, the closing sale price in the over-the-counter market, or (cc) in case no such reported sale takes place or such data is not reported on such day, the average of the closing bid and asked prices in the over-the-counter market, as furnished by the National Association of Securities Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer reporting such information. If on any such day the Common Stock is not quoted by any such organization, the closing price for such day shall be the fair value of such Common Stock on such day, as determined by the Board of Directors in good faith. (ix) In case of any capital reorganization of the Corporation (other than any reorganization referred to in subparagraph (e)(iii), (iv), (v), (vi), or (vii), above), any reclassification of the Common Stock (other than any reclassification of the Common Stock referred to in subparagraph (e)(ii), (v) or (vii) above), the consolidation or merger of the Corporation with or into any other corporation or of the sale of all or substantially all of the properties and assets of the Corporation to any other corporation, each share of Series A Convertible Preferred Stock shall immediately thereafter be convertible into the number of shares of stock, other securities, assets and/or cash to which a holder of the number of shares of Common Stock into which such share was convertible immediately prior thereto would have been entitled to receive upon such reorganization, reclassification, consolidation, merger or sale. In case of any such reorganization, reclassification, consolidation, merger or sale, the provisions set forth in this subparagraph (e)(ix) with respect to the rights and interests of the holders of the Series A Convertible Preferred Stock shall automatically be appropriately adjusted so as to be applicable as nearly as possible to the shares of stock, other securities, assets and/or cash into which the Series A Convertible Preferred Stock thereby becomes convertible, and effective provision shall be made in the Articles of Incorporation of the resulting or surviving corporation or otherwise, so that such provisions shall thereafter be applicable, as nearly as possible, to any such shares of stock, other securities, assets and/or cash. The Corporation shall not effect any such consolidation, merger or sale, unless before the consummation thereof the successor corporation (if other than the Corporation) resulting from such consolidation or merger, the corporation purchasing such assets, or other appropriate corporation or entity shall expressly assume in writing the obligation to deliver to the holder of each share of Series A Convertible Preferred Stock, upon conversion thereof, such shares of stock, other securities, assets and/or cash as such holder shall be entitled to receive pursuant to the provisions hereof, and to make provisions for the protection of such conversion right as above provided. The provisions of this subpara- graph (e)(ix) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers or sales. (x) In the event that the Corporation shall (except as hereinafter provided) issue any additional shares of Common Stock for cash at a price less than the Current Market Price per share of Common Stock then in effect, then the Conversion Price upon each such issuance shall be adjusted to that price determined by multiplying the Conversion Price in effect immediately prior to such event by a fraction: (aa) the numerator of which shall be the number of shares of Common Stock outstanding immedi- ately prior to the issuance of such additional shares of Common Stock plus the number of full shares of Common Stock which the aggregate consideration for the total number of such additional shares of Common Stock so issued would purchase at the Current Market Price per share, and (bb) the denominator of which shall be the number of shares of Common Stock outstanding immedi- ately prior to the issuance of such additional shares of Common Stock plus the number of such additional shares of Common Stock to issued; For purposes of clauses (aa) and (bb) the date as of which the Current Market Price per share of Common Stock shall be computed shall be the earlier of (xx) the date on which the Corporation shall enter into a firm contract for the issuance of such additional shares of Common Stock or (zz) the date of actual issuance of such additional shares of Common Stock; (xi) The Corporation may make such reductions in the Conversion Price, so as to increase the number of Common Shares into which the Series A Convertible Preferred Stock may be converted, in addition to those required by subparagraph (e)(iii), (iv), (v), (vi) and (ix), as it considers to be advisable in order that any event treated for federal income tax purposes as a dividend of stock or stock rights shall not be taxable to the recipients. (xii) No adjustments to the Conversion Price will be made for the issuance of options or securities to employees of the Corporation or its subsidiaries pursuant to any stock option, restricted stock, thrift, stock purchase, savings or other employee benefit plan or to shareholders of the Corporation pursuant to any dividend reinvestment plan. No adjustment will be required to be made in the Conversion Price until accumulative adjustments require an adjustment of at least $.25, with any smaller adjustments not made hereunder cumulated with future adjustments. (xiii) The Corporation shall mail to each holder of Series A Convertible Preferred Stock notice of the pro- posed effective date of any action which would result in an adjustment in the Conversion Price determined as provided in this subparagraph (e) at least twenty (20) days prior to the record date thereof. Whenever the Conversion Price is adjusted as herein provided, the Corporation shall forthwith file with any transfer agent for the Series A Convertible Preferred Stock a certificate signed by the Chairman of the Board or one of the Vice Presidents of the Corporation and by its Treasurer or an Assistant Treasurer, stating the adjusted Conversion Price determined as provided in this subparagraph (e), and setting forth the facts requiring such adjustment. Any such transfer agent shall be under no duty to make any inquiry or investigation as to the statements contained in any such certificate or as to the manner in which any computation was made, but may accept such certificate as conclusive evidence of the statements therein contained, and any such transfer agent shall be fully protected with respect to any and all acts done or action taken or suffered by it in reliance thereon. No transfer agent in its capacity as transfer agent shall be deemed to have any knowledge with respect to any change of capital structure of the Corporation unless and until it receives a notice thereof pursuant to the provisions hereof, and, in the absence of any such notice, each transfer agent may conclusively assume that there has been no such change. Whenever the Conversion Price is adjusted, the Corporation shall forthwith cause a notice stating the adjustment, and describing the events requiring such adjustments and the Conversion Price to be mailed to the holders of record of Series A Convertible Preferred Stock. (xiv) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of Series A Convertible Preferred Stock, such number of shares as shall from time to time be sufficient to effect the conversion of all Series A Convertible Preferred Stock from time to time outstanding. The Corporation shall from time to time, in accordance with the laws of Wisconsin, increase the authorized amount of Common Stock if at any time the number of shares of Common Stock remaining unissued shall not be sufficient to permit the conversion of all the then outstanding shares of Series A Convertible Preferred Stock. (xv) The Corporation will pay any and all issue and other taxes (other than taxes based on income) that may be payable in respect of any issue or delivery of Common Stock on conversion of Series A Convertible Preferred Stock pursuant hereto. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of Common Stock in a name other than that in which the Series A Convertible Preferred Stock so converted was registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid. (xvi) No fractional shares of Common Stock will be issued upon conversion of the Series A Convertible Preferred Stock, and in lieu of any fractional shares that would otherwise be issuable, the Corporation will pay cash on the basis of the current market price per share of the Common Stock on the business day immediately preceding the day of conversion determined in accordance with subparagraph (e)(viii) above. (xvii) The Board of Directors of the Corporation shall not authorize for issuance any class of capital stock ranking prior to the Series A Convertible Preferred Stock without the consent of holders of two-thirds of the outstanding shares of Series A Convertible Preferred Stock. For purposes of this Agreement, any class or classes of stock of the Corporation shall be deemed to rank: (aa) Prior to the Series A Convertible Preferred Stock as to dividends or as to distribution of assets upon liquidation, dissolution or winding up if the holders of such class shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of the Series A Convertible Preferred Stock; and (bb) On a parity with the Series A Convert- ible Preferred Stock as to dividends or as to distributions of assets upon liquidation, dissolution or winding up, whether or not the dividend rates, dividend payment dates, or liquidation amounts per share thereof be different from those of the Series A Convertible Preferred Stock, if the holders of such class and the Series A Convertible Preferred Stock shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend rates or liquidation amounts, without preference or priority of one over the other. ARTICLE IV Pre-emptive Rights. No holder of any stock of the corporation shall have any pre-emptive or other subscription rights nor be entitled, as