As filed with the Securities and Exchange Commission on July 9, 1998
Registration No. 333-56965
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
OLD KENT FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN 6711 38-1986608
(State or Other Juris- (Primary Standard Industrial (IRS Employer
diction of Incorporation Classification Code Number) Identification No.)
or Organization)
-------------------------
111 LYON STREET N.W.
GRAND RAPIDS, MICHIGAN 49503
(616) 771-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-------------------------
MARY E. TUUK
OLD KENT FINANCIAL CORPORATION
111 LYON STREET N.W.
GRAND RAPIDS, MICHIGAN 49503
(616) 771-5272
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
-------------------------
WITH COPIES OF COMMUNICATIONS TO:
GORDON R. LEWIS, ESQ. BARRY P. TAFF, P.C.
WARNER NORCROSS & JUDD LLP SILVER, FREEDMAN & TAFF, L.L.P.
111 LYON STREET N.W., SUITE 900 1100 NEW YORK AVENUE, SUITE 700
GRAND RAPIDS, MICHIGAN 49503-2487 WASHINGTON, D.C. 20005
(616) 752-2752 (202) 414-6103
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES BE REGISTERED OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED PER SHARE<F1> PRICE<F1> FEE<F1>
- -------------------------------------------------------------------------------------------------------
Common Stock, $1.00 par value<F2> 12,820,840 Shares $15.21 $195,004,000 $57,526
<FN>
<F1> The registration fee has been computed pursuant to Rule 457(f)(2).
Pursuant to that rule, the Maximum Aggregate Offering Price is based
on the aggregate book value of common stock, $25.00 par value, of
First Evergreen Financial Corporation, as of March 31, 1998. The
proposed maximum offering price per share is determined by dividing
the proposed maximum aggregate offering price by the number of shares
to be registered.
<F2> Includes the Series C Preferred Stock Purchase Rights (the "Rights")
attached to each share of Common Stock. Until the occurrence of
certain prescribed events, the Rights are not exercisable, are
evidenced by the certificates representing the Registrant's Common
Stock, and may be transferred only with such shares of the
Registrant's Common Stock.
<F3> Registration fee previously paid.
</FN>
-------------------------
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
===========================================================================
[FIRST EVERGREEN LOGO] [OLD KENT LOGO]
PROSPECTUS AND PROXY STATEMENT JULY 13, 1998
SPECIAL MEETING OF STOCKHOLDERS OF
FIRST EVERGREEN CORPORATION
IN CONNECTION WITH AN OFFERING OF UP TO
12,820,840 SHARES
OF
OLD KENT FINANCIAL CORPORATION
COMMON STOCK, $1.00 PAR VALUE
The Board of Directors of First Evergreen Corporation ("First
Evergreen") is furnishing this Prospectus and Proxy Statement to First
Evergreen stockholders to solicit proxies to vote at the Special Meeting of
First Evergreen Stockholders to be held on August 20, 1998, and at any
adjournment or postponement of that meeting. At the Special Meeting, First
Evergreen stockholders will vote upon adoption of an Agreement and Plan of
Merger (the "Merger Agreement"). Pursuant to the Merger Agreement, First
Evergreen would merge with Old Kent Financial Corporation ("Old Kent").
If the merger is completed as proposed, Old Kent will issue 32.0312
shares of Old Kent common stock in exchange for each share of First
Evergreen common stock. Old Kent will pay cash for fractional shares. Old
Kent's common stock is quoted on The Nasdaq Stock Market under the symbol
"OKEN."
The merger cannot be completed unless First Evergreen stockholders
adopt the Merger Agreement, Old Kent obtains regulatory approval of the
merger, and Old Kent and First Evergreen each satisfy certain other
conditions.
The Board of Directors of First Evergreen has received the written
opinion of Hovde Financial, Inc., First Evergreen's financial adviser, that
the Merger Agreement is fair, from a financial point of view, to First
Evergreen's stockholders.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THESE SECURITIES NOR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS AND PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
OLD KENT COMMON STOCK IS NOT A SAVINGS ACCOUNT, DEPOSIT, OR OTHER
OBLIGATION OF ANY BANK OR NONBANK SUBSIDIARY OF OLD KENT AND IS NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
YOUR VOTE IS IMPORTANT. THE MERGER CANNOT OCCUR UNLESS THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF FIRST
EVERGREEN COMMON STOCK VOTE FOR ADOPTION OF THE MERGER AGREEMENT.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN
PERSON, PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
THE BOARD OF DIRECTORS OF FIRST EVERGREEN UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.
The information in this Prospectus and Proxy Statement is not complete and
may be changed. Old Kent may not offer these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This Prospectus and Proxy Statement is not an offer to sell
these securities and is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
TABLE OF CONTENTS
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
The Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Summary Selected Historical and Unaudited Pro Forma Combined
Condensed Financial Information . . . . . . . . . . . . . . . . . . .6
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . .9
THE SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
THE MERGER AND MERGER AGREEMENT. . . . . . . . . . . . . . . . . . . . . 11
What You Will Receive. . . . . . . . . . . . . . . . . . . . . . . . . 11
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . 11
Merger Recommendation and Reasons for the Merger . . . . . . . . . . . 13
Opinion of First Evergreen's Financial Adviser . . . . . . . . . . . . 14
Stock Price Condition. . . . . . . . . . . . . . . . . . . . . . . . . 19
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 19
Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . 19
Bank Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Distribution of Old Kent Common Stock. . . . . . . . . . . . . . . . . 20
Exclusive Commitment to Old Kent . . . . . . . . . . . . . . . . . . . 21
Conduct of Old Kent Pending the Completion of the Merger . . . . . . . 22
Conduct of First Evergreen Pending the Completion of the Merger. . . . 22
Insurance and Indemnification. . . . . . . . . . . . . . . . . . . . . 24
Management of Old Kent After the Merger. . . . . . . . . . . . . . . . 24
Conditions to Closing the Merger . . . . . . . . . . . . . . . . . . . 24
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Description of Old Kent Capital Stock. . . . . . . . . . . . . . . . . 27
Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . 28
Comparison of Rights of Old Kent's and First Evergreen's Stockholders. 31
Restrictions on First Evergreen Affiliates . . . . . . . . . . . . . . 36
Material Federal Income Tax Consequences . . . . . . . . . . . . . . . 37
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . 38
APPRAISAL RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
VOTING AND MANAGEMENT INFORMATION. . . . . . . . . . . . . . . . . . . . 39
Voting Securities and Principal Stockholders of First Evergreen. . . . 39
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . 41
GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Independent Public Accountants . . . . . . . . . . . . . . . . . . . . 42
Shareholder Proposals. . . . . . . . . . . . . . . . . . . . . . . . . 43
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Sources of Information . . . . . . . . . . . . . . . . . . . . . . . . 43
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . 44
APPENDIX A: Agreement and Plan of Merger
APPENDIX B: Stock Option Agreement
APPENDIX C: Opinion of Hovde Financial, Inc.
APPENDIX D: Section 262 of the Delaware General Corporate Law (Appraisal
Rights)
This Prospectus and Proxy Statement incorporates important business and
financial information about Old Kent and First Evergreen that is not
included in or otherwise delivered with this Prospectus and Proxy
Statement. You may obtain these documents by requesting them in writing or
by telephone from:
Old Kent Financial Corporation First Evergreen Corporation
Attn: Mary E. Tuuk, Secretary Attn: Stephen M. Hallenbeck, Secretary
111 Lyon Street N.W. 3101 W. 95th Street
Grand Rapids, Michigan 49503 Evergreen Park, Illinois 60805
Tel: (616) 771-5272 Tel: (708) 422-6700
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY AUGUST 13, 1998 TO
RECEIVE THEM BEFORE THE SPECIAL MEETING. For a list of information
incorporated by reference in this Prospectus and Proxy Statement, see "WHERE
YOU CAN FIND MORE INFORMATION."
SUMMARY
This summary highlights selected information from this Prospectus and
Proxy Statement and may not contain all of the information that is
important to you. To best understand the merger between First Evergreen
and Old Kent (the "Merger") and for a more complete description of the
legal terms of the Merger, you should read carefully this entire document
and the documents that are incorporated by reference in this document. In
this Prospectus and Proxy Statement, "you" and "your" refers to each
stockholder of First Evergreen.
On June 15, 1998, Old Kent's Board of Directors declared a 5% stock
dividend on Old Kent common stock, payable July 17, 1998, to Old Kent's
shareholders of record on June 26, 1998 (the "Old Kent Stock Dividend").
The Old Kent Stock Dividend resulted in an adjustment to the amount of Old
Kent common stock that First Evergreen stockholders would be entitled to
receive in the Merger. Share and per share data in this Prospectus and
Proxy Statement have been adjusted to reflect the Old Kent Stock Dividend
except as otherwise indicated. However, the text of the Merger
Agreement attached as Appendix A, the section "Opinion of Financial
Advisor," and data in earlier dated documents incorporated by reference in
this Prospectus and Proxy Statement have not been so adjusted.
THE COMPANIES
OLD KENT FINANCIAL CORPORATION
111 Lyon Street N.W.
Grand Rapids, Michigan 49503
(616) 771-5000
Old Kent is a bank holding company with its headquarters in Grand Rapids,
Michigan. At March 31, 1998, Old Kent had (on a consolidated basis) assets
of $14.2 billion, deposits of $10.3 billion, a net loan portfolio of $8.1
billion, and shareholders' equity of $1.0 billion.
Old Kent's principal banking subsidiary, Old Kent Bank, serves its
communities through 193 banking offices in Michigan and 24 banking offices
in Illinois. Old Kent also has one other bank subsidiary and 6 non-bank
subsidiaries. Subsidiaries of Old Kent Bank include Old Kent Mortgage
Company, an originator of residential mortgages; Old Kent Insurance Group,
Inc., an insurance agency; Old Kent Brokerage Services, Inc., a securities
brokerage firm, and Lyon Street Asset Management Company, an investment
advisor.
Old Kent and its subsidiaries offer a wide range of banking, fiduciary, and
other financial services, including commercial, mortgage, and retail loans,
business and personal checking accounts, savings and retirement accounts,
time deposit instruments, automated teller machines, debit cards and other
-1-
electronically accessed banking services, money transfer services, safe
deposit facilities, cash management, real estate and lease financing,
international banking services, investment management and trust services,
personal investment and related advisory services, brokerage services, and
access to insurance products and credit cards.
Old Kent's principal markets for financial services presently are the
Michigan and Northeastern Illinois communities in which Old Kent Bank is
located and the areas immediately surrounding those communities.
FIRST EVERGREEN CORPORATION
3101 W. 95th Street
Evergreen Park, Illinois
(708) 422-6700
First Evergreen Corporation is a bank holding company with its
headquarters in Evergreen Park, Illinois. First Evergreen owns all of
the outstanding capital stock of First National Bank of Evergreen Park
("First Evergreen Bank"), a national banking association. First Evergreen
does not engage in any activities other than providing administrative
services for and acting as a holding company for First Evergreen Bank.
At March 31, 1998, First Evergreen had (on a consolidated basis) assets of
$1.9 billion, deposits of $1.7 billion, a net loan portfolio of $682.7
million, and stockholders' equity of $195.0 million.
First Evergreen Bank provides a complete range of retail banking services
to individuals and small and mediumsize businesses at each of its eight
banking locations: First Evergreen Bank-Evergreen Park (main office); First
Evergreen Bank-Oak Lawn Office; First Evergreen Bank-Clearing Office; First
Evergreen Bank-Orland Park East Office; First Evergreen Bank-Orland Park
West Office; First Evergreen Bank-Physician's Pavilion; First Evergreen
Business Banking Center; and First Evergreen Bank-Auburn/Highland Office.
These services include checking, savings and money market deposit accounts,
business loans, personal loans, residential mortgage loans, home
improvement loans, loans for education, other consumer oriented financial
services, including IRA and Keogh accounts, automated teller machines, and
safe deposit and night depository facilities.
First Evergreen Bank's Trust Department offers fiduciary, investment
management, and advisory services to individuals and small corporations.
It also administers (as trustee and in other fiduciary and representative
capacities) pension, profit-sharing, and other employee benefit plans and
personal trusts and estates.
-2-
THE MERGER
WHAT YOU WILL RECEIVE (SEE PAGE 11)
As a result of the Merger, you would receive 32.0312 shares of Old Kent
common stock for each share of First Evergreen common stock that you own.
No fractional shares will be issued. Instead, you would receive a check in
payment for any fractional shares based on the market value of the Old Kent
common stock. You should not send in your stock certificates until
instructed to do so by Old Kent after the Merger is completed.
EXAMPLE: IF YOU OWN 100 SHARES OF FIRST EVERGREEN STOCK, YOU WILL RECEIVE
3,203 SHARES OF OLD KENT COMMON STOCK. IN ADDITION, YOU WILL RECEIVE A
CHECK EQUAL TO 0.12 (YOUR FRACTIONAL SHARE) MULTIPLIED BY THE AVERAGE
CLOSING PRICE OF OLD KENT COMMON STOCK FOR THE 10 TRADING DAY PERIOD ENDING
10 BUSINESS DAYS BEFORE THE CLOSING OF THE MERGER.
RECOMMENDATION TO FIRST EVERGREEN STOCKHOLDERS
The Board of Directors of First Evergreen believes that the Merger is in
your best interests and unanimously recommends that you vote FOR the
proposal to adopt the Merger Agreement.
OPINION OF FIRST EVERGREEN'S FINANCIAL
ADVISER (SEE PAGE 14)
In deciding to approve the Merger, First Evergreen's Board of Directors
considered the opinion of its financial advisor, Hovde Financial, Inc.,
that the Merger Agreement is fair to First Evergreen's stockholders from a
financial point of view. Hovde Financial's written opinion is attached as
Appendix C to this Prospectus and Proxy Statement. You are encouraged to
read it.
FIRST EVERGREEN STOCKHOLDERS MEETING (SEE PAGE 9)
First Evergreen will hold a special meeting of its stockholders to vote on
the adoption of the Merger Agreement. The special meeting of First
Evergreen stockholders will be held:
August 20, 1998
2:00 p.m. local time
Oak Lawn facility of First National Bank of
Evergreen Park
9400 South Cicero Avenue, Suite 200
Oak Lawn, Illinois
To approve the Merger, at least a majority of the 400,261 shares of First
Evergreen common stock outstanding as of July 9, 1998 must vote for
adoption of the Merger Agreement.
-3-
As of July 9, 1998, First Evergreen's directors, executive officers, and
their affiliates owned 15.38% of First Evergreen common stock. They are
expected to vote in favor of adoption of the Merger Agreement. As of
July 9, 1998, Old Kent's directors, executive officers, and their
affiliates did not own any shares of First Evergreen common stock. No
approval of Old Kent's shareholders is required to complete the Merger.
TERMINATION RIGHT BASED ON OLD KENT'S
STOCK PRICE (SEE PAGE 19)
First Evergreen will have the right to terminate the Merger Agreement if,
after Old Kent and First Evergreen have scheduled a closing of the Merger
pursuant to the terms of the Merger Agreement, the "Average Closing Price"
of Old Kent's common stock is less than $33.33 per share. The "Average
Closing Price" of Old Kent's common stock is determined by taking the
average of the per share closing prices on the 10 trading days ending on
the 10th business day before the scheduled closing.
For information regarding other circumstances in which Old Kent or First
Evergreen may have the right to terminate the Merger Agreement, see the
discussion under the caption "Termination" on page 26.
REGULATORY APPROVALS (SEE PAGE 19)
The Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") must approve the Merger. Old Kent filed its application for
approval with the Federal Reserve Board on June 22, 1998.
CONDITIONS TO THE MERGER (SEE PAGE 24)
There are a number of conditions that must be met before Old Kent and First
Evergreen will be required to complete the Merger. These conditions
include the following, among others:
- First Evergreen's stockholders must adopt the Merger Agreement;
- The Federal Reserve Board must approve the Merger;
- Old Kent's tax counsel must issue an opinion to the effect that,
for federal tax purposes, the Merger will be a tax-free
reorganization; and
- Old Kent's independent accountant must provide a letter to the
effect that the Merger should qualify to be treated as a pooling-
of-interests for accounting purposes.
Some of these and other conditions to the Merger may be waived by the party
for whose benefit they are provided.
-4-
FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE 37)
The Merger is structured so that you are not expected to recognize any gain
or loss for federal income tax purposes in the Merger (except that you will
be taxed on any cash payments you receive for a fractional Old Kent share
or cash received upon the exercise of appraisal rights). HOWEVER, DUE TO
THE COMPLEXITIES OF FEDERAL, STATE, AND LOCAL INCOME TAX LAWS, IT IS
STRONGLY RECOMMENDED THAT YOU CONSULT YOUR OWN TAX ADVISERS CONCERNING THE
TAX CONSEQUENCES OF THE MERGER.
APPRAISAL RIGHTS (SEE PAGE 38)
You have the right to dissent from the Merger and receive the fair value of
your shares in cash, as determined by the Delaware Court of Chancery. To
perfect your appraisal rights, certain procedures set forth in Section 262
of the Delaware General Corporation Law must be followed closely. For your
reference, a copy of Section 262 is attached as Appendix D.
INTERESTS OF FIRST EVERGREEN'S OFFICERS
AND DIRECTORS IN THE MERGER (SEE PAGE 41)
In considering the recommendation by the Board of Directors of First
Evergreen that you vote in favor of adoption of the Merger Agreement, you
should be aware that certain directors and officers of First Evergreen and
First Evergreen Bank may be deemed to have certain interests in the Merger
in addition to their interests generally as stockholders of First
Evergreen.
It is expected that at the Effective Time, Old Kent Bank will enter into
employment agreements with Kenneth J. Ozinga, Chairman, President and Chief
Executive Officer of First Evergreen and First Evergreen Bank, Stephen M.
Hallenbeck, Secretary/Treasurer and Chief Financial Officer of First
Evergreen and Executive Vice President and Secretary of First Evergreen
Bank, and Robert C. Wall, Vice President of First Evergreen and Executive
Vice President of First Evergreen Bank. The employment agreements will
each have a term of one year, and will provide for the payment of salaries
as follows: Mr. Ozinga: $607,125; Mr. Hallenbeck: $405,000; and Mr. Wall:
$361,875. It is also expected that Old Kent Bank will enter into
employment agreements with certain other officers of First Evergreen Bank.
ACCOUNTING TREATMENT (SEE PAGE 38)
Old Kent and First Evergreen expect the Merger to qualify as a "pooling-
of-interests" for accounting and financial reporting purposes.
-5-
COMPARATIVE MARKET PRICES
On April 21, 1998, the last full trading day prior to the public
announcement of the proposed Merger, the closing price reported for Old
Kent's stock was $38.21 per share (adjusted to reflect the Old Kent Stock
Dividend). On July 7, 1998, the closing price reported for Old Kent's
stock was $38.44 per share. Old Kent common stock is quoted on The Nasdaq
Stock Market.
First Evergreen common stock is not actively traded, although occasional
transactions occur between individuals and local and regional brokerage
firms. The prices at which such transactions are effected are only
occasionally reported to First Evergreen. The last transaction involving
First Evergreen common stock prior to April 21, 1998 and the date of this
Prospectus and Proxy Statement for which price information is known to First
Evergreen was on March 4, 1998, when one share traded at a price of $485.25
per share.
------------------------------------------------------------------
The following table shows closing prices for Old Kent common stock and
the estimated value of Old Kent common stock to be received for each share
of First Evergreen common stock on an equivalent per share basis:
OLD KENT FIRST EVERGREEN
COMMON STOCK COMMON STOCK
------------ ----------------------------------
LAST REPORTED
SALE PRICE PRIOR EQUIVALENT
DATE ACTUAL PRICE TO DATE PER SHARE
---------- ------------ ---------------- ----------
April 21, 1998 $38.21<F*> $485.25 $1,223.91
July 7, 1998 $38.94 $485.25 $1,231.19
<FN>
The equivalent per share value of First Evergreen common stock is the
closing price of Old Kent common stock as of the date indicated multiplied
by the Exchange Ratio of 32.0312.
- ------------
<F*>Adjusted to reflect the Old Kent Stock Dividend.
</FN>
-6-
SUMMARY SELECTED HISTORICAL AND UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
The following financial information is provided to aid you in your
analysis of the financial aspects of the Merger. This information is
derived from Old Kent's and First Evergreen's audited financial statements
for 1993 through 1997 and unaudited financial statements for the three
months ended March 31, 1998. This information is only a summary. You
should read it in conjunction with the historical financial statements (and
related notes) contained in or incorporated by reference from Old Kent's
and First Evergreen's annual reports on Form 10-K and other information
filed with the Securities and Exchange Commission (the "SEC"). See "WHERE
YOU CAN FIND MORE INFORMATION."
HISTORICAL SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED ---------------------------------------------------------------------
MARCH 31, 1998 1997 1996 1995 1994 1993
------------------ ---- ---- ---- ---- ----
(dollars in thousands)
OLD KENT FINANCIAL CORPORATION
Income Statement Data:
Net interest income $ 134,255 $ 525,927 $ 494,288 $ 476,693 $ 455,635 $ 427,587
Provision for credit losses 15,081 45,677 35,236 21,666 22,465 34,822
Net income 46,174 180,304 158,701 141,814 137,084 131,324
Balance Sheet Data (period end):
Assets $14,220,022 $13,773,522 $12,646,828 $12,003,084 $11,477,723 $10,340,037
Deposits 10,299,363 10,228,290 10,080,147 9,357,366 9,429,337 8,411,203
Loans 8,214,299 8,469,477 8,097,056 7,430,552 6,854,849 5,344,712
Long-term and subordinated debt<F1> 200,000 200,000 100,000 100,000 0 0
Shareholders' equity 1,008,319 1,027,453 993,757 1,015,936 895,997 850,040
FIRST EVERGREEN CORPORATION
Income Statement Data:
Net interest income $ 15,134 $ 59,447 $ 59,690 $ 59,697 $ 62,870 $ 60,463
Provision for credit losses 300 1,300 400 0 0 0
Net income 5,349 18,114 20,692 20,230 20,415 21,970
Balance Sheet Data (period end):
Assets $ 1,927,361 $ 1,933,096 $ 1,910,013 $ 1,888,088 $ 1,872,035 $ 1,870,758
Deposits 1,701,724 1,700,620 1,695,847 1,661,946 1,694,617 1,718,071
Loans 686,321 674,440 618,695 530,499 478,764 416,341
Long-term and subordinated debt 0 0 0 0 0 0
Stockholders' equity 195,004 198,142 186,440 173,818 157,464 145,026
(See footnotes beginning on the following page.)
-7-
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
Old Kent and First Evergreen expect that the Merger will be accounted
for as a pooling-of-interests. This means that, for accounting and
financial reporting purposes, Old Kent will treat the companies as if they
had always been combined. For a more detailed description of pooling-
of-interests accounting, see "THE MERGER--Accounting Treatment."
The following unaudited pro forma financial information reflects the
pooling-of-interests method of accounting and is intended to give you a
picture of what Old Kent and First Evergreen might have looked like
had they always been combined. The pro forma income statement and balance
sheet were prepared by adding or combining the historical amounts of each
company. Then, the combined amounts were adjusted for differences in
accounting methods used by Old Kent and First Evergreen. The companies may
have performed differently if they had been combined. You should not rely
on the pro forma information as being indicative of the historical results
that Old Kent and First Evergreen would have had if combined or the future
results that they will report after the Merger.
YEAR ENDED DECEMBER 31,
THREE MONTHS ENDED -------------------------------------------
MARCH 31, 1998 1997 1996 1995
------------------ ---- ---- ----
(dollars in thousands)
Income Statement Data:
Net interest income $ 149,389 $ 585,374 $ 553,978 $ 536,390
Provision for credit losses 15,381 46,977 35,636 21,666
Net income 51,523 198,418 179,393 162,044
Balance Sheet Data (period end)<F2>:
Assets $16,147,383 $15,706,618 $14,556,841 $13,891,172
Deposits 12,001,088 11,928,910 11,775,994 11,019,312
Loans 8,897,002 9,143,917 8,715,751 7,961,051
Long-term debt<F1> 200,000 200,000 100,000 100,000
Shareholders' equity 1,203,323 1,225,595 1,180,197 1,189,754
- ------------------------
<FN>
<F1> Includes $100,000 guaranteed preferred beneficial interest in Old
Kent's junior subordinated debentures.
<F2> The pro forma combined balance sheet data assumes the issuance of
12,820,840 shares of Old Kent common stock in exchange for all of the
outstanding shares of First Evergreen common stock, assuming an
Exchange Ratio of 32.0312 shares of Old Kent common stock for each
share of First Evergreen common stock.
</FN>
-8-
Under the "risk-based" capital guidelines presently in effect for
banks and bank holding companies, minimum capital levels are based on the
perceived risk in the various asset categories. Certain off-balance-sheet
instruments such as loan commitments and letters of credit require capital
allocations. Bank holding companies are required to maintain minimum risk-
based capital ratios. Old Kent's ratios are above the regulatory minimum
guidelines and each of its subsidiary banks met the regulatory criteria to
be categorized as "well-capitalized" institutions at March 31, 1998. First
Evergreen met the regulatory criteria to be categorized as a "well-
capitalized" institution at March 31, 1998. The "well-capitalized"
classification may permit financial institutions to minimize the cost of
Federal Deposit Insurance Corporation insurance assessments by being
charged a lesser rate than those that do not meet this definition.
Designation as a "well-capitalized" institution does not constitute a
recommendation by federal bank regulators. The following table shows
capital ratios and requirements as of March 31, 1998:
RISK-BASED CAPITAL
-----------------------
LEVERAGE TIER 1 TOTAL
-------- ------ -----
Old Kent's capital ratios 7.11% 9.16% 11.35%
First Evergreen's capital ratios 10.04 24.07 24.53
Pro forma combined capital ratios 7.47 10.19 12.32
Regulatory capital ratios - "well-capitalized" definition 5.00 6.00 10.00
Regulatory capital ratios - minimum requirement 3.00 4.00 8.00
COMPARATIVE PER SHARE INFORMATION
The following summarizes the per share information for Old Kent and
First Evergreen on a historical, pro forma combined, and equivalent basis.
The First Evergreen "Per Share Equivalents" are calculated by multiplying
the Unaudited Pro Forma Combined per share amounts by 32.0312. First
Evergreen stockholders will receive 32.0312 shares of Old Kent common stock
in exchange for each share of First Evergreen common stock.
The pro forma data do not purport to be indicative of the results of
future operations or the actual results that would have occurred had the
Merger occurred at the beginning of the period presented. The pro forma
financial data have been included in accordance with the rules of the SEC
and are provided for comparative purposes only. The information presented
below has been restated to reflect stock dividends and stock splits.
-9-
YEAR ENDED DECEMBER 31,
THREE MONTHS ---------------------------------
ENDED MARCH 31, 1998 1997 1996 1995
-------------------- ---- ---- ----
OLD KENT COMMON STOCK
Earnings per share-basic<F1>:
Historical . . . . . . . . . $ 0.48 $ 1.81 $ 1.55 $ 1.35
Pro forma<F2> . . . . . . . . 0.47 1.76 1.55 1.38
Earnings per share-diluted<F1>:
Historical . . . . . . . . . 0.48 1.79 1.53 1.34
Pro forma<F2> . . . . . . . . 0.47 1.74 1.54 1.36
Cash dividends declared per share:
Historical . . . . . . . . . 0.171 0.642 0.576 0.528
Book value per share-end of period:
Historical . . . . . . . . . 10.49 10.54 10.03 9.67
Pro forma<F3> . . . . . . . . 11.05 11.12
YEAR ENDED DECEMBER 31,
THREE MONTHS ---------------------------------
ENDED MARCH 31, 1998 1997 1996 1995
-------------------- ---- ---- ----
FIRST EVERGREEN COMMON STOCK
Earnings per share-basic<F1>:
Historical . . . . . . . . . $ 13.36 $ 45.17 $ 51.42 $ 50.11
Equivalent pro forma<F4> . . . . 15.05 56.37 49.65 44.20
Cash dividends declared per share:
Historical . . . . . . . . . 20.00 17.00 15.00 13.00
Equivalent pro forma<F4> . . . . 21.91 <F5> 20.56 18.45 16.91
Book value per share-end of period:
Historical . . . . . . . . . 493.07 494.12 463.78 430.24
Equivalent pro forma<F4> . . . . 353.94 356.19
- -----------------
-10-
<FN>
<F1> Earnings per share were calculated using income (loss) from continuing
operations. In calculating pro forma earnings per share, no
adjustments to the pro forma amounts have been made to reflect
potential expense reductions or revenue enhancements that may result
from the Merger or the effect of repurchases of Old Kent common stock
or First Evergreen common stock subsequent to the stated period.
<F2> Gives effect to the Merger as if it had occurred at the beginning of
each period presented.
<F3> Gives effect to the Merger as if it had occurred at the end of the
period. The March 31, 1998 pro forma book value per share does not
include the impact of an anticipated $25 million of restructuring and
Merger-related charges.
<F4> The equivalent pro forma computations assume that for each share of
First Evergreen common stock outstanding, First Evergreen stockholders
would receive 32.0312 shares of Old Kent common stock.
<F5> First Evergreen has historically paid a single dividend annually
during the first three months of the year, and did so during 1998.
Old Kent has historically paid quarterly dividends. In order to
provide a meaningful comparison, the equivalent pro forma dividend for
the three months ended March 31, 1998 has been computed on an
annualized basis by multiplying Old Kent's actual quarterly dividend
declared by a factor of 4. The equivalent pro forma quarterly dividend
would have been $5.48.
</FN>
As of June 30, 1998, there were 94,156,572 (after giving effect to the Old
Kent Stock Dividend) shares of Old Kent common stock issued and outstanding
held by 15,565 holders of record. As of June 30, 1998, there were 400,261
shares of First Evergreen common stock issued and outstanding held by 517
holders of record.
-11-
FORWARD-LOOKING STATEMENTS
This Prospectus and Proxy Statement, as well as documents incorporated
by reference in this Prospectus and Proxy Statement, contain forward-
looking statements that are based on First Evergreen's and Old Kent's
managements' beliefs, assumptions, current expectations, estimates, and
projections about the financial services industry, the economy, and about
Old Kent and First Evergreen themselves. Words such as "anticipates",
"believes", "estimates", "expects", "forecasts", "intends", "is likely",
"plans", "perceives", "projects", variations of such words and similar
expressions are intended to identify such forward-looking statements.
These statements are not guarantees of future performance and involve
certain risks, uncertainties, and assumptions that are difficult to predict
with regard to timing, extent, likelihood, and degree of occurrence.
Therefore, actual results and outcomes may materially differ from what may
be expressed or forecasted in such forward-looking statements.
Factors that could cause a difference between an ultimate actual
outcome and a preceding forward-looking statement include, but are not
limited to, changes in interest rates and interest rate relationships;
demand for products and services; the degree of competition by traditional
and non-traditional competitors; changes in banking laws or regulations;
changes in tax laws; changes in prices, levies, and assessments; the impact
of technological advances; government and regulatory policy changes; the
outcome of pending and future litigation and contingencies; trends in
customer behaviors and their ability to repay loans; and the vicissitudes
of the world and national economy. Neither Old Kent nor First Evergreen
undertakes any obligation to update, amend, or clarify forward-looking
statements, as a result of new information, future events, or otherwise.
THE SPECIAL MEETING
PLACE, TIME AND DATE
The Special Meeting will be held at the Oak Lawn facility of First
National Bank of Evergreen Park, located 15 9400 South Cicero Avenue, Suite
200, Oak Lawn, Illinois, at 2:00 p.m., local time, on August 20, 1998. This
Prospectus and Proxy Statement is being sent to each holder of First
Evergreen common stock, and accompanies a form of proxy (the "Proxy") that is
being solicited by the First Evergreen Board for use at the Special Meeting
and at any and all adjournments or postponements of the Special Meeting.
MATTERS TO BE CONSIDERED
At the Special Meeting, stockholders of First Evergreen will vote upon
a proposal to adopt the Merger Agreement. First Evergreen stockholders
will also consider and vote upon such other matters as may properly be
-12-
brought before the Special Meeting. As of the date of this Prospectus and
Proxy Statement, the First Evergreen Board of Directors knows of no
business that will be presented for consideration at the Special Meeting,
other than the matters described in this Prospectus and Proxy Statement.
RECORD DATE; VOTE REQUIRED
The First Evergreen Board has fixed the close of business on July 9,
1998 (the "Record Date"), as the date for determining holders of First
Evergreen common stock who will be entitled to notice of and to vote at the
Special Meeting. As of the Record Date, there were outstanding and
entitled to vote at the Special Meeting 400,261 shares of First Evergreen
common stock.
You will be entitled to cast one vote per share on each proposal
presented at the Special Meeting. You may vote in person or by properly
executed proxy. The presence, in person or by properly executed proxy, of
the holders of a majority of the outstanding shares of First Evergreen
common stock entitled to vote at the Special Meeting is necessary to
constitute a quorum. Abstentions and broker non-votes will be treated as
shares present at the Special Meeting for purposes of determining the
presence of a quorum.
The affirmative vote of the holders of a majority of the outstanding
shares of First Evergreen common stock entitled to vote on the Merger
Agreement is required for the adoption of the Merger Agreement. Therefore,
abstentions and broker non-votes will have the same effect as votes against
adoption of the Merger Agreement.
As of the Record Date, the directors and executive officers of First
Evergreen and their affiliates beneficially owned in the aggregate 61,579
shares of First Evergreen common stock, or approximately 15.38% of the then
outstanding shares of First Evergreen common stock entitled to vote at the
Special Meeting. As of the Record Date, the directors and executive
officers of Old Kent and their affiliates did not beneficially own any shares
of First Evergreen common stock.
PROXIES
Shares of First Evergreen common stock represented by properly
executed proxies received prior to or at the Special Meeting will, unless
such proxies have been revoked, be voted at the Special Meeting and any
adjournments or postponements thereof in accordance with the instructions
indicated in the proxies. If you do not properly indicate instructions on
your executed Proxy, your shares will be voted FOR the adoption of the
Merger Agreement.
-13-
You may revoke any Proxy given pursuant to this solicitation or
otherwise at any time before it is voted by delivering to the Secretary of
First Evergreen at 3101 W. 95th Street, Evergreen Park, Illinois 60805 on
or before the taking of the vote at the Special Meeting, a written notice
of revocation bearing a later date than the proxy or a later dated proxy
relating to the same shares of First Evergreen common stock or by attending
the Special Meeting and voting in person. Attendance at the Special
Meeting will not in itself constitute the revocation of a proxy.
If any other matters are properly presented at the Special Meeting for
consideration, the persons named in the Proxy or acting thereunder will
have discretion to vote on such matters in accordance with their best
judgment. As of the date of this Prospectus and Proxy Statement, the First
Evergreen Board of Directors knows of no such other matters.
In addition to solicitation by mail, directors, officers, and
employees of First Evergreen who will not be specifically compensated for
such services, may solicit proxies from the stockholders of First
Evergreen, personally or by telephone, telegram, or other forms of
communication. Brokerage houses, nominees, fiduciaries, and other
custodians will be requested to forward soliciting materials to beneficial
owners and will be reimbursed for their reasonable expenses incurred in
sending proxy material to beneficial owners. First Evergreen will bear its
own expenses in connection with the solicitation of proxies for the Special
Meeting.
- YOU ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
- YOU SHOULD NOT FORWARD STOCK CERTIFICATES WITH YOUR PROXY.
THE MERGER AND MERGER AGREEMENT
THE MERGER AGREEMENT, ATTACHED AS APPENDIX A, IS INCORPORATED IN THIS
PROSPECTUS AND PROXY STATEMENT BY REFERENCE AND SHOULD BE CAREFULLY
CONSIDERED. CERTAIN PROVISIONS OF THE MERGER AGREEMENT HAVE BEEN
SUMMARIZED IN THIS PROSPECTUS AND PROXY STATEMENT FOR YOUR INFORMATION.
HOWEVER, THE MERGER AGREEMENT, NOT THIS SUMMARY, IS THE DEFINITIVE
STATEMENT OF THE TERMS OF THE MERGER.
-14-
WHAT YOU WILL RECEIVE
If First Evergreen's stockholders adopt the Merger Agreement and the
Merger is completed, First Evergreen will be merged with and into Old Kent.
Old Kent will survive the Merger and as a result, will own First Evergreen
Bank and all of the other assets of First Evergreen. In exchange, you will
receive 32.0312 (the "Exchange Ratio") shares of Old Kent common stock for
each of your shares of First Evergreen, plus cash in lieu of any fractional
share, unless you exercise appraisal rights.
Attached to each share of Old Kent common stock that you will receive
in the Merger will be a fraction of an associated Old Kent Series C
Preferred Stock Purchase Right (a "Right"). Each Right represents a right
to purchase 1/100 of a share of Old Kent's Series C Preferred Stock.
However, until the occurrence of certain events generally involving a
change of control of Old Kent, the Rights are not exercisable, are
evidenced by the certificates representing the Old Kent common stock, and
may be transferred only with such shares of Old Kent common stock. In this
Prospectus and Proxy Statement, the term "Old Kent common stock" includes
both Old Kent's common stock and these Rights. SEE "THE MERGER--
Description of Old Kent Capital Stock" and "--Comparison of Rights of Old
Kent's and First Evergreen's Stockholders" below for a more detailed
discussion of the Rights.
The Exchange Ratio is subject to certain upward or downward
adjustments based upon the occurrence of certain events between the date of
this Prospectus and Proxy Statement and the completion of the Merger that
result in or would result in changes in the number of shares of Old Kent or
First Evergreen common stock outstanding. The purpose of any such
adjustment is to prevent dilution of the interests of the respective
shareholders of Old Kent and First Evergreen. Old Kent and First Evergreen
do not expect that any additional events necessitating an adjustment to the
Exchange Ratio will occur.
Old Kent will not issue fractional shares of Old Kent common stock in
the Merger. Instead, if you would otherwise be entitled to receive a
fraction of a share of Old Kent common stock, you will receive an amount of
cash determined by multiplying the amount of the fractional share by the
"Average Closing Price" (defined to mean the average closing price of Old
Kent common stock for the 10 trading day period ending 10 business days
before the closing of the Merger).
BACKGROUND OF THE MERGER
First Evergreen is a bank holding company whose sole subsidiary is
First Evergreen Bank. First Evergreen has no business interests or
subsidiaries other than First Evergreen Bank. First Evergreen Bank is a
-15-
community oriented financial institution that has enjoyed almost 50 years
of continued growth in terms of an increasing deposit base and increasing
earnings.