of right, to purchase or subscribe for any part of the unissued stock of this corporation or any of additional stock issued by reason of any increase of authorized capital stock of this corporation or other securities whether or not convertible into stock of this corporation. ARTICLE V The address of the registered office of the Corporation is 770 North Water Street, Milwaukee, Wisconsin 53202 and its registered agent at such address is Michael A. Hatfield. ARTICLE VI The business and affairs of the Corporation shall be managed by a Board of Directors. The number of directors (exclusive of directors, if any, elected by the holders of one or more series of Preferred Stock, voting separately as a series pursuant to the provisions of these Restated Articles of Incorporation applicable thereto) shall be not less than 3 directors, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors then in office. The directors shall be divided into three classes, designated Class I, Class II, and Class III, and the term of office of directors of each class shall be three years. Each class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors. If the number of directors is changed by resolution of the Board of Directors pursuant to this Article VI, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires and until his successor shall be elected and shall qualify. Any newly created directorship resulting from an increase in the number of directors and any other vacancy on the Board of Directors, however caused, shall be filled by the vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director so elected to fill any vacancy in the Board of Directors, including a vacancy created by an increase in the number of directors, shall hold office for the remaining term of directors of the class to which he has been elected and until his successor shall be elected and shall qualify. Exclusive of directors, if any, elected by the holders of one or more series of Preferred Stock, no director of the Corporation may be removed from office, except for Cause and by the affirmative vote of two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote at a meeting of shareholders duly called for such purpose. As used in this Article VI, the term "Cause" shall mean solely malfeasance arising from the performance of a director's duties which has a materially adverse affect on the business of the Corporation. No person, except those nominated by or at the direction of the Board of Directors, shall be eligible for election as a director at any annual or special meeting of shareholders unless a written request, in the form established by the Corporation's By-laws, that his or her name be placed in nomination is received from a shareholder of record by the Secretary of the Corporation not less than 30 days prior to the date fixed for such meeting, together with the written consent of such person to serve as a director. Where such a request for nomination and such consent have been timely received, but such nominee is unable or declines to serve, the person who placed the individual's name in nomination may request that an alternative name be placed in nomination at the meeting. Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately by series, to elect directors at an annual or special meeting of shareholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of these Restated Articles of Incorporation applicable thereto. Directors so elected shall not be divided into classes unless expressly provided by such terms, and during the prescribed terms of office of such directors the Board of Directors shall consist of such directors in addition to the number of directors determined as provided in the first paragraph of this Article VI. ARTICLE VII The period of existence of the Corporation shall be perpetual. ARTICLE VIII Acquisition and Disposition of Own Shares. The Corporation shall have the right to purchase, take, receive or otherwise acquire, hold, own, pledge, transfer or otherwise dispose of its own shares; provided that no such acquisition, directly or indirectly, of its own shares of equal or subordinate rank shall be made unless: (a) At the time of such acquisition the Corporation is not and would not thereby be rendered insolvent; and (b) The net assets of the Corporation remaining after such acquisition would be not less than the aggregate preferential amount payable in the event of voluntary liquidation to the holders of shares having preferential rights to the assets of the corporation in the event of liquidation. ARTICLE IX Notwithstanding any other provision of these Restated Articles of Incorporation or the Corporation's By-Laws (and notwithstanding the fact that some lesser percentage may be specified by law, these Restated Articles of Incorporation or the Corporation's By-Laws), the Corporation's By-Laws may be amended, altered or repealed, and new By-Laws may be enacted, only by the affirmative vote of not less than two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote at a meeting of shareholders duly called for such purpose, or by a vote of not less than three-quarters of the entire Board of Directors then in office. ARTICLE X Except as otherwise specified herein, the "requisite affirmative votes," and the recitals of votes which are "requisite for adoption" or "requisite for approval" under Section 180.25 of the Wisconsin Statutes for the approval or authorization of any (i) plan of merger or consolidation of the Corporation with or into any other corporation, (ii) sale, lease, exchange or disposition of all or substantially all the property and assets of the Corporation to or with any other person, corporation or entity not made in the ordinary course of business, or (iii) voluntary dissolution of the Corporation or revocation of voluntary dissolution proceedings, shall be the affirmative vote of the holders of two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote at a meeting called for such purpose (unless any class or series of shares is entitled to vote thereon as a class, in which event the "requisite affirmative votes" shall be the affirmative votes of the holders of two-thirds of the outstanding shares of each class of shares and of each series entitled to vote thereon as a class and of the total shares entitled to vote thereon), provided, however, if the Board of Directors shall have approved any transaction described in clauses (i), (ii) or (iii) above by a resolution adopted by three-quarters of the Board of Directors then in office and entitled to vote thereon, the "requisite affirmative votes," and the recitals of votes which are "requisite for adoption" or "requisite for approval," shall be the affirmative vote of the holders of a majority of the outstanding shares of capital stock of the Corporation entitled to vote at a meeting called for such purpose (unless any class or series of shares is entitled to vote thereon as a class, in which event the "requisite affirmative votes" shall be the affirmative votes of the holders of a majority of the outstanding shares of each class of shares and of each series entitled to vote thereon as a class and of the total shares entitled to vote thereon). ARTICLE XI A. In addition to any affirmative vote required by law or these Restated Articles of Incorporation or the By-Laws of the Corporation, and except as otherwise expressly provided in Section (B) of this Article XI, a Business Combination (as hereinafter defined) shall require the affirmative vote of not less than: (1) Eighty percent (80%) of the votes entitled to be cast by the holders of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (hereinafter referred to in this Article XI as "Voting Stock"), voting together as a single class (it being understood that, for purposes of this Article XI, each share of the Voting Stock shall have the number of votes granted to it pursuant to the Wisconsin Business Corporation Law or as otherwise provided pursuant to Article III of these Restated Articles of Incorporation); or (2) Two-thirds of the votes entitled to be cast by holders of Voting Stock, voting together as a single class, other than Voting Stock beneficially owned by an Interested Stockholder (as defined below) who is a party to the Business Combination or an Affiliate or Associate of such Interested Stockholder. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified by law or in any agreement with any national securities exchange or otherwise, but such affirmative separate class vote shall be required in addition to any affirmative vote of the holders of any particular class or series of the Voting Stock required by law or pursuant to Article III of these Restated Articles of Incorporation. B. The provisions of Section (A) of this Article XI shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative separate class vote as is required by law and any other provision of these Restated Articles of Incorporation, and any resolution or resolutions adopted by the Board of Directors pursuant to these Restated Articles of Incorporation, as amended, if the conditions specified in either of the following paragraphs (1) or (2) are met: 1. The Business Combination shall have been approved by a majority of the Disinterested Directors (as hereinafter defined), it being understood that this condition shall not be capable of satisfaction unless there is at least one Disinterested Director; or 2. All of the following conditions are met: (a) the aggregate amount of cash and the Fair Market Value (as hereinafter defined) as of the date of the consummation of any Business Combination (the "Consummation Date") of consideration other than cash to be received per share of Common Stock as a result of such Business Combination shall be at least equal to the higher of the following: (i) (If applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Interested Stockholder for any shares of Common Stock acquired by it (aa) within the two-year period immediately prior to the first public announcement of the