First Evergreen Bank's growth has not only been internally generated
but is also the result of several acquisitions. In April 1983, First
Evergreen was the successful bidder for certain of the assets and
liabilities of the former First National Bank of Oak Lawn and caused such
acquired assets and liabilities to be placed in the then newly chartered
Oak Lawn National Bank. In 1985, Clear Bancorp, Inc., a unitary bank
holding company for the state chartered Clearing Bank, was merged into and
with First Evergreen. In 1991, First Evergreen acquired all of the
outstanding capital stock of Oak Lawn Trust and Savings Bank. Clearing
Bank, Oak Lawn National Bank, and Oak Lawn Trust and Savings Bank were
merged into First Evergreen Bank on September 14, 1991.
As First Evergreen Bank has grown, the number of First Evergreen's
stockholders has increased. However, First Evergreen is not a reporting
company under the Securities Exchange Act of 1934 (the "Exchange Act") and
its stock is not publicly traded. As the number of its stockholders
approached the legal requirement for registration under the Exchange Act,
First Evergreen's Board of Directors evaluated alternatives available to
First Evergreen, including a continuation of its business with a publicly
traded stock and attempts to locate suitable business partners.
First Evergreen's Board of Directors has discussed the status of the
financial services industry, the role of First Evergreen in that industry,
and business strategies to provide the range of sophisticated products
expected of a regional bank with the responsiveness of a community bank.
The directors also discussed ownership and governance structures in the
context of the challenges of providing such financial services while
maintaining the closely held nature of First Evergreen's stock ownership.
Although the Board had not made a determination that First Evergreen should
be sold or merged, the Board of Directors concluded that a complete
evaluation of alternatives available to First Evergreen should include a
determination by an expert of the financial value of First Evergreen to its
stockholders. The Board reviewed Hovde Financial, Inc.'s qualifications
and then authorized the Chairman to engage Hovde to explore the value of
First Evergreen in the market and provide alternative business courses of
action to the Board.
Representatives of Hovde appeared before First Evergreen's Board of
Directors. The Hovde representatives then presented an overview of the
market for financial institutions in the Chicago area. They indicated that
they had contacted a group of what they considered to be potential and
compatible business affiliates with First Evergreen. They informed the
Board that they had received expressions of interest from various Midwest
banking organizations, including Old Kent. Hovde presented written
-16-
expressions of interest to the First Evergreen Board. Hovde also presented
market and operating characteristics with respect to large midwest banks,
including Old Kent and the other banking organizations that presented an
expression of interest. The Board also considered financial data for
publicly announced transactions involving mergers and acquisitions of
select comparable banks nationwide made public after January 1, 1997 in
which the sellers' total assets were between $1.0 and $3.5 billion. Based
on the information and data available to the Board, the Board concluded
that the Old Kent expression of interest was preferable to the other
expressions of interest and determined to further explore the possibility
of an affiliation with Old Kent.
In late March 1998, First Evergreen exchanged documents and financial
and operational information with Old Kent. Representatives of First
Evergreen and Old Kent then engaged in discussions which by mid-April 1998
intensified into serious negotiations concerning the possible combination
of the two companies. By April 18, 1998, those negotiations resulted in a
proposed Merger Agreement substantially in a form to be considered by the
Board of Directors of both First Evergreen and Old Kent. The Merger
Agreement in that form was delivered to each First Evergreen director on
April 18, 1998 for consideration prior to the regularly scheduled First
Evergreen Board meeting on April 21, 1998.
On April 21, 1998 the First Evergreen Board, and members of the board
of First Evergreen Bank who are not members of First Evergreen's Board, met
with the Chairman and certain officers of Old Kent to discuss the Old Kent
proposal. The Chairman of Old Kent informed the First Evergreen Board that
Old Kent's Board of Directors had approved the Merger Agreement at its
board meeting on April 20, 1998.
After the Old Kent representatives left the First Evergreen Board
meeting, First Evergreen's Board met with First Evergreen's legal counsel
who discussed the Merger Agreement and the Merger with the Board. Legal
counsel also responded to questions and comments from First Evergreen
directors.
A representative of Hovde was present throughout the First Evergreen
Board meeting on April 21, 1998. He presented to the Board an overview of
Old Kent's proposal. The Board also reviewed, in comparison to Old Kent,
market and operating characteristics for banks comparable to Old Kent,
analysts' ratings and stock characteristics of Old Kent, and Old Kent
financial information.
Hovde also presented its financial analysis of Old Kent's offer, which
included Hovde's opinion that the proposed merger agreement is fair, from a
financial point of view, to First Evergreen's stockholders.
After considering comments from legal counsel, Hovde's financial
analysis, and the other financial data before it, First Evergreen's Board
-17-
then unanimously approved the execution of the Merger Agreement. On April
22, 1998, Old Kent and First Evergreen jointly announced that as of April
21, 1998, Old Kent and First Evergreen had entered into the Merger
Agreement.
MERGER RECOMMENDATION AND REASONS FOR THE MERGER
FIRST EVERGREEN
In approving the Merger Agreement, First Evergreen's Board of
Directors considered the financial consideration to be paid to First
Evergreen stockholders, current First Evergreen operating results,
perceived future prospects of First Evergreen, and industry and economic
factors. The Merger Agreement is the result of arms length negotiations
and was reached in consultation with Hovde and with legal counsel. Hovde
has issued to the First Evergreen Board of Directors a fairness opinion to
the effect that from a financial viewpoint, the Merger Agreement is fair to
the stockholders of First Evergreen.
First Evergreen entered into the Merger Agreement with Old Kent
because of the nature and compatibility in the respective management
philosophies and styles of Old Kent and First Evergreen; Old Kent's strong
financial operating history; and the perceived future business prospects of
Old Kent. Other factors include the large market capitalization of Old
Kent, the liquidity of its publicly traded shares, and the expected tax
free nature of the exchange of First Evergreen shares for Old Kent common
stock. First Evergreen's Board also believes that Old Kent will have a
positive effect on the customers and communities served by First Evergreen.
FIRST EVERGREEN'S BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR ADOPTION OF THE MERGER
AGREEMENT.
OLD KENT
While Old Kent's presence has historically centered on Michigan,
opportunities to expand by acquisition have consistently been reviewed and
prospective acquisition opportunities have been evaluated. As part of its
evaluation of expansion opportunities in Illinois, Old Kent was familiar
with First Evergreen and the banking market served through First Evergreen
Bank. In particular, the suburban Chicago banking market has been viewed
by Old Kent as an attractive market extension because of the economic and
demographic characteristics of the area. Old Kent believes the proposed
Merger will enable Old Kent to improve its geographic diversification by
further expanding Old Kent's presence in the metropolitan Chicago, Illinois
-18-
area. In addition, Old Kent believes that the Merger will permit the
achievement of certain economies of scale with respect to Old Kent's
business conducted in Illinois and elsewhere.
OPINION OF FIRST EVERGREEN'S FINANCIAL ADVISOR
BECAUSE THIS SECTION DESCRIBES AN HISTORICAL ANALYSIS AND
PRESENTATION, THE STOCK PRICES AND EXCHANGE RATIOS DESCRIBED IN THIS
SECTION ARE THE ACTUAL VALUES AT THE RELEVANT DATE. THESE VALUES HAVE NOT
BEEN ADJUSTED FOR THE OLD KENT STOCK DIVIDEND.
Hovde has delivered to the First Evergreen Board of Directors its
opinion that, based upon and subject to the various considerations set forth
in its written opinion dated April 21, 1998 and updated as of the date of
this Prospectus and Proxy Statement, the Merger Agreement is fair from a
financial point of view to First Evergreen stockholders as of such date. In
requesting Hovde's advice and opinion, no limitations were imposed by First
Evergreen upon Hovde with respect to the investigations made or procedures
followed by it in rendering its opinion. The full text of the opinion of
Hovde, dated July 13, 1998, which describes the procedures followed,
assumptions made, matters considered and limitations on the review undertaken,
is attached hereto as Appendix C. You should read this opinion in its
entirety.
Hovde is a nationally recognized investment banking firm and, as part
of its investment banking business, is continually engaged in the valuation
of financial institutions in connection with mergers and acquisitions,
private placements, and valuations for other purposes. As a specialist in
securities of financial institutions, Hovde has experience in, and
knowledge of, banks, thrifts, and bank and thrift holding companies. First
Evergreen's Board of Directors selected Hovde to act as its financial
advisor in connection with the Merger on the basis of the firm's reputation
and expertise in transactions such as the Merger.
Hovde will receive a fee contingent upon the completion of the Merger
for services rendered in connection with advising First Evergreen regarding
the Merger Agreement, including the fairness opinion and financial advisory
services provided to First Evergreen, plus reimbursement of out-of-pocket
expenses. As of the date of the fairness opinion, such fee would be
approximately $4,527,000, and Hovde has received no amount of such fee.
HOVDE'S OPINION IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL
POINT OF VIEW, OF THE MERGER AGREEMENT, AND DOES NOT CONSTITUTE A
RECOMMENDATION TO YOU AS TO HOW YOU SHOULD VOTE AT THE SPECIAL MEETING.
THE SUMMARY OF THE OPINION OF HOVDE SET FORTH IN THIS PROSPECTUS AND PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF
SUCH OPINION.
-19-
The following is a brief summary of the analyses performed by Hovde in
connection with its fairness opinion:
During the course of its engagement, and as a basis for arriving at
its opinion, Hovde reviewed and analyzed material bearing upon the
financial and operating condition of Old Kent and First Evergreen and
material prepared in connection with the Merger, including, among other
things, the following: (i) the Merger Agreement; (ii) certain historical
publicly available information concerning First Evergreen and Old Kent;
(iii) the nature and terms of recent acquisition and merger transactions
involving bank institutions and bank holding companies that Hovde
considered reasonably similar to First Evergreen in size, financial
character, operating character, historical performance, and geographic
market; and (iv) financial and other information provided to Hovde by the
management of Old Kent and First Evergreen. Hovde conducted meetings with
members of senior management of First Evergreen and Old Kent for purposes
of reviewing the future prospects of First Evergreen and Old Kent. Hovde
also took into account its experience in other transactions, as well as its
knowledge of the commercial banking and thrift industries and its general
experience in securities valuations.
In rendering its opinion, Hovde assumed, without independent
verification, the accuracy and completeness of the financial and other
information and has relied upon the accuracy of the representations of the
parties contained in the Merger Agreement. Hovde has not made any
independent evaluation or appraisal of any properties, assets, or
liabilities of First Evergreen. Hovde assumed and relied upon the accuracy
and completeness of the publicly available and other financial and other
information provided to it, relied upon the representations and warranties
of Old Kent and First Evergreen made pursuant to the Merger Agreement, and
did not independently attempt to verify any of such information.
In connection with its opinion, Hovde performed various analyses with
respect to First Evergreen. The following is a brief summary of such
analyses, certain of which were presented to the First Evergreen Board by
Hovde on April 21, 1998.
ANALYSIS OF THE MERGER CONSIDERATION. Hovde reviewed the value of the
consideration to be received in the Merger by each holder of First
Evergreen common stock. Given Old Kent's trading price of $40.00 at the
time of announcement, Hovde calculated that the value of Old Kent common
stock that would be issued in the Merger equated to approximately 246.50%
of First Evergreen's book value at December 31, 1997, approximately 250.85%
of First Evergreen's tangible book value at December 31, 1997, a multiple
of approximately 27.0 times First Evergreen's earnings for the 12 months
ended December 31, 1997, and a premium to core deposits of approximately
17.27%.
-20-
SUMMARY OF PROPOSALS. Hovde summarized the sales process, the parties
contacted and the level of interest expressed by each party, including the
value of the aggregate consideration offered to First Evergreen
stockholders. Hovde also compared the significant terms of the Old Kent
proposal to those of the other bidders submitting proposals, including but
not limited to the value of the consideration offered, the market
characteristics of the acquiror's stock, and the community/employee
considerations. Furthermore, Hovde examined the trading price and volume
of Old Kent common stock and the relationship between the trading
characteristics of Old Kent common stock and the common stock of the other
companies, as well as to a peer group of comparable companies.
ANALYSIS OF SELECTED MERGERS. As part of its analysis, Hovde reviewed
two sets of mergers: (i) selected mergers involving banks headquartered
anywhere in the Midwest announced between January 1, 1996 and April 17,
1998 in which the total assets of the seller were between $500 million and
$3 billion and the tangible equity to assets ratio of the seller was
between 9.0% and 12.0% (the "Midwest Mergers") and (ii) selected mergers
involving banks headquartered in the state of Illinois announced between
January 1, 1991 and April 17, 1998 in which the total assets of the seller
were between $500 million and $3 billion (the "Illinois Mergers"). The
Midwest Mergers consisted of 9 mergers and the Illinois Mergers consisted
of 14 mergers. For each transaction, Hovde determined the value of the
offer made by the acquiror (the "Offer Value") as of the announcement date
of the transaction. For each transaction, Hovde calculated the multiple of
the Offer Value to the acquired company's earnings per share ("EPS") for
the twelve months preceding ("LTM") the announcement date of the
transaction; and the multiple of the Offer Value to the acquired company's
book value per share; tangible book value per share; and the tangible book
premium to core deposits, each as of the announcement date of the
transaction. The Midwest Mergers and the Illinois Mergers are listed in
the table below:
ACQUIROR TARGET
MIDWEST MERGERS
Union Planters Corp. AMBANC Corp.
St. Paul Bancorp Beverly Bancorporation Inc.
Mercantile Bancorporation Inc. Firstbank of Illinois
Mercantile Bancorporation Inc. CBT Corp.
F&M Bancorporation Inc. BancSecurity Corp.
Union Planters Corp. Peoples First Corp.
Park National Corp. First-Knox Banc Corp.
Magna Group Inc. Homeland Bankshares
Firstar Corp. American Bancorp
-21-
ILLINOIS MERGERS
St. Paul Bancorp Inc. Beverly Bancorp
Mercantile Bancorporation Inc. Firstbank of Illinois
First Midwest Bancorp Inc. Heritage Financial Services, Inc.
ABN AMRO Holding N.V. CNBC Bancorp, Inc.
Mercantile Bancorporation Inc. Today's Bancorp, Inc.
Firstar Corp. First Colonial Bankshares Corp.
Harris Financial, Inc. Suburban Bancorp
First Chicago Corp. Lake Shore Bancorp
Old Kent Financial Corp. Edgemark Financial Corp.
First Bank System Boulevard Bancorp
Banc One Corporation First Community Bancorp
Banc One Corporation First Illinois Corp.
Banc One Corporation Marine Corporation
NBD Bancorp FNW Bancorp
The calculations for the Midwest Mergers yielded a range of multiples
of offer value to LTM EPS of 12.7 times to 25.3 times, with an average of
20.0 times and a median of 20.5 times; a range of multiples of offer value
to book value of 1.69 times to 2.90 times, with an average of 2.33 times
and a median of 2.35 times; a range of multiples of offer value to tangible
book value of 1.69 times to 3.26 times, with an average of 2.45 times and a
median of 2.43 times; and a range of multiples of tangible book premium to
core deposits of 9.16% to 29.13%, with an average of 20.07% and a median of
21.62%.
The calculations of the Illinois Mergers yielded a range of multiples
of offer value to LTM EPS of 13.8 times to 33.0 times, with an average of
19.7 times and a median of 18.4 times; a range of multiples of offer value
to book value of 1.77 times to 3.38 times, with an average of 2.27 times
and a median of 2.13 times; a range of multiples of offer value to tangible
book value of 1.87 times to 4.09 times, with an average of 2.64 times and a
median of 2.48 times; and a range of tangible book premium to core deposits
of 9.56% to 31.64%, with an average of 16.14% and a median of 12.36%.
Hovde compared these multiples with the corresponding multiples for
the Merger, valuing the shares of Old Kent common stock that would be
received pursuant to the Merger Agreement at $1,220.24 per share of First
Evergreen common stock. In calculating the multiples for the Merger, Hovde
used First Evergreen's EPS for the 12 months ended December 31, 1997, and
First Evergreen's book value per share, tangible book value per share, and
total deposits as of December 31, 1997, and Hovde calculated that First
Evergreen's LTM EPS for such 12 month period, book value per share,
tangible book value per share, and tangible book premium to core deposits
as of December 31, 1997 were 27.0 times, 2.47 times, 2.51 times, and
17.27%, respectively.
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No company or transaction used in the above analysis as a comparison
is identical to First Evergreen, Old Kent, or the Merger. Accordingly, an
analysis of the results of the foregoing is not mathematical; rather, it
involves complex considerations and judgments concerning differences in
financial and operating characteristics of First Evergreen, Old Kent, and
the companies comprising the Midwest and Illinois merger groups.
CONTRIBUTION ANALYSIS. Hovde prepared a contribution analysis showing
percentages of assets, deposits, and common equity at December 31, 1997,
and actual 1997 and estimated 1998 net income that would be contributed to
the combined company on a pro forma basis by First Evergreen and Old Kent.
This analysis showed, assuming Old Kent's stock price was at $40.00 per
share, that First Evergreen, as of December 31, 1997, would contribute
12.31% of pro forma consolidated total assets, 14.26% of core deposits,
16.17% of common equity, 9.13% of actual 1997 net income, and 9.76% of
estimated 1998 net income. This analysis showed that holders of First
Evergreen Stock would own approximately 11.63% of the pro forma common
shares outstanding of Old Kent, assuming Old Kent's stock price was at
$40.00 per share.
FINANCIAL IMPLICATIONS TO HOLDERS OF FIRST EVERGREEN COMMON STOCK.
Hovde prepared an analysis of the financial implications of the Old Kent
offer to a holder of First Evergreen Stock. This analysis indicated that
on a pro forma equivalent basis, at a $1,220.24 price per share of First
Evergreen common stock with Old Kent trading at $40.00 per share, a
stockholder of First Evergreen would achieve approximately 19.3% accretion
in earnings per share, an increase in dividends per share of approximately
9.8%, and a decrease in book value per share of approximately 24.9% in 1998
as a result of the consummation of the Merger. Assuming that the projected
earnings per share and dividends per share do not materially change from
historical growth rate levels, the holders of First Evergreen common stock
will experience an increase of approximately 27.9% in earnings per share,
an increase of approximately 16.3% in dividends per share, and a decrease
of approximately 12.7% in book value per share in 2002 as a result of the
consummation of the Merger.
COMPARATIVE SHAREHOLDER RETURNS. Hovde presented an analysis of
comparative theoretical stockholder returns in several scenarios, including
First Evergreen remaining independent, First Evergreen being acquired in
2002, and First Evergreen being acquired by Old Kent through the Merger.
This analysis, which was based on the net present value of projected
dividend streams and projected common stock valuations (using the current
price-to-earnings multiples), indicated total shareholder returns of 15.04%
if First Evergreen remained independent, 32.92% for a merger in 2002 on the
terms specified in the following paragraph, and 45.77% based on the
acceptance of the offer from Old Kent at a fixed exchange ratio of 30.5059
per First Evergreen share.
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DISCOUNTED CASH FLOW ANALYSIS. Hovde performed a discounted cash flow
analysis to determine a present value per share of First Evergreen common
stock assuming First Evergreen continued to operate as a stand-alone entity
and was acquired at a later date. This present value was determined by
projecting First Evergreen's after-tax net income for the five years ended
December 31, 1998 through 2002. The "terminal value" per share (i.e., the
projected 2002 value per share) of First Evergreen common stock was
determined by applying a price to earnings multiple of 19.7 times against
First Evergreen's projected earnings at December 31, 2002. The present
value of the terminal value was then determined using an annual discount
rate of 11.0%. The above calculations resulted in a net present value per
fully diluted share of First Evergreen common stock of $1,016.29 per share.