proposed Business Combination (the "Announcement Date"), or (bb) in the transaction in which it became an Interested Stockholder, whichever is higher, plus interest compounded annually from the date on which the Interested Stockholder became an Interested Stockholder (the "Determination Date") through the Consummation Date at the base rate for interest rate determinations of M&I Marshall & Ilsley Bank in effect from time to time, less the aggregate amount of any cash dividends paid, and the Fair Market Value of any dividends paid other than in cash, per share of Common Stock from the Determination Date through the Consummation Date (but not exceeding the amount of such interest payable per share of Common Stock); and (ii) The Fair Market Value per share of Common Stock on the Announcement Date or on the Determination Date, whichever is higher. The provisions of this Paragraph B(2)(a) of this Article XI shall be required to be met with respect to all shares of Common Stock outstanding whether or not the Interested Stockholder has previously acquired any shares of Common Stock. (b) The aggregate amount of cash and the Fair Market Value as of the Consummation Date of consideration other than cash to be received per share of any class or series of outstanding Capital Stock, other than Common Stock, shall be at least equal to the highest of the following (such requirement being applicable to each such class or series of outstanding Capital Stock, whether or not the Interested Stockholder has previously acquired beneficial ownership of any shares of such class or series): (i) (If applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Interested Stockholder for any share of such class or series of Capital Stock acquired by it (aa) within the two-year period immediately prior to the Announcement Date, or (bb) in the transaction in which it became an Interested Stockholder, whichever is higher, plus interest compounded annually from the Determination Date through the Consummation Date at the base rate for interest rate determinations of M&I Marshall & Ilsley Bank in effect from time to time, less the aggregate amount of any cash dividends paid, and the Fair Market Value of any dividends paid other than in cash, per share of such class or series of Capital Stock from the Determination Date through the Consummation Date (but not exceeding the amount of such interest payable per share of such class of Capital Stock); (ii) (If applicable) the highest preferential amount per share to which the holders of shares of such class or series of Capital Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; and (iii) The Fair Market Value per share of such class or series of Capital Stock on the Announcement Date or on the Determination Date, whichever is higher. (c) The consideration to be received by holders of a particular class or series of outstanding Capital Stock (including Common Stock) in such Business Combination shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class or series of Capital Stock. If the Interested Stockholder has paid for shares of any class or series of Capital Stock with varying forms of consideration, the form of consideration of such class or series of Capital Stock shall be either cash or the form used to acquire the largest number of shares of such class or series of Capital Stock previously acquired by it. (d) After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination: (a) except as approved by a majority of the Disinterested Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on the outstanding stock having a preference over the Common Stock as to dividends or upon liquidations; (b) there shall have been (1) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Disinterested Directors, and (2) an increase in such annual rate of dividends (as necessary to prevent any reduction) in the event of any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Disinterested Directors; and (c) such Interested Stockholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which resulted in such Interested Stockholder becoming an Interested Stockholder. (e) After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately, solely in such Interested Stockholder's capacity as a stockholder of the Corporation), of any loans, advances, guaranties, pledges or other financial assistance or any tax credits or other tax advantageous provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise. (f) A proxy or information statement describing the proposed Business Combination in accordance with the requirements of the 1934 Act (or any subsequent provisions replacing such Act) shall be mailed to all Stockholders of the Corporation at least thirty (30) days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). The first page of such proxy or information statement shall prominently display the recommendation, if any, which a majority of the Disinterested Directors then in office may choose to make to the holders of Capital Stock regarding the proposed Business Combination. Such proxy or information statement shall also contain, if a majority of the Disinterested Directors then in office so request, an opinion of a reputable investment banking firm of recognized national standing (which firm shall be selected by a majority of the Disinterested Directors then in office, furnished with all information it reasonably requests, and paid a reasonable fee for its services by the Corporation upon the Corporation's receipt of such opinion) as to the fairness (or lack of fairness) of the terms of the proposed Business Combination from the point of view of the holders of Capital Stock other than the Interested Stockholder. (g) For purposes of this Article XI, the following definitions shall apply: (i) The term "Business Combination" shall mean any transaction referred to any one or more of the following clauses: (aa) Any merger or consolidation of the Corporation or any Subsidiary with (1) any Interested Stockholder or (2) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate or an Associate of any Interested Stockholder; or (bb) Any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value of $25,000,000 or more; or (cc) The issuance or transfer by the Corporation or any Subsidiary (in any one transaction or a series of transactions) of any Securities of the Corporation or any Subsidiary having an aggregate Fair Market Value of $25,000,000 or more to any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; or (dd) The adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; or (ee) Any reclassification of Securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries of any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible Securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or an Affiliate of any Interested Stockholder; or (ff) Any series or combination of transactions directly or indirectly having the same effect as any of the foregoing. (ii) "Interested Stockholder" shall mean any person (other than the Corporation, any Subsidiary, or any pension, savings or other employee benefit plan for the benefit of employees of the Corporation and/or any Subsidiary) who or which: (aa) is the beneficial owner, directly or indirectly, of more than 10% of the Corporation's outstanding Voting Stock; or (bb) is an Affiliate or Associate of the Corporation and at any time within the two-year period immediately prior to the date in question was a beneficial owner, directly or indirectly, of 10% or more of the Corporation's then outstanding Voting Stock; or (cc) is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any other Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the 1933 Act. (iii) A person shall be deemed the "beneficial owner" of any Voting Stock; (aa) which such person or any of its Affiliates or Associates owns, directly or indirectly; or (bb) which such person or any of its Affiliates or Associates has (y) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (z) the right to vote pursuant to any agreement, arrangement or understanding; or (cc) which is beneficially owned, directly or indirectly, by any other person with which 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 of Capital Stock. (iv) In determining whether a person is an Interested Stockholder pursuant to Subparagraph (g)(ii) of this Article XI, the number of shares of Voting Securities deemed to be outstanding shall include shares deemed owned through application of Subparagraph (g)(iii) of this Article XI, but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (v) "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purpose of the definition of Interested Stockholder set forth in Subparagraph (g)(ii) of this Article XI, the term "Subsidiary" shall mean only a corporation of which a majority of each class of Voting Securities is owned, directly or indirectly, by the Corporation. (vi) "Disinterested Director" means any member of the Board of Directors of the Corporation who is not affiliated with the Interested Stockholder and who either was a member of the Board of Directors prior to the Determination Date or was elected or recommended for election by majority of the Disinterested Directors in office at the time such Director was nominated for election. (vii) "Fair Market Value" means: (aa) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the composite tape for the New York Stock Exchange listed stocks, or, if such stock is not quoted on the composite tape, on the New York Stock Exchange, or, if such stock is not listed or admitted for trading on such exchange, on the principal United States Securities Exchange registered under the 1934 Act on which such stock is listed or admitted for trading, or, if such stock is not listed or admitted for trading on any such exchange, the highest closing sale price (if applicable) or bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. automated quotations system or any system then in use, or if no such quotations are available, the Fair Market Value on the date in question of a share of such stock as determined in good faith by a majority of the Disinterested Directors then in office, in each case with respect to any class or series of stock, appropriately adjusted for any dividend or distribution in shares of such stock or any stock split or reclassification of outstanding shares of such stock into a greater number of shares of such stock or any combination or reclassification of outstanding shares of such stock into a smaller number of shares of such stock; and (bb) in the case of property other than cash or stock, the Fair Market Value of such property on the date in question as determined in good faith by a majority of the Disinterested Directors then in office. (viii) Reference to "highest per share price" shall in each case with respect to any class or series of stock reflect an appropriate adjustment for any dividend or distribution in shares of such stock or any stock split or reclassification of outstanding shares of such stock into a greater number of shares of such stock or any combination or reclassification of outstanding shares of such stock into a smaller number of shares of such stock. (ix) In the event on any Business Combination in which the Corporation survives, the phrase "consideration other than cash to be received" as used in Paragraphs B(2)(a) and (b) of this Article XI, shall include the shares of Common Stock and/or shares of any other class or series of Capital Stock retained by the holders of such shares. (x) "Capital Stock" shall mean all capital stock of the Corporation issued from time to time under Article III of the Corporation's Restated Articles of Incorporation. ARTICLE XII These Restated Articles of Incorporation supersede and take the place of the heretofore existing Articles of Incorporation of the Corporation and amendments thereto. Executed in duplicate this 25th day of March, 1994. MARSHALL & ILSLEY CORPORATION By: /s/ James B. Wigdale _________________________________ James B. Wigdale, Chairman Attest: /s/ M.A. Hatfield _______________________________ M.A. Hatfield, Secretary This instrument was drafted by: Scott A. Moehrke Godfrey & Kahn, S.C. 780 North Water Street Milwaukee, Wisconsin 53202-3590 EX-3 3 EXHIBIT 3(B)/BY-LAWS, AS AMENDED Updated through 06/23/94 BY-LAWS MARSHALL & ILSLEY CORPORATION 1. OFFICES 1.1. Principal and Other Offices. The principal office of the Corporation shall be located at any place either within or outside the State of Wisconsin as shall be designated in the Corporation's most recent annual report filed with the Wisconsin Secretary of State. The executive offices of the Corporation shall be located at its principal office. The Corporation may have such other offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the Corporation may require from time to time. 1.2. Registered Office. The registered office of the Corporation required by the Wisconsin Business Corporation Law (the "WBCL") to be maintained in the State of Wisconsin may be, but need not be, the same as any of its places of business within the State of Wisconsin. The registered office may be changed from time to time as provided in Section 180.0502 of the WBCL or any successor thereto. 2. SHAREHOLDERS 2.1. Annual Meeting. The annual meeting of shareholders shall be held on the fourth Tuesday in the month of April in each year at 10 A.M., or at such other time and/or date as shall be fixed by the Secretary of the Corporation or the Board of Directors, for the purposes of electing directors and for the transaction of such other business as may have been properly brought before the meeting in compliance with the provisions of Section 2.5 of the By-laws. If the day fixed for the annual meeting shall be a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. 2.2. Special Meetings. Except as otherwise provided by the WBCL and subject to the rights of the holders of any class of series of capital stock having a preference over the common stock as to dividends or upon liquidation, special meetings of shareholders of the Corporation may be called only by the Chief Executive Officer or the President of the Corporation pursuant to a resolution approved by not less than three-quarters of the Board of Directors. 2.3. Place of Meeting. The Board of Directors, Chief Executive Officer or President may designate any place, within or without the State of Wisconsin, as the place of meeting for the annual meeting or for any special meeting. If no designation is made, the place of meeting shall be the principal office of the Corporation. Any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented at the meeting. 2.4. Notice of Meeting. The Corporation shall notify shareholders of the date, time and place of each annual and special shareholders' meeting not less than ten nor more than sixty days before the date of the meeting. Notice of a special meeting shall include a description of each purpose for which the meeting is called. Notice of the meeting shall be given only to those shareholders entitled to vote at the meeting, unless otherwise required by the law. Notice may be communicated in person, by telephone, telegraph, teletype, facsimile or other forms of wire or wireless communication, or by mail or private carrier. Written notice to a shareholder shall be deemed to be effective on the earlier of: (a) the date received; (b) the date it is deposited in the United States mail when addressed to the shareholder's address shown in the Corporation's current record of shareholders, with postage prepaid; (c) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee; (d) the date sent, if transmitted by telegraph, teletype, facsimile or other form of wire or wireless communication; or (e) the date delivered to a courier or deposited in a designated receptacle, if sent by private carrier, when addressed to the shareholder's address shown in the Corporation's current record of shareholders. 2.5. Advance Notice of Shareholder-Proposed Business at Annual Meetings. At an annual meeting of shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be either (a) specified in the notice of meeting (or any supplement thereto) given in accordance with Section 2.4 of these By-laws, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, the Chief Executive Officer or the President, or (c) otherwise properly brought before the meeting by a shareholder. In addition to any other applicable requirements for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice of such business in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 60 days prior to the date fixed for such meeting in accordance with Section 2.1 of these By-laws. A shareholder's notice to the Secretary of the Corporation shall set forth as to each matter the shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and number of shares of the Corporation which are beneficially owned by the shareholder, and (iv) any material interest of the shareholder in such business. In addition, any such shareholders shall be required to provide such further information as may be requested by the Corporation in order to comply with federal securities laws, rules and regulations. Notwithstanding anything contained in these By-laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 2.5; provided, however, that nothing in this Section 2.5 shall be deemed to preclude discussion by any shareholder of any business properly brought before the annual meeting in accordance with said procedure. The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.5, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. 2.6. Procedure for Nomination of Directors. Only persons nominated in accordance with the following procedures shall be eligible for election as directors, except as may otherwise be provided by the terms of the Corporation's Amended and Restated Articles of Incorporation (the "Articles") with respect to the rights of holders of any class or series of preferred stock to elect directors under specified circumstances. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of shareholders by or at the direction of the Board of Directors, by any nominating committee or persons appointed by the Board, or by any shareholder of the Corporation entitled to vote for election of directors at the meeting who complies with the notice procedures set forth in this Section 2.6. Nominations other than those made by or at the direction of the Board of Directors or any nominating committee or person appointed by the Board shall be made pursuant to timely notice in proper written form to the Secretary of the Corporation. To be timely, a shareholder's request to nominate a person for election to the Board of Directors, together with the written consent of such person to serve as a director, must be received by the Secretary of the Corporation not less than 30 days prior to the date fixed for such meeting. To be in proper written form, such shareholder's notice shall set forth in writing (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such person and (iv) such other information relating to such person as is required to be disclosed in solicitations of proxies for election of directors, or as otherwise required, in each case pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended; and (b) as to the shareholder giving the notice, (i) the name and address, as they appear on the Corporation's books, of such shareholder and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such shareholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No persons shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth herein and in the Articles. The Chairman of any meeting of shareholders shall, if the facts so warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the Articles and these By-laws; and if he should so determine, he shall so declare to the meeting and the defective nomination(s) shall be disregarded. 