Although the summary set forth above does not purport to be a complete
description of the analyses performed by Hovde, the most material aspects
of the analyses performed by Hovde in rendering its opinion have been
summarized above. However, the preparation of a fairness opinion is not
necessarily susceptible to partial analysis or summary description. Hovde
believes that its analysis and the summary set forth above must be
considered as a whole and that selecting portions of its analysis, without
considering all factors and analysis, would create an incomplete view of
the process underlying the analysis by which Hovde reached its opinion. In
addition, Hovde may have given various analyses more or less weight than
other analyses, but no analysis was given materially more weight than any
other analysis. Also, Hovde may have deemed various assumptions more or
less probable than other assumptions so that the ranges of valuations
resulting from any particular analysis described above should not be taken
to be Hovde's view of the actual value of First Evergreen or the combined
company.
In performing its analysis, Hovde made numerous assumptions with
respect to industry performance, general business and economic conditions,
and other matters, many of which are beyond the control of First Evergreen
and Old Kent. The analysis performed by Hovde is not necessarily
indicative of actual value or actual future results, which may be
significantly more or less favorable than suggested by such analysis. Such
analysis was prepared solely as part of Hovde's analysis of the fairness of
the Merger Agreement, from a financial point of view, to the holders of
First Evergreen common stock. The analysis does not purport to be an
appraisal or to reflect the prices at which a company might actually be
sold or the prices at which any securities may trade at the present time or
at any time in the future. Hovde used in its analysis various projections
of future performance prepared by the management of First Evergreen. The
projections are based on numerous variables and assumptions which are
inherently unpredictable and must be considered not certain of occurrence
as projected. Accordingly, actual results could vary significantly from
those assumed in the projections and any related analysis. Hovde's opinion
does not address the relative merits of the Merger as compared to any other
-24-
business combination in which First Evergreen might engage. In addition,
as described above, Hovde's opinion to the First Evergreen Board was one of
many factors taken into consideration by the First Evergreen Board in
making its determination to approve the Merger Agreement.
Based upon the foregoing analyses and other investigations and
assumptions set forth in its opinion, without giving specific weightings to
any one factor or comparison, Hovde determined that the Merger Agreement
was fair from a financial point of view to the holders of First Evergreen
common stock. Hovde's fairness opinion does not take into account any
adjustment to the amount of common stock Old Kent would issue, as provided
for in the Merger Agreement.
THE SUMMARY OF THE PRESENTATION BY HOVDE TO THE FIRST EVERGREEN BOARD
AS SET FORTH ABOVE DOES NOT PURPORT TO BE A COMPLETE DESCRIPTION OF SUCH
PRESENTATION. THE PREPARATION OF A FAIRNESS OPINION INVOLVES VARIOUS
DETERMINATIONS AS TO THE MOST APPROPRIATE AND RELEVANT METHODS OF FINANCIAL
ANALYSES AND THE APPLICATION OF THOSE METHODS TO THE PARTICULAR
CIRCUMSTANCES, AND, THEREFORE, SUCH AN OPINION IS NOT READILY SUSCEPTIBLE
TO SUMMARY DESCRIPTION. FURTHERMORE, IN ARRIVING AT ITS OPINION, HOVDE DID
NOT ATTRIBUTE ANY PARTICULAR WEIGHT TO ANY ANALYSIS OR FACTOR CONSIDERED BY
IT, BUT RATHER MADE QUALITATIVE JUDGMENTS AS TO THE SIGNIFICANCE AND
RELEVANCE OF EACH ANALYSIS AND FACTOR. ACCORDINGLY, HOVDE BELIEVES THAT
ITS ANALYSES AND THE SUMMARY SET FORTH ABOVE MUST BE CONSIDERED AS A WHOLE
AND THAT SELECTING PORTIONS OF ITS ANALYSES, WITHOUT CONSIDERING ALL
FACTORS AND ANALYSES, COULD CREATE AN INCOMPLETE VIEW OF THE PROCESS
UNDERLYING THE ANALYSES SET FORTH IN ITS REPORT TO THE FIRST EVERGREEN
BOARD AND ITS FAIRNESS OPINION. IN PERFORMING ITS ANALYSES, HOVDE MADE
NUMEROUS ASSUMPTIONS WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL BUSINESS
AND ECONOMIC CONDITIONS AND OTHER MATTERS, MANY OF WHICH ARE BEYOND THE
CONTROL OF OLD KENT OR FIRST EVERGREEN. THE ANALYSES PERFORMED BY HOVDE
ARE NOT NECESSARILY INDICATIVE OF ACTUAL VALUES OR ACTUAL FUTURE
PERFORMANCE.
STOCK PRICE CONDITION
First Evergreen has the right to terminate the Merger Agreement and
not complete the Merger if the "Average Closing Price" is less than $33.33.
In other words, if the average of the per share closing prices of Old Kent
common stock on the 10 trading days ending on the 10th business day before
the scheduled closing of the Merger is less than $33.33, First Evergreen
has the right (but not the obligation) to terminate the Merger Agreement.
You should note that this right to terminate the Merger Agreement is only
available to First Evergreen after the Average Closing Price has been
determined, which will only be determinable once the closing of the Merger
is scheduled.
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Old Kent and First Evergreen have agreed to schedule the closing of
the Merger (the "Closing") on a mutually agreed upon date. If they cannot
agree upon a date, either party may schedule the Closing by giving the
other party 10 days' prior written notice of the desired closing date.
However, neither party may give such notice unless and until (a) all
applicable government approvals have been obtained (including the
expiration of any applicable waiting periods), and (b) the First Evergreen
stockholders have adopted the Merger Agreement.
REGULATORY APPROVALS
Before Old Kent and First Evergreen may complete the Merger, Old Kent
must receive the approval of the Federal Reserve Board. In addition, if
and when the Federal Reserve Board approves the Merger, Old Kent and First
Evergreen must wait an additional 30 days before completing the Merger to
allow the U.S. Department of Justice to take further action to delay or
block the Merger. If the Department of Justice does not issue adverse
comments during the first 15 days of this period, Old Kent and First
Evergreen may complete the Merger. Old Kent filed its application to
approve the Merger with the Federal Reserve Board on June 22, 1998.
While Old Kent expects to receive the Federal Reserve Board's approval, no
assurance can be made as to whether or when the approval will be given.
EFFECTIVE TIME OF THE MERGER
Old Kent and First Evergreen will agree upon the date and time that
the Merger will officially be complete, referred to as the "Effective Time"
of the Merger. In no event will the Effective Time be later than the first
business day of the month following the month in which the Closing occurs.
Old Kent is not required to permit the Effective Time to occur prior to
October 1, 1998. Old Kent and First Evergreen anticipate that the Closing
will occur in late September and the Effective Time will be October 1,
1998.
BANK CONSOLIDATION
Old Kent anticipates that shortly after the Effective Time, when First
Evergreen Bank and Old Kent Bank are both wholly owned subsidiaries of Old
Kent, Old Kent will consolidate First Evergreen Bank with and into Old Kent
Bank. First Evergreen has agreed to assist Old Kent in connection with
obtaining any necessary regulatory approvals for this bank consolidation.
DISTRIBUTION OF OLD KENT COMMON STOCK
As of the Effective Time, you will cease to be a stockholder of First
Evergreen. Certificates that represented your shares of First Evergreen
-26-
common stock outstanding immediately prior to the Effective Time ("Old
Certificates") will then represent the right to receive (a) shares of Old
Kent common stock having all of the voting and other rights of shares of
Old Kent common stock, and (b) cash in lieu of fractional shares; unless
you have effectively exercised appraisal rights (see "APPRAISAL RIGHTS"
below).
Any declaration of a dividend on Old Kent common stock payable to
shareholders of record of Old Kent as of a record date at or after the
Effective Time will include dividends on all shares of Old Kent common
stock issuable in the Merger. However, you will not receive dividends
payable to holders of record of Old Kent common stock after the Effective
Time of the Merger until you physically exchange your Old Certificates for
new Old Kent common stock certificates. Upon physical exchange of your Old
Certificates, you will be entitled to receive from Old Kent an amount equal
to all such dividends (without interest and less the amount of any taxes,
if any, that may have been imposed or paid) declared and paid with respect
to those shares.
As soon as practicable after the Effective Time, Old Kent will cause
Old Kent Bank or such other bank or trust company as Old Kent may designate
(the "Exchange Agent") to send you transmittal materials to be used to
exchange Old Certificates for stock certificates representing shares of Old
Kent common stock. The transmittal materials will contain instructions
with respect to the surrender of Old Certificates. In addition, Old Kent
will deliver to the Exchange Agent that number of shares of Old Kent common
stock issuable in the Merger and the amount of cash payable for fractional
shares in the Merger.
Promptly after you deliver your Old Certificates to the Exchange
Agent, the Exchange Agent will deliver new stock certificates to you. The
Exchange Agent will deliver certificates in the name and to the address
appearing on First Evergreen's stock records as of the Effective Time or in
such other name or to such other address as you may specify in the
transmittal documents received by the Exchange Agent. The Exchange Agent
will not be required to issue and deliver certificates to you until it has
received all of your Old Certificates (or an affidavit of loss and
indemnity bond for such certificate or certificates), together with
properly executed transmittal materials. Such Old Certificates,
transmittal materials, and affidavits must be in a form and condition
reasonably acceptable to Old Kent and the Exchange Agent. The Exchange
Agent will have discretion to determine reasonable rules and procedures
relating to the issuance and delivery of certificates of Old Kent Common
Stock and the payment for fractional shares.
After the Effective Time, Old Kent and First Evergreen will not
transfer on the stock transfer books of First Evergreen any shares of First
Evergreen Common Stock that were issued and outstanding immediately prior
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to the Effective Time of the Merger. If, after the Effective Time, a First
Evergreen stockholder properly presents Old Certificates to the Exchange
Agent for transfer, the Exchange Agent will cancel and exchange the Old
Certificates for stock certificates representing shares of Old Kent Common
Stock as provided in the Merger Agreement. After the Effective Time,
ownership of shares represented by Old Certificates may be transferred only
on the stock transfer records of Old Kent.
EXCLUSIVE COMMITMENT TO OLD KENT
BOARD RECOMMENDATION
In the Merger Agreement, the Board of Directors of First Evergreen
has agreed, except in the case of a "Fiduciary Event," to recommend the
adoption of the Merger Agreement to First Evergreen's stockholders. A
"Fiduciary Event" will be deemed to have occurred if and when First
Evergreen's Board of Directors has:
- Received in writing a "Superior Proposal," which is then still
pending;
- Received the written advice of independent legal counsel that the
failure to withdraw, modify, or change its recommendation would
more likely than not cause the Board of Directors to breach its
fiduciary duties to First Evergreen's stockholders under applicable
law;
- Determined in good faith that the failure to so withdraw, modify,
or change its recommendation would cause the Board of Directors to
breach its fiduciary duties to First Evergreen's stockholders under
applicable law; and
- Determined to accept and recommend the Superior Proposal to First
Evergreen's stockholders.
A "Superior Proposal" is defined to mean any bona fide, unsolicited
proposal concerning the sale or other change of control of First Evergreen
or First Evergreen Bank made by a third party on terms that the Board
determines in good faith, based on the written advice of a financial
adviser of nationally recognized reputation, to be more financially
favorable to First Evergreen's stockholders than the Merger Agreement.
The withdrawal, modification, or change of First Evergreen's Board's
recommendation of the Merger with Old Kent, if a Fiduciary Event has
occurred, will not be a breach of the Merger Agreement, provided that First
Evergreen provides Old Kent at least 48 hours advance notice. However,
Old Kent will retain its rights under the Stock Option Agreement (see "THE
MERGER--Stock Option Agreement" below).
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NO NEGOTIATIONS WITH THIRD PARTIES
In addition to the Board's commitment to recommend the Merger with Old
Kent to First Evergreen's stockholders, First Evergreen has agreed that it
(along with its directors, officers, employees, attorneys, investment
bankers, and other representatives) will not directly or indirectly solicit
or otherwise encourage any other party to make any proposal involving the
sale of First Evergreen or First Evergreen Bank. Further, First Evergreen
has agreed not to negotiate with any other party regarding a possible sale
of First Evergreen, except only in the event of what would otherwise
constitute a Fiduciary Event but for the fact that First Evergreen's Board
has yet to accept and recommend the Superior Proposal. Finally, again
except as otherwise required by law or in the case of what would otherwise
be a Fiduciary Event but for the fact that First Evergreen's Board has yet
to accept and recommend the Superior Proposal, First Evergreen has agreed
not to provide any confidential information about itself or First Evergreen
Bank to any party other than Old Kent. In such a case, prior to providing
any confidential information, First Evergreen must enter into a
confidentiality agreement with that third party on terms no less favorable
that the terms contained in its confidentiality agreement with Old Kent.
CONDUCT OF OLD KENT PENDING THE COMPLETION OF THE MERGER
In the Merger Agreement, Old Kent made certain covenants to First
Evergreen, including a covenant that it would take no action inconsistent
with the terms of the Merger Agreement and that it would comply in all
material respects with all laws. In addition, Old Kent agreed that it
would not increase its regular quarterly cash dividend except in a manner
consistent with past practice. These covenants remain in effect until the
Effective Time or until the Merger Agreement has been terminated.
CONDUCT OF FIRST EVERGREEN PENDING THE COMPLETION OF THE MERGER
In the Merger Agreement, First Evergreen made certain covenants to Old
Kent. These covenants, which remain in effect until the Effective Time or
until the Merger Agreement has been terminated, are summarized next.
ORDINARY COURSE OF BUSINESS
First Evergreen has agreed to conduct its business and manage its
property only in the usual, regular, and ordinary course and not otherwise,
in substantially the same manner as prior to the execution of the Merger
Agreement. In particular, First Evergreen has agreed, among other things,
to: (a) take no action that would be inconsistent with or contrary to the
Merger Agreement; (b) comply in all material respects with all laws and
regulations; (c) make no change in its Certificate of Incorporation,
-29-
By-Laws, or capital stock (except as contemplated by the Stock Option
Agreement); (d) use all reasonable efforts to preserve its business
organization intact; (e) charge off loans and maintain its reserve for loan
and lease losses in accordance with regulatory and accounting standards;
(f) except to reelect incumbent directors and to elect a director to fill a
then-existing board vacancy, not increase the number of directors or fill
any other vacancy on the Board of Directors or elect or appoint any person
to an executive office; (g) except for previously planned salary increases
and bonuses and a retention bonus plan of $100,000, take no action to
increase the salary or other compensation payable to, or fringe benefits of,
any officer or director, or any other class or group of employees as a class
or group, except for increases, agreements, or payments that are reasonable
in amount and consistent with the prior year and that are announced or made
only after first consulting with Old Kent; (h) take no action to enter into
any employment agreement that is not terminable by First Evergreen or First
Evergreen Bank without cost or penalty upon 60 days' or less notice, except
as contemplated by the Merger Agreement; (i) notify Old Kent of the threat
or commencement of any lawsuit or other proceeding against or relating to
First Evergreen or First Evergreen Bank, their directors, officers, or
employees in their capacities as such, or the Merger or the Merger
Agreement; and (j) make no charitable or similar contributions or gifts of
cash or other assets except for contributions that, in the aggregate, will
have a fair market value not greater than $800,000 for the year 1998
through the Effective Time.
DIVIDENDS
If the Merger is completed during calendar year 1998, First Evergreen
will pay a cash dividend equal to its current annual rate of $20 per share,
consistent with its past practice, but adjusted to reduce the dividend rate
to reflect any months remaining in 1998 after the Effective Time for which
a dividend would not be earned. The dividend per share will be computed
using the following formula:
"Months Completed"
$20 x --------------------------
12
where, "Months Completed" will equal each full calendar month in 1998
before the Effective Time. A calendar month is deemed "full" if the
Effective Time falls after at least 20 days of the first day of the
particular month.
If the Merger is not completed in 1998, First Evergreen will pay its
1998 dividend upon completion of the year and in a manner consistent with past
practice. If First Evergreen's payment of the cash dividend is not made or is
lessened because it would disqualify the Merger from being treated as a
pooling-of-interests for accounting purposes, Old Kent and First Evergreen
-30-
have agreed to make an equitable adjustment to the Exchange Ratio to the
extent that a portion of the dividend cannot be paid.
ENVIRONMENTAL INVESTIGATION
First Evergreen has agreed to permit Old Kent to conduct an
environmental assessment of each parcel of First Evergreen's currently
owned real property, any other real estate formerly owned by First
Evergreen or First Evergreen Bank, and real estate acquired by First
Evergreen Bank in satisfaction of a debt previously contracted.
If Old Kent discovers any facts or conditions that, in its reasonable
discretion, it believes could potentially pose a current or future risk of
a material liability, interfere with use, or cause material diminution of
value of the property, then Old Kent shall identify that risk to First
Evergreen, identify the facts or conditions underlying that risk, and
provide First Evergreen with a copy of the environmental assessment for
that property. In addition, Old Kent will obtain an estimate of the
proposed scope of work and maximum foreseeable cost of any further
environmental investigation, remediation, or other follow-up work it
reasonably deems necessary or appropriate to assess and, if necessary or
appropriate, remediate the environmental risk.
All work plans for any investigation and remediation shall be mutually
satisfactory to Old Kent and First Evergreen. First Evergreen may, at its
option and expense, undertake mutually agreed upon investigation and
remediation to be completed prior to the Closing.
If (a) Old Kent and First Evergreen are unable to agree upon a course
of action to promptly complete any investigation and remediation and/or a
mutually acceptable modification to the Merger Agreement, and (b) Old Kent
cannot be reasonably assured that the after-tax cost of the sum of (i) the
actual cost of all investigative and remedial or other corrective actions
or measures undertaken by First Evergreen, (ii) the estimated cost of all
investigative and remedial or other corrective actions or measures not
undertaken by First Evergreen but required by law or necessary to avoid
future exposure to material liability, and (iii) all diminution of the
value of such properties; in the aggregate, will not exceed $1,000,000;
then Old Kent may terminate the Merger Agreement.
DATA PROCESSING CONTRACTS
First Evergreen may not enter into any new data processing agreement
without the consent of Old Kent unless such agreement is necessary for First
Evergreen to conduct business in the ordinary course. First Evergreen must
advise Old Kent of all anticipated renewals or extensions of existing data
processing service agreements, data processing software license agreements,
and data processing hardware lease agreements with independent vendors.
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First Evergreen must cooperate with Old Kent in negotiating with
those vendors the length of any extension or renewal term of those
agreements, that, unless otherwise agreed with Old Kent, must not exceed
one year from the date of renewal. First Evergreen has agreed to send to
each vendor, as and when due, such notices of nonrenewal as may be
necessary or appropriate under the terms of the applicable agreements to
prevent those agreements from automatically renewing for a term of more
than one year from the date of renewal, except as otherwise agreed between
First Evergreen and Old Kent.
INSURANCE AND INDEMNIFICATION
Old Kent has agreed to honor any and all rights to indemnification and
advancement of expenses existing in favor of the directors and officers of
First Evergreen and First Evergreen Bank under their respective Certificate
of Incorporation, Articles of Association, and By-Laws, that survive the
Merger and continue with respect to acts or omissions occurring before the
Effective Time, with the same force and effect as prior to the Effective
Time.
In addition, Old Kent has agreed that the officers and directors of
First Evergreen and First Evergreen Bank shall be covered for a period of
at least 4 years from the Effective Time by the directors' and officers'
liability insurance policy maintained by First Evergreen and First
Evergreen Bank, provided that Old Kent may substitute policies of at least
the same coverage and amounts containing terms and conditions that are not
materially less advantageous than such policy, with respect to acts or
omissions occurring prior to the Effective Time that were committed by such
officers and directors in their capacity as such. However, in no event
will Old Kent be required to expend more than $140,000 to maintain or
procure insurance coverage pursuant to the Merger Agreement. If Old Kent does
not advise First Evergreen in writing prior to 20 days before the scheduled
Closing of the Merger that it has procured such coverage for at least
4 years or agrees to do so without regard to the $140,000 limit, First
Evergreen shall be permitted, in lieu of receiving the foregoing insurance
coverage, to procure tail coverage for past acts and omissions for a single
premium amount not in excess of the $140,000 limit.