2.7. Fixing of Record Date. For the purpose of determining any voting group entitled to notice of or to vote at any meeting of shareholders, or shareholders entitled to receive any distribution or dividend from the Corporation, or in order to determine those shareholders entitled to take any other action authorized by these By-laws or the WBCL, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders. Such record date shall not be more than 70 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If no record date is so fixed for the determination of shareholders entitled to notice of, or to vote at a meeting of shareholders, or shareholders entitled to receive a dividend or any other distribution, the record date for determination of such shareholders shall be at the close of business on: (a) with respect to an annual shareholders' meeting or any special shareholders' meeting called by the Board of Directors or any person specifically authorized by these By-laws to call a meeting, the day before the first notice is given to shareholders; (b) with respect to a special shareholders' meeting demanded by one or more shareholders, the date the first shareholder signs a demand for the special meeting; (c) with respect to the payment of a dividend, the date the Board of Directors authorizes the dividend; and (d) with respect to any other distribution to shareholders, other than one involving a repurchase or reacquisition of shares, the date the Board of Directors authorizes the distribution. When a determination of shareholders entitled to notice of or to vote at any meeting of shareholders has been made as provided in this section, such determination shall be applied to any adjournment thereof unless the Board of Directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. 2.8. Shareholders' List. After fixing a record date for a meeting of shareholders, the Corporation shall prepare a list of the names of all its shareholders who are entitled to notice of a shareholders' meeting. The list shall be arranged by class or series of shares and show the address of and the number of shares held by each shareholder. The shareholder list shall be available for inspection by any shareholder beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting. The list shall be available at the Corporation's principal office or at a place identified in the meeting notice in the city where the meeting is to be held. A shareholder, or his or her agent or attorney, is entitled, on written demand, to inspect and to copy the list during regular business hours and at his expense, during the period it is available for inspection, provided the shareholder, or his or her agent or attorney, demonstrates to the satisfaction of the Corporation he or she satisfies the requirements of the WBCL. The Corporation shall make the shareholders' list available at the meeting and shall be subject to the inspection of any shareholder, or his or her agent or attorney, during the time of the meeting or any adjournment thereof. Refusal or failure to prepare or make available the shareholders' list shall not affect the validity of any action taken at such meeting. 2.9. Quorum; Votes. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the Articles or the WBCL provides otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. If the Articles or the WBCL provide for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately. Action may be taken by one voting group on a matter even though no action is taken by another voting group entitled to vote on the matter. Once a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is deemed present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. If a quorum exists, action on a matter by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the Articles or the WBCL requires a greater number of affirmative votes, provided, however, that unless otherwise provided in the Articles, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. 2.10. Proxies. At all meetings of shareholders, a shareholder entitled to vote may vote by proxy appointed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. 2.11. Voting Shares Owned by the Corporation. Shares of the Corporation belonging to it shall not be voted directly or indirectly at any meeting of shareholders and shall not be considered in determining whether a quorum exists or for any other purpose relating to the voting of shares. Notwithstanding the foregoing, shares held by the Corporation in a fiduciary capacity are outstanding shares and may be voted and shall be considered in any such determination. 2.12. Shares in the Name of Another Corporation or a Trustee. Shares issued in the name of another corporation may be voted by the president of such corporation, or any other officer or proxy appointed by such president in the absence of express written notice to the Corporation of the designation of some other person by the board of directors or by-laws of such other corporation. Shares in the name of a trustee shall be voted in the manner designated by a majority of the trustees or their proxy unless a greater concurrence of trustees is required by the trust, of which the Corporation shall have actual notice. 2.13. Adjournments. An annual or special meeting of shareholders may be adjourned by a vote of a majority of the shares represented at the meeting entitled to vote in the election of directors, even if less than a quorum. Upon being reconvened, the adjourned meeting shall be deemed to be a continuation of the initial meeting. A quorum will be deemed present if a quorum of shares was represented at the initial meeting and any business that could be conducted at the initial meeting may be considered at the adjourned meeting. A meeting may be adjourned at any time, including after action on one or more matters, and for any purpose, including, but not limited to, allowing additional time to solicit votes on one or more matters, to disseminate additional information to shareholders or to count votes. Notice is not required for an adjourned meeting if the date, time and place of the adjournment are announced at the meeting before adjournment. If a new record date for an adjourned meeting is fixed, notice of the adjourned meeting must be given to persons who are shareholders as of the new record date. Only those shares entitled to vote at the initial meeting will be entitled to vote at the adjourned meeting. 2.14. Polling. In the discretion of the chairman of an annual or special meeting of shareholders, polls may be closed at any time after commencement of the meeting. When there are several matters to be considered at a meeting, the polls may remain open during the meeting as to any or all matters to be considered, as the chairman may declare. Polls will remain open as to matters to be considered at any adjournment of the meeting unless the chairman declares otherwise. At the discretion of the chairman, the polls may remain open after adjournment of a meeting for not more than 72 hours for the purpose of collecting proxies and counting votes. All votes submitted prior to the announcement of the results of the balloting shall be valid and counted. The results of balloting shall be final and binding after announcement of such results. 2.15 Chairman of Meetings. The Chairman of the Board or, in his absence or inability or refusal to act, the Chairman of the Executive Committee, shall preside at all meetings of the shareholders. 3. BOARD OF DIRECTORS 3.1. General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation managed under the direction of, its Board of Directors, subject to any limitations set forth in the Articles. 3.2. Number, Tenure and Qualifications. The number of directors (exclusive of directors, if any, elected by the holders of one or more series of preferred stock, voting separately as a series pursuant to the provisions of the Articles applicable thereto) shall not be less than three directors, the exact number of directors to be determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board of Directors then in office. The directors shall be divided into three classes, designated Class I, Class II and Class III, and the term of directors of each class shall be three years. Each class shall consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors. If the number of directors is changed by resolution of the Board of Directors pursuant to this Section 3.2, any increase or decrease shall be apportioned among the various classes of directors so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires and until his successor shall be duly elected and shall qualify. Directors need not be residents of the State of Wisconsin or shareholders of the Corporation. No person shall be eligible to be elected a director at any meeting of shareholders held on or after the date he attains age seventy-two (72). The Board of Directors, at its discretion, may waive the age limitation or establish a greater age from time to time. The Board of Directors, at its discretion, may designate a person who has served as a director of the Corporation as a "Director Emeritus" upon such terms and conditions and at such compensation as may be fixed by resolution of the Board from time to time. A Director Emeritus shall have the right to attend meetings of the Board of Directors but shall have no vote and shall not be counted in determining the presence of a quorum. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of preferred stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of shareholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of the Articles applicable thereto. Directors so elected shall not be divided into classes unless expressly provided by such Articles, and during the prescribed terms of office of such directors, the Board of Directors shall consist of such directors in addition to the number of directors determined as provided in the first paragraph of this Section 3.2. 3.3. Regular Meeting. A regular meeting of the Board of Directors shall be held, without other notice, immediately after and at the same place as the annual meeting of shareholders, and each adjourned session thereof. The Board of Directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution. 3.4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, President, Secretary or three-quarters of the members of the Board of Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place either within or without the State of Wisconsin as the place for holding any special meeting of the Board of Directors called by them. 3.5. Notice. Notice of meetings of the Board of Directors may be communicated in person, by telephone, telegraph, teletype, facsimile or other form of wire or wireless communication, or by mail or private carrier. Notice of meetings, except the regular annual meeting, shall be given at least 48 hours prior to the time set for the meeting if communicated orally or by telegraph, teletype, facsimile or other form of wire or wireless communication, and at least 5 days prior to the date set for the meeting if communicated by any other means. Written notice shall be deemed effective and given on the earlier of: (a) when received; (b) 2 days after the date it is deposited in the United States mail, with postage prepaid, when addressed to the director at an address designated by him to receive such notice or, in the absence of such designation, at his business or home address as they appear in the Corporation's records; (c) the date and time sent, if transmitted by telegraph, teletype, facsimile or other form of wire or wireless communication when sent to the director at a location designated by the director to receive such notice or, in the absence of such designation, at his business or home as those locations appear in the Corporation's records; or (d) the date delivered to a courier or deposited in a designated receptacle, if sent by private carrier, when addressed to the director at an address designated by him to receive such notice or, in the absence of such designation, at his business or home address as it appears in the Corporation's records. Oral notice shall be deemed effective when communicated. Whenever any notice whatever is required to be given to any director of the Corporation under these By-laws, the Articles or under the provisions of any statute, a waiver thereof in writing, signed at any time whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to timely notice. A director's attendance at, or participation in, a meeting waives any required notice unless the director at the beginning of the meeting or promptly upon his or her arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of such meeting. 3.6. Quorum; Votes. A majority of the number of directors in accordance with Section 3.2 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but though less than such quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. The affirmative vote of a majority of directors present shall be the act of the Board of Directors, or a committee of the Board of Directors created under Section 3.11, unless the Articles or these By-laws require the vote of a greater number of directors. 3.7. Removal and Resignation. Exclusive of directors, if any, elected by the holders of one or more classes of preferred stock, no director of the Corporation may be removed from office except for "Cause" and by the affirmative vote of two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote at a meeting of shareholders duly called for such purpose. As used in this Section 3.7, the term "Cause" shall mean solely malfeasance arising from the performance of a director's duties which has a materially adverse effect on the business of the Corporation. A director may resign at any time by delivering written notice to the Board of Directors, Chairman of the Board or to the Corporation. 3.8. Vacancies. Any vacancy on the Board of Directors, however caused, including, without limitation, any vacancy resulting from an increase in the number of directors, shall be filled by the vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director so elected to fill any vacancy on the Board of Directors, including a vacancy created by an increase in the size of the Board of Directors, shall hold office for the remaining term of directors of the class to which he has been elected and until his successor shall be elected and shall qualify. 3.9. Compensation. The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the Corporation as directors or otherwise, or may delegate such authority to an appropriate committee. 3.10. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless: (a) the director objects at the beginning of the meeting (or promptly upon his arrival) to holding the meeting or transacting business at the meeting; or (b) the director dissents or abstains from an action taken and minutes of the meeting are prepared that show the director's dissent or abstention from the action taken; or (c) the director delivers written notice of his dissent or abstention to the presiding officer of the meeting before its adjournment or to the Corporation immediately after adjournment of the meeting; or (d) the director dissents or abstains from an action taken, minutes of the meeting are prepared that fail to show the director's dissent or abstention from the action taken and the director delivers to the Corporation a written notice of that failure promptly after receiving the minutes. Such right to dissent shall not apply to a director who voted in favor of such action. 3.11. Committees. The Board of Directors, by resolution adopted by the affirmative vote of a majority of the number of directors then in office, may designate one or more committees, each committee to consist of two or more directors elected by the Board of Directors. The Board of Directors may elect one or more of its members as alternate members of any such committee and such alternate member may take the place of any absent member or members at any meeting of such committee upon request of the Chairman of the Board or upon request of the chairman of such meeting. Unless limited by the Articles, each committee may exercise those aspects of the authority of the Board of Directors which are within the scope of the committee's assigned responsibilities or which the Board of Directors otherwise specifically confers upon such committee; provided, however, that no committee of the Board may do any of the following: (a) authorize distributions; (b) approve or propose to shareholders action that the WBCL requires be approved by shareholders; (c) fill vacancies on the Board of Directors or on any of its committees, unless the Board of Directors has specifically granted such authority to the committee; (d) amend the Articles; (e) adopt, amend, or repeal these By-laws; (f) approve a plan of merger not requiring shareholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or (h) authorize or approve the issuance or sale or contract for sale of shares or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the Board of Directors may authorize a committee (or a senior executive officer of the Corporation) to do so within limits specifically prescribed by the Board of Directors. 3.12. Informal Action Without Meeting. Any action required or permitted by the Articles or these By-laws or any provision of law to be taken by the Board of Directors or a committee at a meeting may be taken without a meeting if the action is taken by all members of the Board of Directors. The action shall be evidenced by one or more written consents describing the action taken, signed by each director and retained by the Corporation. 3.13. Telephonic Meetings. Any or all directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication which allows all directors participating to simultaneously hear each other during the meeting. In the case of any such meeting all participating directors must be informed that a meeting is taking place at which official business may be transacted. A director participating in a meeting by this means is deemed to be present in person at the meeting. 3.14 Chairman of Meetings. The Chairman of the Board or, in his absence or inability or refusal to act, the Chairman of the Executive Committee, shall preside at all meetings of the Board of Directors. 4. OFFICERS 4.1. Number. The principal officers of the Corporation shall be a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents, any one of whom may be designated as Executive Vice President, and a Secretary, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. 4.2. Election and Term of Office. The officers of the Corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after the annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Each officer shall hold office until his successor shall have been duly elected or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. 4.3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. 4.4. Vacancies. A vacancy in any principal office occurring for any reason shall be filled by the Board of Directors for the unexpired portion of the term as soon as reasonably practicable at the convenience of the Board. 4.5. Chairman of the Board. The Chairman of the Board shall have such duties as the Board of Directors shall prescribe from time to time. 4.6. Vice Chairman of the Board. The Vice Chairman of the Board shall be responsible for the administration and management of the areas of the business and affairs of the Corporation assigned to him from time to time by the Board of Directors or the Chief Executive Officer. 