MANAGEMENT OF OLD KENT AFTER THE MERGER
Upon completion of the Merger and the consolidation of First Evergreen
Bank into Old Kent Bank, Old Kent's directors and executive officers will
remain the same. None of the directors of First Evergreen will become
directors of Old Kent. However, Old Kent anticipates that some of the
executive officers of First Evergreen or First Evergreen Bank will become
officers of Old Kent Bank.
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CONDITIONS TO CLOSING THE MERGER
MUTUAL CONDITIONS TO CLOSE
The obligations of each Old Kent and First Evergreen to complete the
Merger are subject to the fulfillment of certain conditions, including the
following:
- The stockholders of First Evergreen must have adopted the Merger
Agreement;
- Each company's representations and warranties to the other in the
Merger Agreement must be true as of April 21, 1998 (the date the
Merger Agreement was signed) and as of the Effective Time, except
where the failure of such representations and warranties to be
true, individually or in the aggregate, does not or would not
result in a "Material Adverse Effect" (as defined below) on the
breaching party;
- Each company must have performed in all material respects all of
the agreements, conditions, and covenants to be completed at or
prior to the Closing made by that company in the Merger
Agreement;
- Old Kent and First Evergreen must not be subject to any order,
decree, or injunction by any court or governmental authority that
enjoins or prohibits the consummation of the Merger;
- The registration statement of which this Prospectus and Proxy
Statement is a part must have been declared effective by the SEC
and must not be subject to a stop order or threatened stop order;
and
- Each company's legal counsel must provide an opinion to the other
company with respect to certain legal matters.
The term "Material Adverse Effect" is defined to mean any change or
effect that, individually or when taken together with all other such
changes or effects that have occurred prior to the date of determination of
the occurrence of the Material Adverse Effect, is or is reasonably likely
to have a material negative impact on (a) the business, assets, financial
condition, results of operations, or value of Old Kent and its
subsidiaries, taken as a whole, or, as the case may be, First Evergreen and
First Evergreen Bank, taken as a whole; or (b) the ability of Old Kent or
First Evergreen, as the case may be, to satisfy the applicable closing
conditions or consummate the Merger or perform its obligations under the
Stock Option Agreement. Notwithstanding the above, fees and expenses
reasonably related to the Merger (such as any additional insurance
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coverages, employment and consulting services, legal, accounting, and
investment banking fees and expenses, and severance and retention
provisions) are not included in any determination of a Material Adverse
Effect.
OLD KENT'S CONDITIONS TO CLOSE
In addition, Old Kent's obligation to complete the Merger is subject
to the fulfillment of certain other conditions, including the following:
- Each governmental agency having jurisdiction over the Merger must
have approved or consented to the Merger without imposing any
non-standard conditions to approval that are not reasonably
satisfactory to Old Kent;
- There must not be any investigation, lawsuit, or other proceeding
pending or threatened against or relating to First Evergreen or
First Evergreen Bank (or their officers or directors, in their
capacity as such) that may result in a liability to First
Evergreen that could have a Material Adverse Effect on First
Evergreen;
- Old Kent must have received a tax opinion from Warner Norcross &
Judd LLP to the effect that, among other matters, Old Kent will
not recognize gain or loss on its receipt of assets of First
Evergreen in exchange for the shares of Old Kent common stock to
be issued in the Merger;
- First Evergreen must have obtained the consent of the vendor
under certain designated contracts (E.G., data processing
contracts and a real estate lease for a First Evergreen Bank
branch office) and any other agreement containing a provision
triggered by a change of control of First Evergreen and the
result of which could have a Material Adverse Effect on First
Evergreen;
- Old Kent must have received a letter from First Evergreen's
independent accountants to the effect that First Evergreen is
eligible to participate in a pooling-of-interests business
combination; and
- Old Kent must have received a letter from its independent
accountants to the effect that the Merger, if consummated as
contemplated, should qualify as a transaction to be accounted for
as a pooling-of-interests.
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FIRST EVERGREEN'S CONDITIONS TO CLOSE
In addition, First Evergreen's obligation to complete the Merger
is subject to the fulfillment of certain other conditions, including the
following:
- Each governmental agency having jurisdiction over the Merger must
have approved or consented to the Merger;
- First Evergreen must have received a tax opinion from Warner
Norcross & Judd LLP (see "THE MERGER--Material Federal Income Tax
Consequences" below);
- First Evergreen's financial advisor, Hovde Financial, Inc., must
have delivered an opinion that, as of April 21, 1998 and renewed
as of the date of this Prospectus and Proxy Statement, the Merger
Agreement is fair to First Evergreen's stockholders from a
financial point of view and that opinion must not have been
subsequently withdrawn; and
- The Old Kent common stock to be issued in the Merger must have
been authorized for listing on The Nasdaq Stock Market.
TERMINATION
Prior to the Effective Time, the Merger Agreement may be
terminated by Old Kent or First Evergreen by mutual consent, or by either
of them if the Merger has not been completed on or before March 31, 1999.
OLD KENT
In addition, Old Kent may terminate the Merger Agreement and
abandon the Merger on its own action upon the occurrence of certain events
specified in the Merger Agreement, including among others, the following:
- Any of the conditions on Old Kent's obligation to complete the
Merger has not been met or waived by Old Kent, at such time as
such condition can no longer be satisfied;
- Certain environmental risks exist that, in the aggregate could
amount to an after-tax liability or loss of value exceeding
$1,000,000 (see "THE MERGER--Business of First Evergreen Pending
the Completion of the Merger--ENVIRONMENTAL INVESTIGATION"
above);
- Old Kent's independent accountants advise Old Kent that the
Merger is unlikely to qualify for pooling-of-interests
accounting treatment; or
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- First Evergreen's stockholders fail to adopt the Merger Agreement
at the Special Meeting.
FIRST EVERGREEN
In addition, First Evergreen may terminate the Merger Agreement
and abandon the Merger on its own action upon the occurrence of certain
events specified in the Merger Agreement, including among others, the
following:
- Any of the conditions on First Evergreen's obligation to complete
the Merger have not been met or waived by First Evergreen, at such
time as such condition can no longer be satisfied; or
- The Average Closing Price is less than $33.33. See "--Stock Price
Condition" above.
EFFECT OF TERMINATION
If either Old Kent or First Evergreen terminates the Merger Agreement
in accordance with its terms, neither Old Kent, First Evergreen, nor any of
their directors will be liable to the others. However, the Stock Option
Agreement (unless it is not otherwise terminated) and certain provisions
regarding confidentiality and expenses will survive the termination of the
Merger Agreement. In addition, neither company will escape liability to
the other for any liabilities or damages arising out of its willful breach
of any provision in the Merger Agreement.
DESCRIPTION OF OLD KENT CAPITAL STOCK
Old Kent's authorized capital stock consists of 300,000,000 shares of
common stock, $1.00 par value, and 25,000,000 shares of preferred stock, no
par value ("Preferred Stock"), of which 3,000,000 shares are designated
Series A Preferred Stock, 300,000 shares are designated Series B Preferred
Stock, and 1,000,000 are designated Series C Preferred Stock. As of
June 30, 1998, Old Kent had outstanding 89,622,631 shares of common stock
(which is equivalent to 94,156,572 shares after giving effect to the Old Kent
Stock Dividend) and no shares of Preferred Stock.
COMMON STOCK. Old Kent shareholders are entitled to dividends out of
funds legally available for that purpose when, as and if declared by the
Board of Directors. The dividend rights of Old Kent common stock are
subject to the rights of Old Kent Preferred Stock that has been or may be
issued. Each holder of Old Kent common stock is entitled to one vote for
each share held on each matter presented for shareholder action. Old Kent
common stock has no preemptive rights, cumulative voting rights, conversion
rights, or redemption provisions.
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In the case of any liquidation, dissolution, or winding up of the
affairs of Old Kent, Old Kent shareholders will be entitled to receive, pro
rata, any assets distributable to common shareholders in respect of the
number of shares held by them. The liquidation rights of Old Kent common
stock are subject to the rights of holders of any Old Kent Preferred Stock
that has been or may be issued.
PREFERRED STOCK PURCHASE RIGHTS. Each share of Old Kent common stock
has, and each share of Old Kent common stock to be issued in the Merger
will have, attached to it the number of Series C Preferred Stock Purchase
Rights ("Old Kent Rights") issued pursuant to a Rights Agreement, dated as
of January 20, 1997, between Old Kent and Old Kent Bank (the "Old Kent
Rights Agreement") represented by each share of Old Kent common stock, as
long as the Old Kent Rights are not separately transferable. As of the
date of this Prospectus and Proxy Statement, each share of Old Kent common
stock represents 0.4535 of an Old Kent Right. The number of Old Kent
Rights represented by each share of Old Kent common stock is subject to
adjustment upon the occurrence of certain events set forth in the Old Kent
Rights Agreement. See "THE MERGER--Comparison of Rights of Old Kent's and
First Evergreen's Stockholders" below for a more detailed discussion of Old
Kent Rights.
PREFERRED STOCK. Old Kent is authorized to issue shares of Preferred
Stock from time to time in one or more series. Preferred Stock may have
such designations, powers, preferences, and relative participating,
optional, or other rights and such qualifications, limitations, or
restrictions as may be provided for the issue of such series by resolution
adopted by Old Kent's Board of Directors. Such Preferred Stock may have
priority over Old Kent common stock as to dividends and as to distribution
of Old Kent's assets upon any liquidation, dissolution, or winding up of
Old Kent. Such Preferred Stock may be redeemable for cash, property, or
rights of Old Kent, may be convertible into shares of Old Kent common
stock, and may have voting rights entitling the holder to not more than one
vote per share on each matter submitted for shareholder action.
STOCK OPTION AGREEMENT
As an inducement and condition to Old Kent's willingness to enter
into the Merger Agreement, First Evergreen entered into the Stock Option
Agreement with Old Kent. The Stock Option Agreement is attached as
Appendix B to this Prospectus and Proxy Statement.
Pursuant to the Stock Option Agreement, First Evergreen has granted
Old Kent an option to purchase up to 80,012 shares of First Evergreen
common stock (or, up to 19.99% of the number of shares of First Evergreen
common stock) (the "Option"). The exercise price of the Option is $1,067
per share, subject to adjustment under specified circumstances described
below. The exercise price, as so adjusted, is referred to as the "Option
Price."
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The Option will become exercisable in whole or in part if, but only
if, both an "Initial Triggering Event" and a "Subsequent Triggering Event"
(as each of those terms are defined below) occur with respect to First
Evergreen prior to the expiration of the Option. The purchase of any
shares of First Evergreen common stock pursuant to the Option is subject to
compliance with applicable law, including the receipt of necessary
approvals under the Bank Holding Company Act of 1956.
Under the Stock Option Agreement, an "Initial Triggering Event" occurs
at the earliest of any of the following events or transactions:
- First Evergreen or First Evergreen Bank, without Old Kent's prior
written consent, enters into an agreement to engage in an
"Acquisition Transaction" (as defined below) with a third party,
or the Board of Directors of First Evergreen recommends that the
stockholders of First Evergreen adopt or accept any Acquisition
Transaction other than the Merger Agreement with Old Kent;
- A third party acquires beneficial ownership (or the right to
acquire beneficial ownership) of 10% or more of the outstanding
shares of First Evergreen common stock;
- The stockholders of First Evergreen have voted and failed to
approve the Merger Agreement at the Special Meeting
(or the Special Meeting was not held in violation of the Merger
Agreement) and prior to the Special Meeting (or if the Special
Meeting was canceled, prior to such cancellation), it was
publicly announced that a third party made, or disclosed an
intention to make, a proposal to engage in an Acquisition
Transaction with respect to First Evergreen;
- First Evergreen's Board of Directors withdraws or modifies (or
publicly announces its intention to withdraw or modify) in any
manner adverse to Old Kent its recommendation that the
stockholders of First Evergreen approve the Merger Agreement, or
First Evergreen authorizes, recommends, or proposes (or publicly
announces its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with a third
party;
- A third party makes a proposal to First Evergreen or its
stockholders to engage in an Acquisition Transaction and such
proposal was publicly announced;
- A third party files with the SEC a registration statement or
tender offer materials with respect to a potential exchange offer
that would constitute an Acquisition Transaction (or files a
preliminary proxy statement with the SEC with respect to a
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potential vote by its stockholders to approve the issuance of
shares to be offered in such an exchange offer);
- First Evergreen willfully breaches any of its obligations
contained in the Merger Agreement in anticipation of engaging in
an Acquisition Transaction and following such breach, Old Kent
would be entitled to terminate the Merger Agreement (whether
immediately or after the giving of notice or passage of time or
both);
- A third party files an application or notice with the Federal
Reserve Board or other federal or state bank regulatory or
antitrust authority for approval to engage in an Acquisition
Transaction; or
- A Fiduciary Event exists.
The term "Acquisition Transaction" is defined to include any of the
following transactions: (a) a merger or any similar transaction involving
First Evergreen or First Evergreen Bank (other than a merger or similar
transaction in which the First Evergreen stockholders--as of a time
immediately prior to the transaction--own at least 50% of the outstanding
First Evergreen common stock immediately after the transaction); (b) a
purchase, lease, or other acquisition of all or substantially all of the
assets or deposits of First Evergreen or First Evergreen Bank; (c) a
purchase or other acquisition of securities representing 10% or more of the
voting power of First Evergreen or First Evergreen Bank; or (d) any
substantially similar transaction.
Under the Stock Option Agreement, a "Subsequent Triggering Event"
generally occurs at the earlier of the following events:
- The acquisition by a third party of beneficial ownership of 25%
or more of the then-outstanding First Evergreen common stock; or
- First Evergreen or First Evergreen Bank, without having received
the prior written consent of Old Kent, enters into an agreement
to engage in an Acquisition Transaction with a third party, or
the Board of Directors of First Evergreen recommends that the
stockholders of First Evergreen approve or accept any Acquisition
Transaction, other than the Merger with Old Kent; except that for
a purchase or other acquisition of First Evergreen's voting
securities, the third party must agree to acquire more than 25%
of the voting power of First Evergreen's securities.
The Option will expire upon the earliest of: (a) the Effective Time
of the Merger; (b) the termination of the Merger Agreement in accordance
with its terms, assuming that the termination occurs prior to the
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occurrence of an Initial Triggering Event (except in certain cases in which
Old Kent terminates the Merger Agreement as a result of certain acts or
omissions of First Evergreen); or (c) 18 months after the termination of
the Merger Agreement if such termination follows an Initial Triggering
Event or is a "listed termination" (as defined in the Stock Option
Agreement). Old Kent may not exercise the Option at any time when it is in
material breach of the Merger Agreement such that First Evergreen would be
entitled to terminate the Merger Agreement pursuant to its terms. The
Stock Option Agreement automatically terminates if First Evergreen
terminates the Merger Agreement as a result of a material breach by Old
Kent or Old Kent fails to obtain the consent or approval of any federal or
state governmental authority necessary to complete the Merger.
If the Option becomes exercisable, Old Kent may exercise it in whole
or in part within 6 months following the applicable Subsequent Triggering
Event. Old Kent's right to exercise the Option and certain other rights
under the Stock Option Agreement are subject to an extension in order to
obtain required regulatory approvals and comply with applicable regulatory
waiting periods and to avoid liability under Section 16(b) of the Exchange
Act. The Option Price and the number of shares issuable under the Option
would be adjusted in the event of specified changes in the capital stock of
First Evergreen. In addition, First Evergreen has granted Old Kent certain
registration rights with respect to the shares of First Evergreen common
stock issued or issuable pursuant to the Option.
The Stock Option Agreement also provides that at any time after the
occurrence of a "Repurchase Event" (as defined below), upon a request by
Old Kent, First Evergreen must repurchase the Option and all or any part of
the shares received upon the full or partial exercise of the Option
("Option Shares"). Such repurchase of the Option by First Evergreen from
Old Kent will be at a price per share equal to the amount by which the
"Market/Offer Price" (as defined below) exceeds the Option Price. A
repurchase of Option Shares will be at a price per share equal to the
Market/Offer Price.
The term "Market/Offer Price" means the highest of: (a) the price per
share at which a tender or exchange offer has been made for First Evergreen
common stock; (b) the price per share of First Evergreen common stock that
any third party is to pay pursuant to an agreement with First Evergreen;
(c) the highest sale price per share of First Evergreen common stock within
the six-month period immediately preceding the date that notice to
repurchase is given; or (d) in the event of a sale of all or substantially
all of First Evergreen's assets or deposits, the sum of the price paid for
such assets or deposits and the current market value of the remaining
assets (as determined by a nationally recognized investment banking firm),
divided by the number of shares of First Evergreen common stock outstanding
at the time of such sale.
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The term "Repurchase Event" means the acquisition by any third party
of beneficial ownership of 50% or more of the outstanding shares of First
Evergreen common stock or the completion of an Acquisition Transaction
where the purchasing entity acquires 50% or more of the voting power of
First Evergreen or First Evergreen Bank.
The Stock Option Agreement also provides that Old Kent may, at any
time following a Repurchase Event and prior to the expiration of the
Option, surrender the Option (and any Option Shares obtained upon the
exercise of the Option and still held by Old Kent) for a surrender fee
equal to $23.35 million plus, if applicable, Old Kent's purchase price with
respect to any Option Shares, and minus any net cash received pursuant to
the sale of Option Shares to any third party (less the purchase price of
such Option Shares) (the "Surrender Fee"). Old Kent may not exercise its
right to surrender the Option and receive the Surrender Fee if First
Evergreen has previously repurchased any Option Shares.
If, prior to the expiration of the Option: (a) First Evergreen
enters into a transaction in which First Evergreen is not the surviving
corporation, (b) certain fundamental changes in the capital stock of First
Evergreen occur, or (c) First Evergreen sells all or substantially all of
its or certain of First Evergreen Bank's assets; the Option shall be
converted into a substitute option (the "Substitute Option"), with terms
similar to those of the Option, to purchase capital stock of the entity
that is the effective successor to First Evergreen.
The Stock Option Agreement provides that neither Old Kent nor First
Evergreen may assign any of its rights or obligations under it without the
written consent of the other party, except that if a Subsequent Triggering
Event occurred prior to the expiration of the Option, Old Kent may, subject
to certain limitations, assign its rights and obligations under the Stock
Option Agreement.
Arrangements such as the Stock Option Agreement are customarily
entered into in connection with mergers and acquisitions between financial
institutions such as Old Kent and First Evergreen in an effort to increase
the likelihood that the transactions will be consummated in accordance with
their terms and to compensate the grantee (E.G., Old Kent) of such an
option for its efforts undertaken and the expenses, losses, and opportunity
costs incurred in connection with the transactions and where the
transaction is not consummated under certain circumstances involving an
acquisition or potential acquisition of the issuer of the option (E.G.,
First Evergreen) by a third party. Old Kent and First Evergreen entered
into the Stock Option Agreement to accomplish these objectives.
The existence of the Option could significantly increase the cost to
a potential purchaser of acquiring First Evergreen compared to the cost had
Old Kent and First Evergreen had not entered into the Stock Option
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Agreement. In addition, the provisions of the Stock Option Agreement may
prevent a potential purchaser from accounting for its acquisition of First
Evergreen using the pooling-of-interests method of accounting. As a
result, the Stock Option Agreement may have the effect of discouraging or
precluding offers by third parties to acquire First Evergreen, even if such
a third party was prepared to offer to pay consideration to First
Evergreen's stockholders that has a higher current market price than the
shares of Old Kent common stock to be received by First Evergreen
stockholders pursuant to the Merger Agreement.
To the best knowledge of Old Kent and First Evergreen, as of the date
of this Prospectus and Proxy Statement, no event giving rise to the right
to exercise the Option has occurred.
COMPARISON OF RIGHTS OF OLD KENT'S AND FIRST EVERGREEN'S STOCKHOLDERS
Upon completion of the Merger, you will become a shareholder of Old
Kent (except in limited circumstances discussed below). As an Old Kent
shareholder, your rights will be governed by Old Kent's Restated Articles
of Incorporation and Bylaws. Old Kent's organizational documents differ in
certain material respects from First Evergreen's Certificate of
Incorporation and By-Laws. In addition, as a shareholder of Old Kent (a
Michigan corporation), your rights will also be governed by the Michigan
Business Corporation Act ("MBCA"), rather than the Delaware General
Corporate Law (the "DGCL"), as you currently are as a stockholder of First
Evergreen (a Delaware corporation).
The following comparison of the MBCA, the Old Kent Restated Articles
of Incorporation, and Bylaws, on the one hand, and the DGCL, the First
Evergreen Certificate of Incorporation and By-Laws, on the other, is not
intended to be complete and is qualified in its entirety by reference to
the Old Kent Restated Articles of Incorporation, the Old Kent Bylaws, the
First Evergreen Certificate of Incorporation, and the First Evergreen
By-Laws. Copies of these documents are available upon request. See "WHERE
YOU CAN FIND MORE INFORMATION" below.
ANTI-TAKEOVER PROVISIONS -- IN GENERAL
Old Kent's Restated Articles of Incorporation and Bylaws contain
certain provisions that could prevent or delay the acquisition of Old Kent
by means of a tender offer, a proxy contest, or otherwise. These
provisions could also limit shareholders' participation in certain types of
business combinations or other transactions that might be proposed in the
future, regardless whether such transactions were favored by a majority of
shareholders, and could enhance the ability of officers and directors to
retain their positions. In general, First Evergreen's Certificate of
Incorporation and By-Laws do not contain similar provisions. The material
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differences in the companies' organizational documents with respect to such
anti-takeover provisions are discussed separately below under separate
sections, such as "Size and Classification of the Board of Directors,"
"Removal of Directors," "Shareholder Nominations," and "Shareholder Rights
Plan."
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS
Pursuant to Old Kent's Restated Articles of Incorporation, Old Kent's
Board of Directors is divided into 3 classes, as nearly equal in number as
possible, with the term of office of one class expiring each year. The
number of directors is fixed by a resolution of the Board of Directors
receiving at least 75% approval of the entire board, but in no event may
the number of directors be less than 3. The current number of directors of
Old Kent is 19. As a result of the classification of Old Kent's Board of
Directors, it would normally take at least two annual meetings of
shareholders to effect a change in a majority of the Board of Directors of
Old Kent.
While permissible under the DGCL, First Evergreen's By-Laws do not
provide for the classification of directors into different classes.
Instead, each director is elected for a one year term and holds office
until his or her successor is elected and qualified. The current number of
directors and the number required under First Evergreen's By-Laws is 5.
The requisite number of directors may be changed by amending the By-laws.
REMOVAL OF DIRECTORS
Under Old Kent's Restated Articles of Incorporation, a director may be
removed from office at any time prior to the expiration of his or her term,
but only for "cause." Except as may be provided otherwise by law, cause
for removal shall exist if: (a) the director whose removal is proposed has
been convicted of a felony by a court of competent jurisdiction and such
conviction is no longer subject to direct appeal; (b) the director has been
adjudicated by a court of competent jurisdiction to be liable for
negligence or misconduct in the performance of his or her duty to the
corporation in a matter of substantial importance to the corporation and
such adjudication is no longer subject to a direct appeal; (c) the director
has become mentally incompetent, whether or not so adjudicated, which
mental incompetency directly affects his or her ability as a director of
the corporation; (d) the director's actions or failure to act are deemed by
the Board of Directors to be in derogation of the director's duties; or (e)
the director's removal is required or recommended by the Federal Reserve
Board. Removal for cause, as cause is defined in (a) or (b) above, must be
approved by vote of a majority of the total number of directors or by
majority vote of shareholders. Removal for cause, as cause is defined in
(c), (d), or (e) above, must be approved by at least 75% of the total
number of directors.
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Under DGCL, unless otherwise provided in a corporation's certificate
of incorporation or by-laws, one or more directors may be removed with or
without cause upon a majority vote of the stockholders. First Evergreen's
Certificate of Incorporation and By-Laws make no provision regarding the
removal of directors.
SHAREHOLDER NOMINATIONS
Under Old Kent's Restated Articles of Incorporation, a shareholder may
nominate an individual for director at any annual meeting of shareholders
or at any special meeting of shareholders called for election of directors
(referred to as an "Election Meeting") may be made by the Board of
Directors or by a shareholder under certain limited circumstances described
below. Nominations made by the Board of Directors are made at a meeting of
the Board of Directors, or by written consent of directors in lieu of a
meeting, not less than 20 days prior to the date of an Election Meeting.
A shareholder may make a nomination at an Election Meeting if, and
only if, such shareholder has delivered a notice to the Secretary of Old
Kent setting forth with respect to each proposed nominee: (a) the name,
age, business address, and residence address of the nominee; (b) the
principal occupation or employment of the nominee; (c) the number of shares
of capital stock of the corporation that are beneficially owned by the
nominee; (d) a statements that the nominee is willing to be nominated; and
(e) such other information concerning the nominee as would be required
under the rules of the SEC in a proxy statement soliciting proxies for the
election of such nominee. The notice must be delivered not less than 120
days prior to the date of the Election Meeting in the case of an annual
meeting and not more than 7 days following the date of notice of the
Election Meeting in the case of a special meeting.
Neither the DGCL, First Evergreen's Certificate of Incorporation, nor
First Evergreen's By-Laws establish procedures regarding shareholder
nominations of directors.
SHAREHOLDER RIGHTS PLAN
The Board of Directors of Old Kent has adopted a shareholder rights
plan. This plan is designed to protect the shareholders of Old Kent
against unsolicited attempts to acquire control of Old Kent in a manner
that does not offer a fair price to all of the shareholders.
Each full Old Kent Right, when exercisable, entitles a shareholder of
Old Kent to purchase one one-hundredth of a share of Series C Preferred
Stock from Old Kent at a price of $160. The Old Kent Rights become
exercisable if (a) a person or group (an "Acquiring Person") has acquired,
or has obtained the right to acquire, 15% or more of the outstanding shares
of Old Kent common stock, (b) an Acquiring Person commenced a tender offer
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or exchange offer that would result in the Acquiring Person owning 15% or
more of the outstanding shares of Old Kent common stock, or (c) a person or
group already owning 10% of the outstanding shares of Old Kent common stock
is determined by Old Kent's Board of Directors to be an "Adverse Person"
(as defined in the Old Kent Rights Agreement).
If after the Old Kent Rights become exercisable, (a) Old Kent was the
surviving corporation in a merger with an Acquiring Person and Old Kent
common stock was not changed or exchanged, (b) an Acquiring Person was to
engage in one or more "self-dealing" transactions deemed to be unfair to
Old Kent by the Old Kent Board of Directors, (c) an Acquiring Person was to
become the beneficial owner of more than 15% of the then outstanding shares
of Old Kent common stock, (d) a person had been or was designated as an
Adverse Person by Old Kent's Board of Directors in accordance with the Old
Kent Rights Agreement; then each holder of an Old Kent Right would have the
right to receive, upon exercise, Old Kent common stock having a value equal
to two times the exercise price of the Old Kent Right.
In addition, after an Acquiring Person has acquired, or obtained the
right to acquire, 15% or more of the outstanding shares of Old Kent common
stock and the Acquiring Person causes Old Kent to merge into the Acquiring
Person or causes 50% or more of Old Kent's assets to be sold or
transferred, each holder of an Old Kent Right would have the right to
receive, upon exercise, common stock of the Acquiring Person having a value
equal to two times the exercise price of the Old Kent Right.
Old Kent is entitled to redeem the Old Kent Rights at $0.01 per Old
Kent Right at any time until 10 days following the public announcement that
an Acquiring Person has acquired, or has obtained the right to acquire, 15%
or more of the outstanding shares of Old Kent common stock.
First Evergreen has not adopted a similar shareholder rights plan.
STATE ANTI-TAKEOVER LAWS
Certain provisions of the Michigan Business Corporation Act establish
a statutory scheme similar to the supermajority and fair price provisions
found in many corporate charters (the "Fair Price Act"). The Fair Price
Act provides that a supermajority vote of 90% of the shareholders and no
less than two-thirds of the votes of noninterested shareholders must
approve a "business combination." The Fair Price Act defines a "business
combination" to encompass any merger, consolidation, share exchange, sale
of assets, stock issue, liquidation, or reclassification of securities
involving an "interested shareholder" or certain "affiliates." An
"interested shareholder" is generally any person who owns 10% or more of
the outstanding voting shares of the corporation. An "affiliate" is a
person who directly or indirectly controls, is controlled by, or is under
common control with a specified person.
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The supermajority vote required by the Fair Price Act does not apply
to business combinations that satisfy certain conditions. These conditions
include, among others: (a) the purchase price to be paid for the shares of
the corporation in the business combination must be at least equal to the
highest of either (i) the market value of the shares or (ii) the highest
per share price paid by an interested shareholder within the preceding
two-year period or in the transaction in which the shareholder became an
interested shareholder, whichever is higher; and (b) once becoming an
interested shareholder, the person may not become the beneficial owner of
any additional shares of the corporation except as part of the transaction
that resulted in the interested shareholder becoming an interested
shareholder or by virtue of proportionate stock splits or stock dividends.
The requirements of the Fair Price Act do not apply to business
combinations with an interested shareholder that the Board of Directors has
approved or exempted from the requirements of the Fair Price Act by
resolution prior to the time that the interested shareholder first became
an interested shareholder.
The MBCA also regulates the acquisition of "control shares" of large
public Michigan corporations (the "Control Share Act"). The Control Share
Act applies to Old Kent and its shareholders. The Control Share Act
establishes procedures governing "control share acquisitions." A control
share acquisition is defined as an acquisition of shares by an acquiror
which, when combined with other shares held by that person or entity, would
give the acquiror voting power at or above any of the following thresholds:
20%, 33 %, and 50%. Under the Control Share Act, an acquiror may not vote
"control shares" unless the corporation's disinterested shareholders
(defined to exclude the acquiring person, officers of the target
corporation and directors of the target corporation who are also employees
of the corporation) vote to confer voting rights on the control shares.
The Control Share Act does not affect the voting rights of shares owned by
an acquiring person prior to the control share acquisition. The Control
Share Act entitles corporations to redeem control shares from the acquiring
person under certain circumstances. In other cases, the Control Share Act
confers dissenters' right upon all of a corporation's shareholders except
the acquiring person.
Section 203 of the DGCL would prohibit a "business combination" (as
defined in Section 203, generally including mergers, sales and leases of
assets, issuances of securities and similar transactions) by First
Evergreen or a subsidiary with an "interested stockholder" (as defined in
Section 203, generally the beneficial owner of 15% or more of First
Evergreen' voting stock) within three years after the person or entity
becomes an interested stockholder, unless (a) prior to the person or entity
becoming an interested stockholder, the business combination or the
transaction pursuant to which such person or entity became an interested
stockholder will have been approved by the First Evergreen Board, (b) upon
the consummation of the transaction in which the person or entity became an
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interested stockholder, the interested stockholder holds at least 85% of
the voting stock of First Evergreen (excluding, for purposes of determining
the number of shares outstanding, shares held by persons who are both
officers and directors of First Evergreen and shares held by certain
employee benefit plans), or (c) the business combination is approved by the
First Evergreen Board and by the holders of at least two-thirds of the
outstanding voting stock of First Evergreen, excluding shares held by the
interested stockholder. In connection with approving the Merger Agreement,
the First Evergreen Board approved the Merger, so that the Merger is not
subject to the limitations set forth in Section 203.
APPRAISAL/DISSENTERS' RIGHTS
Under the MBCA, a shareholder who does not vote in favor of certain
corporate actions may have the right to obtain an appraisal of those shares
in certain circumstances, and the right to receive cash in exchange for
those shares (referred to as "rights of dissent"). The MBCA recognizes
rights of dissent in connection with certain amendments to the articles of
incorporation, mergers, consolidations, sales, or other dispositions of all
or substantially all of the assets of a corporation, certain acquisitions
for stock, and approval of a control share acquisition. Under Michigan law,
rights of dissent are generally not available to Old Kent shareholders
in connection with mergers, consolidations, or sales of assets because
shares of Old Kent common stock are held of record by more than 2,000
persons.
However, Old Kent's Restated Articles of Incorporation provide
that any Old Kent shareholder may dissent from any plan of merger or
consolidation to which Old Kent is a party or any sale, lease, exchange, or
other disposition of all or substantially all of the assets of Old Kent not
in the usual or regular course of business, in the manner, with the rights
and subject to the requirements applicable to dissenting shareholders as
provided in the MBCA, without regard to the exception to a shareholder's
right to dissent provided in the MBCA. However, this right of dissent does
not apply to any corporate action that is approved by an affirmative vote
of at least 50% of the entire Board of Directors and an affirmative vote of
50% of the board's "Continuing Directors." The term "Continuing Director"
means a member of the Board of Directors of Old Kent who was either:
(a) first elected or appointed as a director prior to April 17, 1989; or
(b) subsequently elected or appointed as a director if such director was
nominated or appointed by a majority of the then Continuing Directors.
Like the MBCA, the DGCL provides appraisal rights under certain
circumstances, including mergers and consolidations. The primary exception to
the appraisal rights under the DGCL is the "market out" exception. Under
that exception, a stockholder of a corporation whose stock is listed on a
national securities exchange (E.G., the New York Stock Exchange), designated
as a national market system security on The Nasdaq Stock Market, or
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widely held (I.E., greater than 2,000 stockholders of record) will not have
appraisal rights if the stock he or she receives in the merger is also listed
on a national securities exchange or widely held. Because First Evergreen's
common stock is not widely held, the "market out" exception does not apply to
First Evergreen stockholders. Accordingly, appraisal rights are available to
First Evergreen stockholders with respect to the Merger. See "APPRAISAL
RIGHTS" below.
EVALUATION OF PROPOSED OFFERS
Old Kent's Restated Articles of Incorporation provide that Old Kent's
Board of Directors will not approve, adopt, or recommend any proposal of
any party other than Old Kent to make a tender or exchange offer for any
equity security of Old Kent, or engage in any merger or consolidation of
Old Kent with or into another entity, any sale, exchange, lease, mortgage,
pledge, transfer, or other disposition of all or substantially all of Old
Kent's assets, any liquidation or dissolution of Old Kent or any
reorganization or recapitalization of Old Kent that would result in a
change of control of Old Kent, unless it has first evaluated the proposal
and determined, in its judgment, that the proposal would be in substantial
compliance with all applicable laws. If Old Kent's Board of Directors
determines, in its judgment, that a proposal would be in substantial
compliance with all laws, the Board of Directors will then evaluate the
proposal and determine whether the proposal is in the best interests of Old
Kent and its shareholders. In evaluating a proposed offer to determine
whether it would be in the best interests of Old Kent and its shareholders,
the Board of Directors, in exercising its judgment, may consider all facts
that it deems relevant including, without limitation: (a) the fairness of
the consideration to be received by Old Kent's shareholders under the
proposed offer; (b) the possible economic and social impact of the proposed
offer and its consummation on Old Kent and its subsidiaries and their
employees, customers, and depositors; (c) the possible economic and social
impact of the proposed offer and its consummation on the communities in
which Old Kent and its subsidiaries operate or are located; (d) the
business, financial condition, safety, soundness, and earning prospects of
the offering party; (e) the competence, experience, and integrity of the
offering party and its management; and (f) the intentions of the offering
party regarding the use of the assets of Old Kent to finance the
transaction.
OLD KENT'S QUOTATION ON THE NASDAQ STOCK MARKET
Old Kent common stock is quoted on The Nasdaq Stock Market. In
contrast, First Evergreen common stock is not listed on a national
securities exchange or quotation system. As a result, Old Kent's
shareholders should enjoy a broader and more active market for Old Kent
common stock than has historically existed for First Evergreen common
stock.
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RESTRICTIONS ON FIRST EVERGREEN AFFILIATES
All shares of Old Kent common stock received by First Evergreen
stockholders in the Merger will be freely transferable, except that shares
of Old Kent common stock received by persons who are deemed to be
"affiliates" (as such term is defined under the Securities Act of 1933) of
First Evergreen prior to the Merger may be resold by them only in
transactions permitted by the resale provisions of Rule 145 under the
Securities Act of 1933 or as otherwise permitted under the Securities
Act of 1933. Persons who may be deemed to be affiliates of First Evergreen
generally include individuals or entities that control, are controlled by,
or are under common control with, First Evergreen and may include certain
officers, directors, and principal stockholders of First Evergreen.
This Prospectus and Proxy Statement does not cover any resales of the
Old Kent common stock to be received by affiliates upon completion of the
Merger, and no person is authorized to make any use of this Prospectus and
Proxy Statement in connection with any such resale.
Pursuant to the Merger Agreement, each First Evergreen affiliate
executed a written agreement to the effect that such persons will not offer
or sell or otherwise dispose of any of the shares of Old Kent common stock
issued to such persons in the Merger in violation of the Securities Act of
1933 or the rules and regulations promulgated by the SEC. In addition,
pursuant to the Merger Agreement, Old Kent and First Evergreen each have
agreed to use reasonable efforts to cause its affiliates to execute written
agreements prohibiting such affiliates from transferring their Old Kent
common stock or First Evergreen common stock, respectively, during any
period in which such a transfer would disqualify the Merger from pooling-
of-interests accounting treatment.
Each affiliate of First Evergreen has agreed that he or she will use
his or her best efforts to cause the Merger Agreement to be adopted by the
stockholders of First Evergreen and consummated according to its terms.
Each affiliate has also agreed not to solicit, negotiate, discuss, accept,
or approve any offers or proposals from, or enter into any agreement with,
any third party concerning a tender offer, merger, consolidation, share
exchange, or other business combination involving First Evergreen or
concerning the offer, sale, or disposition of any material assets of First
Evergreen.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following general discussion summarizes the material federal
income tax consequences of the Merger and is based on the Internal Revenue
Code of 1986, as amended (the "Code"), the regulations promulgated
thereunder, existing administrative interpretations, and court decisions.
-49-
Future legislation, regulations, administrative interpretations, or court
decisions could significantly change such authorities either prospectively
or retroactively. This summary does not address all aspects of federal
income taxation that may be important to you in light of your particular
circumstances or if you are subject to special rules, such as rules
regarding stockholders who are not citizens or residents of the United
States, financial institutions, or tax-exempt organizations. This
discussion also assumes that you (a) hold your shares of First Evergreen
stock as capital assets within the meaning of Section 1221 of the Code, and
(b) will not exercise appraisal rights with respect to your First Evergreen
common stock.