4.7. Chief Executive Officer. The Chief Executive Officer shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, shall have general supervision and control of the business and affairs of the Corporation and its officers. The Chief Executive Officer shall have the authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the Corporation as the Chief Executive Officer deems necessary, prescribe their powers, duties and compensation, and delegate authority to them. Such agents and employees shall hold offices at the discretion of the Chief Executive Officer. The Chief Executive Officer shall have authority to sign, execute and acknowledge, on behalf of the Corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the Corporation's regular business or which shall be authorized by the Board of Directors. Except as otherwise provided by the WBCL or the Board of Directors, the Chief Executive Officer may authorize any other officer or agent of the Corporation to sign, execute and acknowledge such documents or instruments in his place and stead. In general, the Chief Executive Officer shall have all authority and perform all duties incident to the office of the chief executive officer and such other duties as may be prescribed by the Board of Directors from time to time. 4.8. President. In the absence of the Chief Executive Officer or in the event of his death, inability or refusal to act, the President shall perform the duties of the Chief Executive Officer, and when so acting shall have all the powers and duties of the Chief Executive Officer. In addition, the President shall be responsible for the administration and management of the areas of the business and affairs of the Corporation assigned to him from time to time by the Board of Directors or the Chief Executive Officer. 4.9. Vice Presidents. One or more of the Vice Presidents may be designated as Executive Vice President. In the absence of the President or in the event of his death, inability or refusal to act, the Vice Presidents in the order designated at the time of their election (or in the absence of any designation, then in the order of their appointment), shall perform the duties of the President and when so acting shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign with the Secretary or Assistant Secretary certificates for shares of the Corporation and shall perform such other duties as from time to time may be assigned to him by the Chief Executive Officer, the President or the Board of Directors. 4.10. Secretary. The Secretary shall: (a) keep the minutes of the shareholders' and of the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-laws or as required by the WBCL; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder or delegate that responsibility to a stock transfer agent; (e) sign with the President or a Vice President certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; and (f) in general have all authority and perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Chief Executive Officer or by the Board of Directors. 4.11. Assistant Secretaries. The Assistant Secretaries, when authorized by the Board of Directors, may sign with the President or a Vice President certificates for shares of the Corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Secretaries, in general, shall have such authority and perform such duties as shall be assigned to them by the Secretary, the President or the Board of Directors. 4.12. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors or a committee authorized by the Board to fix the same and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation or a member of such a committee. 4.13. Voting of Stock in Other Corporations. The Board of Directors by resolution shall from time to time designate one or more persons who shall vote all stock held by this Corporation in any other corporation, banking corporation or banking association. Such resolution may designate such persons in the alternative and may empower them to execute proxies to vote in their stead. Where time permits, however, the manner in which such shares shall be voted shall be determined by the Board of Directors of this Corporation or the appropriate committee thereof while the Board is not in session. 5. CERTIFICATES FOR SHARES AND THEIR TRANSFER 5.1. Certificates for Shares. Subject to the requirements of the WBCL, certificates representing shares of the Corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed, either manually or by facsimile, by the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in the case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors or the Secretary may prescribe. 5.2. Transfer of Shares. Transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of the certificate for such shares. 5.3. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the WBCL as they may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation, including the appointment or designation of one or more stock transfer agents and one or more stock registrars. 6. EMERGENCY BY-LAWS Unless the Articles provide otherwise, the following provisions of this Article 6 shall be effective during an "emergency" which is defined as a catastrophic event that prevents a quorum of the Corporation's directors from being readily assembled. During such emergency: (a) Any one member of the Board of Directors or any one of the following officers: Chief Executive Officer, President, any Vice- President or Secretary, may call a meeting of the Board of Directors. Notice of such meeting need be given only to those directors whom it is practicable to reach, and may be given in any practical manner, including by publication or radio. Such notice shall be given at least six hours prior to the commencement of the meeting. (b) One or more officers of the corporation present at the emergency meeting of the Board of Directors, as is necessary to achieve a quorum, shall be considered to be directors for the meeting, and shall so serve in order of rank, and within the same rank, in order of seniority. In the event that less than a quorum of the directors are present (including any officers who are to serve as directors for the meeting), those directors present (including the officers serving as directors) shall constitute a quorum. (c) The Board of Directors as constituted in paragraph (b), and after notice as set forth in paragraph (a), may: (1) prescribe emergency powers to any officer of the corporation; (2) delegate to any officer or director, any of the powers of the Board of Directors; (3) designate lines of succession of officers and agents, in the event that any of them are unable to discharge their duties; (4) relocate the principal place of business, or designate successive or simultaneous principal places of business; and (5) take any other action, convenient, helpful, or necessary to carry on the business of the corporation. Corporate action taken in good faith in accordance with this Article 6 binds the Corporation and may not be used to impose liability on a corporate director, officer, employee or agent. 7. GENERAL 7.1. Indemnify of Officers and Directors. (a) Definitions to Indemnification and Insurance Provisions. (1) "Director, Officer, Employee or Agent" means any of the following: (i) a natural person who, is or was a director, officer, employee or agent of the Corporation; (ii) a natural person who, while a director, officer, employee or agent of the Corporation, is or was serving either pursuant to the Corporation's specific request or as a result of the nature of such person's duties to the Corporation as a director, officer, partner, trustee, member of any governing or decision making committee, employee or agent of another corporation or foreign corporation, partnership, joint venture, trust or other enterprise; (iii) a natural person who, while a director, officer, employee or agent of the Corporation, is or was serving an employee benefit plan because his or her duties to the Corporation also impose duties on, or otherwise involve services by, the person to the plan or to participants in or beneficiaries of the plan; or (iv) unless the context requires otherwise, the estate or personal representative of a director, officer, employee or agent. (2) "Liability" means the obligation to pay a judgment, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employee benefit plan, the agreement to pay any amount in settlement of a Proceeding (whether or not approved by a court order), and reasonable expenses and interest related to the foregoing. (3) "Party" means a natural person who was or is, or who is threatened to be made, a named defendant or respondent in a Proceeding. (4) "Proceeding" means any threatened, pending or completed civil, criminal, administrative or investigative action, suit, arbitration or other proceeding, whether formal or informal (including but not limited to any act or failure to act alleged or determined to have been negligent, to have violated the Employee Retirement Income Security Act of 1974, or to have violated Section 180.40 [180.0826, 180.0832 and 180.0833] of the Wisconsin Statutes, or any successor thereto, regarding improper dividends, distributions of assets, purchases of shares of the Corporation, or loans to officers), which involves foreign, federal, state or local law and which is brought by or in the right of the Corporation or by any other person or entity, to which the Director, Officer, Employee or Agent was a party because he or she is a Director, Officer, Employee or Agent. (5) "Expenses" means all reasonable fees, costs, charges, disbursements, attorneys' fees and any other expenses incurred in connection with the Proceeding. (b) Indemnification of Officers, Directors, Employees and Agents. (1) The Corporation shall indemnify a Director, Officer, Employee or Agent to the extent he or she has been successful on the merits or otherwise in the defense of any Proceeding, for all reasonable Expenses. (2) In cases not included under subsection (1), the Corporation shall indemnify a Director, Officer, Employee or Agent against Liability and Expenses incurred by such person in a Proceeding unless it shall have been proven by final judicial adjudication that such person breached or failed to perform a duty owned to the Corporation which constituted: (i) A willful failure to deal fairly with the Corporation or its shareholders in connection with a matter in which the Director, Officer, Employee or Agent has a material conflict of interest; (ii) A violation of criminal law, unless the Director, Officer, Employee or Agent had reasonable cause to believe