It is a condition to the obligations of First Evergreen to complete
the Merger that it receive a tax opinion from Warner Norcross & Judd LLP,
Old Kent's counsel, regarding material federal income tax consequences of
the Merger. Old Kent and First Evergreen believe, based on the tax opinion
of Warner Norcross & Judd LLP, that the Merger will have the federal income
tax consequences discussed below.
The tax opinion will assume the absence of changes in existing facts
and may rely on assumptions, representations, and covenants, including
those contained in certificates of officers of Old Kent and First
Evergreen. The tax opinion neither binds nor precludes the IRS from
adopting a contrary position. An opinion of counsel sets forth such
counsel's legal judgment and has no binding effect or official status of
any kind and no assurance can be given that contrary positions will not be
successfully asserted by the IRS or adopted by a court if the issues are
litigated.
Except as discussed in this section:
- You will not recognize any gain or loss for federal income tax
purposes if you exchange your First Evergreen common stock for
Old Kent common stock pursuant to the Merger, except to the
extent of cash received in lieu of fractional shares;
- Your tax basis in the Old Kent common stock received as a result
of the Merger will be the same as your tax basis in your First
Evergreen common stock surrendered in the exchange; and
- The holding period of the Old Kent common stock held by you as a
result of the exchange will include the period during which you
held your First Evergreen common stock.
In addition: (a) the Merger will constitute a "reorganization" within
the meaning of Section 368(a)(1)(A) of the Code and Old Kent and First
Evergreen will each be a "party to a reorganization" within the meaning of
Section 368(b); (b) the basis of the First Evergreen assets in the hands of
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Old Kent will be the same as the basis of those assets in the hands of
First Evergreen immediately prior to the Merger; (c) no gain or loss will
be recognized to Old Kent on the receipt by Old Kent of the assets of First
Evergreen in exchange for Old Kent common stock and the assumption by Old
Kent of the liabilities of First Evergreen; and (d) the holding period of
the assets of First Evergreen in the hands of Old Kent will include the
holding period during which such assets were held by First Evergreen.
Opinions of tax counsel do not guarantee favorable tax treatment.
There is a risk that the Internal Revenue Service might determine that
First Evergreen and/or you must recognize gain or loss for federal income
tax purposes in the Merger. ACCORDINGLY, YOU ARE STRONGLY URGED TO CONSULT
WITH YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR UNITED STATES FEDERAL,
STATE, LOCAL, OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF THE MERGER TO
YOU.
ACCOUNTING TREATMENT
It is a condition to the completion of the Merger that Old Kent
receive from First Evergreen's independent accountants a letter dated as of
the date of the Closing to the effect that First Evergreen is eligible to
participate in a business combination to be treated as a pooling-of-
interests. Old Kent must also receive from its independent accountants a
letter dated as of the date of the Closing to the effect that the Merger, if
consummated as contemplated, should qualify as a transaction to be accounted
for as a pooling-of-interests.
Under the pooling-of-interest accounting method, the assets and
liabilities of First Evergreen will be carried forward to Old Kent at their
historical recorded bases. Results of operations of Old Kent will include
the results of both Old Kent and First Evergreen for the entire fiscal year
in which the Merger occurs. The reported balance sheet amounts and results
of operations of the separate corporations for prior periods will be
combined, reclassified, and conformed, as appropriate, to reflect the
combined financial position and results of operations for Old Kent.
APPRAISAL RIGHTS
If you comply with the statutory provisions of Section 262
of the DGCL (a copy of which is attached as Appendix D and incorporated in
this Prospectus and Proxy Statement by reference), you will be entitled to an
appraisal by the Delaware Court of Chancery of the fair value of your First
Evergreen common stock and to receive payment of such amount in cash in lieu
of the Old Kent common stock to be issued pursuant to the Merger Agreement.
-51-
The value as determined by the Delaware Court of Chancery may be more or less
than the value to which you are entitled to under the Merger Agreement. If you
desire to exercise rights of appraisal, you should refer to the statute in its
entirety and should consult with legal counsel prior to taking any action to
ensure that you comply strictly with the applicable statutory provisions.
In summary, to exercise appraisal rights, you must:
- Hold your shares of First Evergreen common stock on the date of
the making of a demand for appraisal of such shares and
continuously hold your shares through the Effective Time of the
Merger;
- Deliver to First Evergreen a written demand for appraisal of
your shares before the vote on the Merger is taken; and
- Not vote in favor of the Merger (note that a vote, in person or
by proxy, against adoption of the Merger Agreement will not
constitute a written demand for appraisal).
If you properly exercise your appraisal rights, you will be notified of the
Merger within 10 days after the Effective Time.
Within 120 days after the Effective Time, if you have properly
exercised your appraisal rights, you (or Old Kent) may file a petition with
the Delaware Court of Chancery seeking a determination of the value of the
stock of all First Evergreen stockholders properly exercising their
appraisal rights. The Court of Chancery must hold a hearing and determine
the fair value (EXCLUSIVE OF ANY ELEMENT OF VALUE ARISING FROM THE MERGER),
together with a fair rate of interest to be paid on the fair value. Old
Kent, as First Evergreen's successor, will pay the fair value of the First
Evergreen common stock held by stockholders seeking appraisal and the
interest determined by the Court in cash. Notwithstanding the foregoing,
at any time within 60 days after the Effective Time, any stockholder will
have the right to withdraw his or her demand for appraisal rights and
accept the terms offered in the Merger.
Your failure to vote against the proposal to adopt the Merger
Agreement will not constitute a waiver of your appraisal rights under the
Delaware Law. However, a vote against adoption of the Merger Agreement
will not satisfy your obligations if you are seeking an appraisal. You
must still give notice pursuant to Section 262 of the Delaware Law.
VOTING AND MANAGEMENT INFORMATION
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FIRST EVERGREEN
Stockholders of record of shares of First Evergreen common stock at
the close of business on the Record Date will be entitled to vote at the
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special meeting of First Evergreen stockholders. As of the Record Date,
there were 400,261 shares of First Evergreen common stock outstanding.
Each share of First Evergreen common stock is entitled to one vote.
The following table sets forth information concerning the number of
shares of First Evergreen common stock held by each shareholder who is
known to First Evergreen's management to be the beneficial owner of more
than 5% of the outstanding shares as of July 9, 1998:
OLD KENT COMMON
AMOUNT AND NATURE OF BENEFICIAL STOCK TO BE RECEIVED
OWNERSHIP OF FIRST EVERGREEN COMMON STOCK <F1> IN THE MERGER<F2>
---------------------------------------------- --------------------
SHARED
SOLE VOTING VOTING OR TOTAL PERCENT
NAME AND ADDRESS OF AND INVEST- INVESTMENT PERCENT FOLLOWING OF
BENEFICIAL OWNER MENT POWER POWER<F3> TOTAL OF CLASS MERGER<F4> CLASS<F5>
- ------------------- ----------- ---------- ----- -------- ---------- ---------
Alfred E. Bleeker
Trust Dated 12/5/89
9514 South Springfield Avenue
Evergreen Park, Illinois 60805 31,474 0 31,474 7.86% 1,008,149 <F*>
Daniel Butler, Jr.
340 Lakeland Drive
Palos Park, Illinois 60464 196 22,840 23,036 5.76 737,870 <F*>
First National Bank of Evergreen Park
(in various fiduciary capacities)
3101 West 95th Street
Evergreen Park, Illinois 60805 36,753 0 36,753 9.18 1,177,242 1.14%
- -----------------------------
<FN>
(Footnotes begin following the next table).
</FN>
The following table sets forth certain information concerning the
number of shares of First Evergreen common stock held as of July 9, 1998,
by each of First Evergreen's directors, each of First Evergreen's officers
whose compensation exceeded $100,000 in 1997, and all of First Evergreen's
directors and executive officers as a group:
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OLD KENT COMMON
AMOUNT AND NATURE OF BENEFICIAL STOCK TO BE RECEIVED
OWNERSHIP OF FIRST EVERGREEN COMMON STOCK <F1> IN THE MERGER<F2>
---------------------------------------------- --------------------
SHARED
SOLE VOTING VOTING OR TOTAL PERCENT
AND INVEST- INVESTMENT PERCENT FOLLOWING OF
NAME OF BENEFICIAL OWNER MENT POWER POWER<F3> TOTAL OF CLASS MERGER<F4> CLASS<F5>
- ------------------------ ----------- --------- ----- -------- ---------- ---------
Richard H. Brown 0 100 100 <F*> 3,203 <F*>
James R. Cismoski 1,658 3,612 5,270 1.32% 168,804 <F*>
Stephen M. Hallenbeck 40 15,031 15,071 3.77 482,742 <F*>
Kenneth J. Ozinga 40 14,782 14,822 3.70 474,766 <F*>
Martin F. Ozinga 2,116 2,873 4,989 1.25 159,803 <F*>
Thomas Palmisano 40 19,761 19,801 4.95 634,249 <F*>
Roscoe N. Rush 0 277 277 <F*> 8,872 <F*>
Robert C. Wall 346 779 1,125 <F*> 36,035 <F*>
Directors and Officers
as a group (16 persons) 4,240 57,339 61,579 15.38% 1,972,449 1.90%
- -----------------------------
<FN>
<F*> Less than 1%.
<F1> The numbers of shares stated are based on information furnished by the
persons listed and include shares personally owned of record by each
person and shares that, under applicable regulations, are deemed to be
otherwise beneficially owned by each person. Under these regulations,
a beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship or otherwise has or shares voting power or investment
power with respect to the security. Voting power includes the power
to vote or direct the voting of the security. Investment power
includes the power to dispose or direct the disposition of the
security. A person is also considered the beneficial owner of a
security if the person has a right to acquire beneficial ownership of
the security within 60 days.
<F2> Based on an assumed Exchange Ratio of 32.0312 shares of Old Kent
common stock for each share of First Evergreen common stock.
<F3> These numbers include shares as to which the listed person or entity
is legally entitled to share voting or investment power by reason of
joint ownership, trust or other contract or property right, and shares
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held by spouses, children, and others over whom the listed person may
have substantial influence by reason of relationship. In some
instances the listed person disclaims beneficial ownership of these
shares. Shares held in fiduciary capacities by First Evergreen Bank
are not included.
<F4> This column reflects the number of shares of Old Kent common stock to
be issued to the specified person in exchange for the number of shares
of First Evergreen common stock shown in the "Total" column for such
person.
<F5> This column reflects the percentage of the outstanding shares of Old
Kent common stock that the specified person will hold following
consummation of the Merger. These percentages were computed with
reference to a total of 103,697,942 shares of Old Kent common stock
outstanding, representing the sum of 90,877,102 shares outstanding as
of April 30, 1998, and anticipated 12,820,840 shares to be issued by
Old Kent in the Merger. The computation does not take fractional
shares into account.
</FN>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain directors, officers, and employees of First Evergreen and
First Evergreen Bank may be deemed to have certain interests in the Merger
in addition to their interests generally as stockholders of First
Evergreen. Set forth below is a summary of such interests.
EMPLOYMENT AGREEMENTS. It is expected that at the Effective Time, Old
Kent Bank will enter into employment agreements ("Executive Employment
Agreements") with Kenneth J. Ozinga, Chairman, President and Chief
Executive Officer of First Evergreen and First Evergreen Bank, Stephen M.
Hallenbeck, Secretary/Treasurer and Chief Financial Officer of First
Evergreen and Executive Vice President and Secretary of First Evergreen
Bank, and Robert C. Wall, Vice President of First Evergreen and Executive
Vice President of First Evergreen Bank. Each of such Executive Employment
Agreements will be for a term of one year. The Executive Employment
Agreements will provide that the executive hold a position in the senior
executive level of management of Old Kent Bank and provide transitional
guidance for the Merger. The Executive Employment Agreements will further
provide that the executives are entitled to benefits on the same basis and
at a level commensurate with those provided to senior management of Old
Kent and for payment of salaries as follows: Mr. Ozinga: $607,125; Mr.
Hallenbeck: $405,000; and Mr. Wall: $361,875. The Executive Employment
Agreements will also contain covenants not to compete with Old Kent and Old
Kent Bank for specified periods of time.
-55-
It is expected that at the Effective Time, Old Kent Bank will also
enter into employment agreements ("Officer Employment Agreements") with 11
senior officers of First Evergreen Bank, including the following persons:
Roberta Bauer-Micetic, Jeffrey A. Blanchette, Richard H. Brown, Barbara
Heidegger, Reid Smeda, David Veurink, Barry Voorn, and Gaines Wilson. Each
Officer Employment Agreement will be for a term of two years and will
provide that the officer serve Old Kent Bank in such executive positions as
may be reasonably determined by Old Kent Bank from time to time. The
Officer Employment Agreements will provide that the senior officers are
entitled to benefits on the same basis and at a level commensurate with
those provided to senior management of Old Kent Bank and for payment of
base salaries aggregating $1,128,500.
The Officer Employment Agreements will provide that in the event the
senior officer's employment is terminated by the officer for "Good Reason,"
or by Old Kent Bank, other than for cause, the officer will be entitled to
receive from Old Kent Bank either the full amount of his or her base salary
that would otherwise be payable to the senior officer for the remainder of
the term of the Officer Employment Agreement or, at the senior officer's
option, benefits according to Old Kent's severance policy, discussed below.
Termination for "Good Reason" means: (i) Old Kent Bank's requirement that
the senior officer relocate his or her business office more than 50 miles
from its location on April 21, 1998 (the date of the Merger Agreement);
(ii) a material breach of the Officer Employment Agreement by Old Kent Bank
that is not timely cured by Old Kent Bank; (iii) Old Kent Bank's assignment
to the officer of duties that are not commensurate with his or her past
responsibilities, experience, level of contribution, and tenure; or (iv)
the senior officer's employment is terminated without cause.
The Officer Employment Agreements will also contain covenants not to
compete with Old Kent Bank for specified periods of time.
SEVERANCE BENEFITS. Old Kent has agreed to provide severance benefits
to First Evergreen's and First Evergreen Bank's full-time employees whose
employment is terminated by Old Kent or First Evergreen on, or within 12
months after, the Effective Time. Employees with nine years or service or
less will receive six weeks' full pay, plus one additional week for each
year of service; officers and Assistant Vice Presidents will receive a
minimum of 12 weeks' full pay and officers at the level of Vice President
and above will receive a minimum of 24 weeks' full pay. Employees with 10
or more years of service will receive two weeks' of full pay for each year
of service, up to a maximum of 52 weeks. Such payments may be taken in
form of salary continuation or lump sum. Terminated employees will also be
entitled to medical benefits through the salary continuation period, or if
severance payments are taken in lump sum, for a period of 90 days.
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides that
Old Kent must honor all rights to indemnification and advancement of
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expenses currently existing in favor of the directors and officers of First
Evergreen and First Evergreen Bank. See "THE MERGER--Insurance and
Indemnification" above.
PROFIT SHARING PLAN. Old Kent has agreed to continue the First
Evergreen Profit Sharing Retirement Plan ("Profit Sharing Plan") until
December 31, 1998, at the recent contribution rate of 15% of covered
compensation. Severance payments and any other payments received after
termination of employment will not be considered "covered compensation."
Old Kent and First Evergreen have agreed that there will be no further
contributions to the Profit Sharing Plan for any period after December 31,
1998, or if later, the Effective Time. Old Kent and First Evergreen have
further agreed that First Evergreen may amend the Profit Sharing Plan to
eliminate any requirement that a participant be employed on the last day of
the plan year to receive a contribution and to provide for 100% vesting.
RETENTION BONUS. Old Kent and First Evergreen have agreed that First
Evergreen's management may, in consultation with Old Kent, implement a
bonus plan with pool of $100,000 to encourage key employees of First
Evergreen Bank, other than executive officers, to remain as employees of
First Evergreen Bank for a specified period of time.
GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements of Old Kent incorporated by reference in this
Prospectus and Proxy Statement and elsewhere in the Registration Statement
of which this Prospectus and Proxy Statement is a part, to the extent and
for the periods indicated in their reports, have been audited by Arthur
Andersen LLP, independent public accountants, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
giving said reports.
The consolidated financial statements of First Evergreen and
subsidiary at December 31, 1997 and 1996, and for the years then ended,
incorporated by reference in First Evergreen Corporation's Annual Report
(Form 10-K) for the year ended December 31, 1997 and incorporated by
reference in the Proxy Statement of First Evergreen, which is referred to
and made a part of this Prospectus and Registration Statement, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing in the Annual Report on Form 10-K for the year
ended December 31, 1997, and incorporated by reference herein. Such
consolidated financial statements are incorporated by reference herein in
reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.
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The financial statements of First Evergreen as of and for the year
ended December 31, 1995 incorporated by reference in this Prospectus and
Proxy Statement and elsewhere in the Registration Statement of which this
Prospectus and Proxy Statement is a part, have been audited by Arthur
Andersen LLP, independent public accountants, and are incorporated by
reference herein in reliance upon the authority of said firm as experts
in giving said reports.
SHAREHOLDER PROPOSALS
In the event that First Evergreen stockholders adopt the Merger
Agreement and the Merger is completed, First Evergreen stockholders will
become Old Kent shareholders and there will be no annual meeting of First
Evergreen stockholders in 1999. If the Merger is not completed, proposals
of First Evergreen stockholders intended to be presented at the annual
meeting of stockholders in 1999 must be received by First Evergreen for
consideration for inclusion in its proxy statement and form of proxy
relating to that meeting a reasonable time before the proxy solicitation is
made for that meeting.
LEGAL OPINIONS
Certain legal matters in connection with the proposed Merger will be
passed upon for Old Kent by its general counsel, Warner Norcross & Judd LLP
of Grand Rapids, Michigan, and for First Evergreen by its counsel, Ruff,
Weidenaar & Reidy, Ltd., Chicago, Illinois. Certain legal matters may also
be passed upon for First Evergreen by its special counsel, Silver, Freedman
& Taff, L.L.P., Washington, D.C.
As of May 27, 1998, partners in and attorneys employed by or
associated with Warner Norcross & Judd LLP and their associates were
beneficial owners of a total of approximately 416,249 shares of Old Kent
common stock (prior to the Old Kent Stock Dividend) having an aggregate
market value of $16,259,560 as of that date. Shares reported as beneficially
owned include all shares as to which such persons have direct or indirect,
sole or shared, power to direct voting or disposition, including personal
shares as well as shares held in fiduciary capacities.
SOURCES OF INFORMATION
Old Kent has supplied all information contained or incorporated by
reference in this Prospectus and Proxy Statement relating to Old Kent,
First Evergreen has supplied all such information relating to First
Evergreen and Hovde Financial, Inc.
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WHERE YOU CAN FIND MORE INFORMATION
Old Kent has filed a registration statement on Form S-4 to register
with the SEC the offering of Old Kent common stock to be issued by Old Kent
in the Merger. This Prospectus and Proxy Statement is a part of that
registration statement. As allowed by SEC rules, this Prospectus and Proxy
Statement does not contain all of the information contained in the
registration statement or the exhibits to the registration statement.
Old Kent and First Evergreen are subject to the informational
requirements of the Exchange Act. Accordingly, they file annual, quarterly
and current reports, proxy statements (Old Kent only), and other information
with the SEC. You may read and copy any reports, statements, or other
information that Old Kent or First Evergreen files at the SEC's public
reference rooms located at Judiciary Plaza, 450 Fifth Street N.W., Room 1024,
Washington, D.C.; Seven World Trade Center, Suite 1300, New York, New York,
and 500 W. Madison Street, Suite 1400, Chicago, Illinois. You may call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Old Kent's and First Evergreen's SEC filings are also available to the public
from commercial document retrieval services and at the web site maintained by
the SEC at "http://www.sec.gov."