his or her conduct was lawful or no reasonable cause to believe his or her conduct was unlawful; (iii) A transaction from which the Director, Officer, Employee or Agent derived an improper personal profit; or (iv) Willful misconduct. (c) Determination that Indemnification is Proper. (1) Unless provided otherwise by a written agreement between the Director, Officer, Employee or Agent and the Corporation, determination of whether indemnification is required under Section (b) shall be made by any method set forth in Section 180.046 [180.0855] of the Wisconsin Statutes. (2) A Director, Officer, Employee or Agent who seeks indemnification under this section shall make a written request to the Corporation. As a further pre-condition to any right to receive indemnification, the writing shall contain a declaration that the Corporation shall have the right to exercise all rights and remedies available to such Director, Officer, Employee or Agent against any other person, corporation, foreign corporation, partnership, joint venture, trust or other enterprise, arising out of, or related to, the Proceeding which resulted in the Liability and the Expense for which such Director, Officer, Employee or Agent is seeking indemnification, and that the Director, Officer, Employee or Agent is hereby deemed to have assigned to the Corporation all such rights and remedies. (3) Indemnification under subsection (b)(1) shall be made within 10 days of receipt of a written demand for indemnification. Indemnification required under subsection (b)(2) shall be made within 30 days of receipt of a written demand for indemnification. (4) Indemnification under this section is not required to the extent the Director, Officer, Employee or Agent has previously received indemnification or allowance of expenses from any person or entity, including the Corporation, in connection with the same Proceeding. (5) Upon written request by a Director, Officer, Employee or Agent who is a Party to a Proceeding, the Corporation shall pay or reimburse his or her reasonable Expenses as incurred if the Director, Officer, Employee or Agent provides the Corporation with all of the following: (i) A written affirmation of his or her good faith belief that he or she is entitled to indemnification under Article 7.1; and (ii) A written undertaking, executed personally or on his or her behalf, to repay all amounts advanced without interest to the extent that it is ultimately determined that indemnification under 7.1(b)(2) is prohibited. The undertaking under this subsection shall be accepted without reference to the Director's, Officer's, Employee's or Agent's ability to repay the allowance. The undertaking shall be unsecured. (6) The right to indemnification under this Article may be amended only by a subsequent vote of not less than two- thirds of the Corporation's outstanding capital stock entitled to vote on such matters. Any reduction in the right to indemnification may only be prospective from the date of such vote. (d) Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is a Director, Officer, Employee or Agent against any Liability asserted against or incurred by the individual in any such capacity or arising out of his status as such, regardless of whether the Corporation is required or authorized to indemnify or allow Expenses to the individual under this section. (e) Severability. The provisions of this Article shall not apply in any circumstance where a court of competent jurisdiction determines that indemnification would be invalid as against public policy. 8. AMENDMENT These By-laws may be amended, altered or repealed, and new By-laws may be enacted, only by the affirmative vote of not less than two-thirds of the outstanding shares of capital stock of the Corporation entitled to vote at a meeting of shareholders duly called for such purpose, upon a proposal adopted by the Board of Directors, or by a vote of not less than three-quarters of the entire Board of Directors then in office; provided, however, that no By-law hereafter adopted, amended or repealed by the shareholders as provided herein shall thereafter be enacted, amended or repealed by the directors unless such action by the shareholders shall expressly confer upon the directors authority to thereafter enact, amend or repeal such By-law as so amended, and; provided, further, that any By-law adopted, repealed or amended by the Board of Directors as provided herein shall be subject to reenactment, repeal or amendment by the shareholders acting at any meeting of the shareholders in accordance with the terms hereof. EX-11 4 EXHIBIT 11/EARNINGS PER SHARE/10Q FOR 06/30/94 MARSHALL & ILSLEY CORPORATION EXHIBIT 11 CALCULATION OF EARNINGS PER SHARE ($000's except per share data) Three Months Ended June 30, ----------------------------- PRIMARY 1994 1993 - - ------- ------------ ------------ Earnings: Net income (loss) ($37,061) $43,417 ============ ============ Shares: Weighted average number of common shares outstanding 95,480 99,444 Additional shares relating to: Convertible preferred stock (d) - 1,963 Stock options outstanding (a)(d) - 2,273 Stock options exercised (c)(d) - 27 ------------ ------------ Total average primary shares outstanding 95,480 103,707 ============ ============ PRIMARY (LOSS) EARNINGS PER SHARE ($0.39) $0.42 ============ ============ FULLY DILUTED - - ------------- Earnings: Net income (loss) ($37,061) $43,417 Add: Interest on convertible notes, net of income tax effect (d) - 711 ------------ ------------ Total earnings as adjusted ($37,061) $44,128 ============ ============ Shares: Weighted average number of common shares outstanding 95,480 99,444 Additional shares relating to: Convertible preferred stock (d) - 1,963 Stock options outstanding (b)(d) - 2,363 Stock options exercised (c)(d) - 27 Assumed conversion of convertible notes (d) - 5,833 ------------ ------------ Total average fully diluted shares outstanding 95,480 109,630 ============ ============ FULLY DILUTED (LOSS) EARNINGS PER SHARE ($0.39) $0.40 ============ ============ Notes: - - ------ (a) Based on the treasury stock method using average market price. (b) Based on the treasury stock method using period-end market price or average market price, whichever is higher. (c) Based on the treasury stock method using market price at date of exercise. (d) Omitted from 1994 calculation due to antidilutive effect. MARSHALL & ILSLEY CORPORATION EXHIBIT 11 CALCULATION OF EARNINGS PER SHARE ($000's except per share data) Six Months Ended June 30, ----------------------------- PRIMARY 1994 1993 - - ------- ------------ ------------ Earnings: Net income $1,452 $85,346 ============ ============ Shares: Weighted average number of common shares outstanding 95,771 99,296 Additional shares relating to: Convertible preferred stock 2,345 1,963 Stock options outstanding (a) 1,485 1,889 Stock options exercised (c) 106 325 ------------ ------------ Total average primary shares outstanding 99,707 103,473 ============ ============ PRIMARY EARNINGS PER SHARE $0.01 $0.82 ============ ============ FULLY DILUTED - - ------------- Earnings: Net income $1,452 $85,346 Add: Interest on convertible notes, net of income tax effect (d) - 1,424 ------------ ------------ Total earnings as adjusted $1,452 $86,770 ============ ============ Shares: Weighted average number of common shares outstanding 95,771 99,296 Additional shares relating to: Convertible preferred stock 2,345 1,963 Stock options outstanding (b) 1,502 2,203 Stock options exercised (c) 106 325 Assumed conversion of convertible notes (d) - 5,851 ------------ ------------ Total average fully diluted shares outstanding 99,724 109,638 ============ ============ FULLY DILUTED EARNINGS PER SHARE $0.01 $0.79 ============ ============ Notes: - - ------ (a) Based on the treasury stock method using average market price. (b) Based on the treasury stock method using period-end market price or average market price, whichever is higher. (c) Based on the treasury stock method using market price at date of exercise. (d) Omitted from 1994 calculation due to antidilutive effect. EX-12 5 EXHIBIT 12/RATIO OF EARNINGS TO FIXED CHARGES/10-Q FOR 06/30/94 EXHIBIT 12 MARSHALL & ILSLEY CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES ($OOO's) 6 Months June 30 EARNINGS 1994 1993 1992 1991 1990 1989 --------- --------- --------- --------- --------- --------- Earnings before income taxes and cumulative effect of changes in accounting principles $20,375 $264,584 $231,792 $186,738 $143,192 $161,140 Fixed charges, excluding interest on deposits 32,421 47,905 51,927 67,436 85,234 102,398 --------- --------- --------- --------- --------- --------- Earnings including fixed charges but excluding interest on deposits 52,796 312,489 283,719 254,174 228,426 263,538 Interest on deposits 123,306 272,100 334,070 448,411 466,537 426,008 --------- --------- --------- --------- --------- --------- Earnings including fixed charges and interest on deposits $176,102 $584,589 $617,789 $702,585 $694,963 $689,546 ========= ========= ========= ========= ========= ========= FIXED CHARGES: Interest Expense: Borrowings: Short-term $16,991 $18,010 $18,699 $32,722 $56,849 $74,831 Long-term 11,960 23,088 26,586 27,908 22,524 22,057 One-third of rental expense for all operating leases (the amount deemed representative of the interest factor) 3,470 6,807 6,642 6,806 5,861 5,510 --------- --------- --------- --------- --------- --------- Fixed charges excluding interest on deposits 32,421 47,905 51,927 67,436 85,234 102,398 Interest on Deposits 123,306 272,100 334,070 448,411 466,537 426,008 --------- --------- --------- --------- --------- --------- Fixed charges including interest on deposits $155,727 $320,005 $385,997 $515,847 $551,771 $528,406 ========= ========= ========= ========= ========= ========= RATIO OF EARNINGS TO FIXED CHARGES Excluding interest on deposits 1.63 x 6.52 x 5.46 x 3.77 x 2.68 x 2.57 x Including interest on deposits 1.13 x 1.83 x 1.60 x 1.36 x 1.26 x 1.30 x -----END PRIVACY-ENHANCED MESSAGE-----