The SEC allows Old Kent and First Evergreen to incorporate by
reference information into this Prospectus and Proxy Statement. This means
that Old Kent and First Evergreen can disclose important information by
referring to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this
Prospectus and Proxy Statement, except for any information superseded by
information in this Prospectus and Proxy Statement. This Prospectus and
Proxy Statement incorporates by reference the documents set forth below
that Old Kent and First Evergreen have previously filed with the SEC.
These documents contain important information about Old Kent and First
Evergreen and their finances.
OLD KENT SEC FILINGS
(FILE NO. 0-12216) PERIOD
Annual Report on Form 10-K Year ended December 31, 1997
(as amended on Form 10-K/A)
Quarterly Report on Form 10-Q Quarter ended March 31, 1998
Current Reports on Form 8-K Filed on January 29, 1998, March
4, 1998, April 24, 1998, June 16,
1998
Registration Statement on Form 8-A Filed on January 22, 1997
Registration Statement on Form 8-B Filed on May 31, 1984
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FIRST EVERGREEN SEC FILINGS
(FILE NO. 2-94209) PERIOD
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Report on Form 10-Q Quarter ended March 31, 1998
Current Reports on Form 8-K Filed on April 27, 1998
The documents subsequently filed by Old Kent and First Evergreen with
the SEC pursuant to Sections 13(a), 13(c), 14, and 15 of the Exchange Act
between the date of this Prospectus and Proxy Statement and the date of the
Special Meeting are also incorporated by reference into this Prospectus and
Proxy Statement.
Documents incorporated by reference are available from Old Kent and
First Evergreen without charge (not including any exhibit to such a document
unless such exhibit is specifically incorporated by reference in this
Prospectus and Proxy Statement). You may obtain documents incorporated by
reference in this Prospectus and Proxy Statement by requesting them in writing
or by telephone from the appropriate party at the following addresses:
Old Kent Financial Corporation First Evergreen Corporation
Attn: Mary E. Tuuk, Secretary Attn: Stephen M. Hallenbeck, Secretary
111 Lyon Street, N.W. 3101 W. 95th Street
Grand Rapids, Michigan 49503 Evergreen Park, Illinois 60805
Tel: (616) 771-5272 Tel: (708) 422-6700
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY AUGUST 13, 1998 TO
RECEIVE THEM BEFORE THE SPECIAL MEETING.
You should rely only on the information contained or incorporated by
reference in this Prospectus and Proxy Statement to vote on the Merger.
Neither Old Kent nor First Evergreen has authorized anyone to provide you
with information that is different from what is contained in this
Prospectus and Proxy Statement.
This Prospectus and Proxy Statement is dated July 13, 1998. You
should not assume that the information contained in this Prospectus and
Proxy Statement is accurate as of any date other than such date, and
neither the mailing of this Prospectus and Proxy Statement to you nor the
issuance of Old Kent common stock in the Merger shall create any
implication to the contrary.
-60-
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BETWEEN
FIRST EVERGREEN CORPORATION
AND
OLD KENT FINANCIAL CORPORATION
Dated as of April 21, 1998
TABLE OF CONTENTS
PAGE
Article I - The Transaction. . . . . . . . . . . . . . . . . . . . . . .A-1
1.1 Approval of Plan of Merger . . . . . . . . . . . . . . . . . .A-1
1.2 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . .A-2
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . .A-2
1.4 Merger of First Evergreen with and into Old Kent . . . . . . .A-2
1.5 Effects of the Merger. . . . . . . . . . . . . . . . . . . . .A-2
1.6 Bank Consolidation . . . . . . . . . . . . . . . . . . . . . .A-3
1.7 Additional Actions . . . . . . . . . . . . . . . . . . . . . .A-3
1.8 Surviving Corporation. . . . . . . . . . . . . . . . . . . . .A-3
Article II - Conversion and Exchange of Shares . . . . . . . . . . . . .A-4
2.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . .A-4
2.2 Upset Provision. . . . . . . . . . . . . . . . . . . . . . . .A-5
2.3 Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . .A-5
2.4 Cessation of Stockholder Status. . . . . . . . . . . . . . . .A-6
2.5 Surrender of Old Certificates and Distribution of
Old Kent Common Stock. . . . . . . . . . . . . . . . . . . . .A-6
2.6 No Fractional Shares . . . . . . . . . . . . . . . . . . . . .A-7
Article III - Old Kent's Representations and Warranties. . . . . . . . .A-8
3.1 Authorization, No Conflicts, Etc.. . . . . . . . . . . . . . .A-8
3.2 Organization and Good Standing . . . . . . . . . . . . . . . .A-9
3.3 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . .A-9
3.4 Old Kent Common Stock. . . . . . . . . . . . . . . . . . . . A-10
3.5 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . A-10
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . A-10
3.7 Call Reports . . . . . . . . . . . . . . . . . . . . . . . . A-11
3.8 Absence of Undisclosed Liabilities . . . . . . . . . . . . . A-11
3.9 Absence of Material Adverse Change . . . . . . . . . . . . . A-11
3.10 Absence of Litigation. . . . . . . . . . . . . . . . . . . . A-11
3.11 Regulatory Filings . . . . . . . . . . . . . . . . . . . . . A-11
3.12 Agreements With Bank Regulators. . . . . . . . . . . . . . . A-12
3.13 Registration Statement, Etc. . . . . . . . . . . . . . . . . A-12
3.14 Investment Bankers and Brokers . . . . . . . . . . . . . . . A-12
3.15 Accounting and Tax Treatment . . . . . . . . . . . . . . . . A-12
3.16 No Known Breach. . . . . . . . . . . . . . . . . . . . . . A-12
3.17 True and Complete Information. . . . . . . . . . . . . . . . A-13
3.18 Representations and Warranties at Closing. . . . . . . . . . A-13
Article IV - First Evergreen's Representations and Warranties. . . . . A-13
4.1 Authorization, No Conflicts, Etc.. . . . . . . . . . . . . . A-13
4.2 Organization and Good Standing . . . . . . . . . . . . . . . A-14
4.3 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . A-14
4.4 Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . A-15
A-i
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-- CONTINUED --
PAGE
4.5 Financial Statements . . . . . . . . . . . . . . . . . . . . A-15
4.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . A-16
4.7 Absence of Material Adverse Change . . . . . . . . . . . . . A-16
4.8 Absence of Litigation. . . . . . . . . . . . . . . . . . . . A-16
4.9 Conduct of Business. . . . . . . . . . . . . . . . . . . . . A-17
4.10 Absence of Defaults Under Contracts. . . . . . . . . . . . . A-17
4.11 Regulatory Filings. . . . . . . . . . . . . . . . . . . . . A-17
4.12 Registration Statement, Etc. . . . . . . . . . . . . . . . . A-17
4.13 Agreements With Bank Regulators. . . . . . . . . . . . . . . A-18
4.14 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . A-18
4.15 Title to Properties. . . . . . . . . . . . . . . . . . . . . A-18
4.16 Condition of Real Property . . . . . . . . . . . . . . . . . A-19
4.17 Real and Personal Property Leases. . . . . . . . . . . . . . A-19
4.18 Required Licenses, Permits, Etc. . . . . . . . . . . . . . . A-20
4.19 Certain Employment Matters . . . . . . . . . . . . . . . . . A-20
4.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . A-21
4.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . A-22
4.22 Duties as Fiduciary. . . . . . . . . . . . . . . . . . . . . A-24
4.23 Investment Bankers and Brokers . . . . . . . . . . . . . . . A-24
4.24 First Evergreen-Related Persons. . . . . . . . . . . . . . . A-24
4.25 Change in Business Relationships . . . . . . . . . . . . . . A-25
4.26 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . A-25
4.27 Books and Records. . . . . . . . . . . . . . . . . . . . . . A-25
4.28 Loan Guarantees. . . . . . . . . . . . . . . . . . . . . . . A-25
4.29 Events Since December 31, 1997 . . . . . . . . . . . . . . . A-25
4.30 Reserve for Loan Losses. . . . . . . . . . . . . . . . . . . A-26
4.31 Loan Origination and Servicing . . . . . . . . . . . . . . . A-26
4.32 Public Communications; Securities Offering . . . . . . . . . A-26
4.33 No Insider Trading . . . . . . . . . . . . . . . . . . . . . A-26
4.34 Data Processing Contracts. . . . . . . . . . . . . . . . . . A-26
4.35 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . A-27
4.36 Accounting and Tax Treatment . . . . . . . . . . . . . . . . A-27
4.37 True and Complete Information. . . . . . . . . . . . . . . . A-27
4.38 Representations and Warranties at Closing. . . . . . . . . . A-27
Article V - Covenants Pending Closing. . . . . . . . . . . . . . . . . A-27
5.1 First Evergreen Disclosure Statement . . . . . . . . . . . . A-27
5.2 Old Kent Disclosure Statement. . . . . . . . . . . . . . . . A-28
5.3 Breaches of Representations. . . . . . . . . . . . . . . . . A-28
5.4 Conduct of Business Pending the Effective Time--Old Kent . . A-28
5.5 Conduct of Business Pending the Effective Time--First
Evergreen. . . . . . . . . . . . . . . . . . . . . . . . . . A-29
5.6 Regular Dividends. . . . . . . . . . . . . . . . . . . . . . A-31
5.7 Data Processing and Related Contracts. . . . . . . . . . . . A-32
A-ii
TABLE OF CONTENTS
-- CONTINUED --
PAGE
5.8 Affiliates -- Compliance with Accounting and
Securities Rules. . . . . . . . . . . . . . . . . . . . . . A-32
5.9 Indemnification and Insurance. . . . . . . . . . . . . . . . A-32
5.10 Exclusive Commitment . . . . . . . . . . . . . . . . . . . . A-33
5.11 Registration Statement . . . . . . . . . . . . . . . . . . . A-33
5.12 Other Filings. . . . . . . . . . . . . . . . . . . . . . . . A-34
5.13 Miscellaneous Agreements and Consents. . . . . . . . . . . . A-34
5.14 Access and Investigation . . . . . . . . . . . . . . . . . . A-34
5.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . A-34
5.16 Environmental Investigation. . . . . . . . . . . . . . . . . A-35
5.17 Dissenting Stockholders' Appraisal Rights. . . . . . . . . . A-36
5.18 Employment Agreements. . . . . . . . . . . . . . . . . . . . A-36
5.19 Accounting and Tax Treatment . . . . . . . . . . . . . . . . A-36
Article VI - Conditions Precedent to Old Kent's Obligations. . . . . . A-36
6.1 Renewal of Representations and Warranties, Etc.. . . . . . . A-36
6.2 Opinion of Legal Counsel . . . . . . . . . . . . . . . . . . A-37
6.3 Required Regulatory Approvals. . . . . . . . . . . . . . . . A-37
6.4 Stockholder Approval . . . . . . . . . . . . . . . . . . . . A-37
6.5 Order, Decree, Etc.. . . . . . . . . . . . . . . . . . . . . A-37
6.6 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . A-37
6.7 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . A-37
6.8 Registration Statement . . . . . . . . . . . . . . . . . . . A-38
6.9 Certificate as to Outstanding Shares . . . . . . . . . . . . A-38
6.10 Change of Control Waivers. . . . . . . . . . . . . . . . . . A-38
6.11 Pooling Assurances . . . . . . . . . . . . . . . . . . . . . A-38
Article VII - Conditions Precedent to First Evergreen's Obligations. . A-38
7.1 Renewal of Representations and Warranties, Etc.. . . . . . . A-38
7.2 Opinion of Legal Counsel . . . . . . . . . . . . . . . . . . A-39
7.3 Required Regulatory Approvals. . . . . . . . . . . . . . . . A-39
7.4 Stockholder Approval . . . . . . . . . . . . . . . . . . . . A-39
7.5 Order, Decree, Etc.. . . . . . . . . . . . . . . . . . . . . A-39
7.6 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . A-39
7.7 Registration Statement . . . . . . . . . . . . . . . . . . . A-39
7.8 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . A-40
7.9 Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . . A-40
Article VIII - Abandonment of Merger . . . . . . . . . . . . . . . . . A-40
8.1 Mutual Abandonment . . . . . . . . . . . . . . . . . . . . . A-40
8.2 Upset Date . . . . . . . . . . . . . . . . . . . . . . . . . A-40
8.3 Old Kent's Rights to Terminate . . . . . . . . . . . . . . . A-40
8.4 First Evergreen's Rights to Terminate. . . . . . . . . . . . A-41
8.5 Effect of Termination. . . . . . . . . . . . . . . . . . . . A-41
A-iii
TABLE OF CONTENTS
-- CONTINUED --
PAGE
Article IX - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . A-41
9.1 "Material Adverse Effect" Defined. . . . . . . . . . . . . . A-41
9.2 Nonsurvival of Representations, Warranties, and
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . A-41
9.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . A-42
9.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
9.5 Specific Enforcement . . . . . . . . . . . . . . . . . . . . A-42
9.6 Jurisdiction; Venue; Jury. . . . . . . . . . . . . . . . . . A-42
9.7 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
9.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
9.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . A-43
9.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . A-43
9.11 Third Party Beneficiaries. . . . . . . . . . . . . . . . . . A-43
9.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . A-43
9.13 Further Assurances; Privileges . . . . . . . . . . . . . . . A-44
9.14 Headings, Etc. . . . . . . . . . . . . . . . . . . . . . . . A-44
9.15 Calculation of Dates and Deadlines.. . . . . . . . . . . . . A-44
9.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . A-44
DEFINITIONS
Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . A-32
Bank Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . .A-3
Bank Consolidation Agreement . . . . . . . . . . . . . . . . . . . . . .A-3
Banking Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-3
Breaching Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
Business Combination . . . . . . . . . . . . . . . . . . . . . . . . . A-33
Call Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
Certificates of Merger . . . . . . . . . . . . . . . . . . . . . . . . .A-2
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-2
Constituent Corporation. . . . . . . . . . . . . . . . . . . . . . . . .A-2
Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
Designated Contracts . . . . . . . . . . . . . . . . . . . . . . . . . A-14
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-2
Employee Benefit Plan. . . . . . . . . . . . . . . . . . . . . . . . . A-21
Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . A-36
Employment-Related Payments. . . . . . . . . . . . . . . . . . . . . . A-20
Environmental Risk . . . . . . . . . . . . . . . . . . . . . . . . . . A-35
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
A-iv
TABLE OF CONTENTS
-- CONTINUED --
PAGE
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-7
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
Federal Bank Holding Company Act . . . . . . . . . . . . . . . . . . . .A-9
Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . .A-9
Fiduciary Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Final Old Kent Price . . . . . . . . . . . . . . . . . . . . . . . . . .A-5
First Evergreen Bank . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
First Evergreen Common Stock . . . . . . . . . . . . . . . . . . . . . .A-4
First Evergreen. . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
First Evergreen-Related Person . . . . . . . . . . . . . . . . . . . . A-24
First Evergreen's Financial Statements . . . . . . . . . . . . . . . . A-15
First Evergreen's Leases . . . . . . . . . . . . . . . . . . . . . . . A-19
First Evergreen's Real Property. . . . . . . . . . . . . . . . . . . . A-19
First Evergreen Disclosure Statement . . . . . . . . . . . . . . . . . A-13
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
Hazardous Substance. . . . . . . . . . . . . . . . . . . . . . . . . . A-22
Hospital Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
Insurance Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
Internal Revenue Code. . . . . . . . . . . . . . . . . . . . . . . . . .A-1
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . A-41
Merger.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Michigan Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Old Kent Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . .A-4
Old Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-6
Old Kent Disclosure Statement. . . . . . . . . . . . . . . . . . . . . .A-8
Old Kent Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-9
Old Kent Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . .A-9
Old Kent's Financial Statements. . . . . . . . . . . . . . . . . . . . A-10
Old Kent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
Phase I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-35
Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
Pricing Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-5
Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
Prospectus and Proxy Statement . . . . . . . . . . . . . . . . . . . . A-12
A-v
TABLE OF CONTENTS
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PAGE
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . A-12
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11
Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . .A-2
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . .A-2
Technology Products. . . . . . . . . . . . . . . . . . . . . . . . . . A-27
Transaction Documents. . . . . . . . . . . . . . . . . . . . . . . . . A-12
Upset Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-5
EXHIBITS
A - First Evergreen Option Agreement . . . . . . . . . . . . . . . .A-1
B - Form of First Evergreen's Disclosure Statement . . . . . . . . .B-1
C - Form of Old Kent's Disclosure Statement. . . . . . . . . . . . .C-1
D - Form of Affiliate Agreement. . . . . . . . . . . . . . . . . . .D-1
E - Form of First Evergreen's Counsel's Legal Opinion. . . . . . . .E-1
F - Form of Old Kent's Counsel's Legal Opinion . . . . . . . . . . .F-1
A-vi
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "PLAN OF MERGER") is made as of
April 21, 1998, between First Evergreen Corporation, a Delaware corporation
headquartered at 3101 W. 95th Street, Evergreen Park, Illinois 60805
("FIRST EVERGREEN"), and Old Kent Financial Corporation, a Michigan
corporation headquartered at 111 Lyon Street NW, Grand Rapids, Michigan
49503 ("OLD KENT").
Old Kent and First Evergreen desire that First Evergreen and its
subsidiary become affiliated with Old Kent. The affiliation would be
effected through the merger of First Evergreen with and into Old Kent in
accordance with this Plan of Merger and in accordance with the Business
Corporation Act of the State of Michigan, as amended (the "MICHIGAN ACT")
and the Delaware General Corporation Law, as amended (the "DGCL"). The
transactions contemplated by and described in this Plan of Merger are
referred to as the "MERGER." Simultaneously or as soon as reasonably
practical following the consummation of the Merger, First Evergreen's
wholly owned subsidiary, First National Bank of Evergreen Park ("FIRST
EVERGREEN BANK") will be consolidated with and into Old Kent's wholly owned
subsidiary, Old Kent Bank.
It is intended that, for federal tax purposes, the Merger qualify as a
reorganization under the provisions of Section 368 of the Internal Revenue
Code of 1986, as amended (the "INTERNAL REVENUE CODE"). It is also
intended that, for accounting and financial reporting purposes, the Merger
shall be accounted for as a pooling-of-interests.
As a condition to, and concurrently with the execution of, this Plan
of Merger, First Evergreen and Old Kent are entering into a stock option
agreement attached as EXHIBIT A (the "OPTION AGREEMENT").
In consideration of the representations, warranties, and covenants
contained in this Plan of Merger, the parties agree:
ARTICLE I - THE TRANSACTION
Subject to the terms and conditions of this Plan of Merger, the Merger
shall be carried out in the following manner:
1.1 APPROVAL OF PLAN OF MERGER. As soon as practicable after this
Plan of Merger has been executed and delivered and the "Registration
Statement" (as defined in Section 3.13 (REGISTRATION STATEMENT, ETC.)) has
become effective, First Evergreen shall submit this Plan of Merger to its
stockholders for adoption at a meeting properly called, noticed, and held
for that purpose (the "STOCKHOLDERS' MEETING"). No shares of "Old Kent
Common Stock" (as defined below) shall be entitled to vote on approval of
this Plan of Merger.
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1.1.1 BOARD RECOMMENDATION. Except in the case of a "Fiduciary
Event" (as defined below), at the Stockholders' Meeting and in any
proxy materials used in connection with the meeting, the board of
directors of First Evergreen shall recommend that its stockholders
vote for adoption of this Plan of Merger.
1.1.2 FIDUCIARY EVENT. A "FIDUCIARY EVENT" shall have occurred
when the Board of Directors of First Evergreen has (a) received in
writing a "Superior Proposal" (as defined below), which is then
pending, (b) received the written advice of independent legal counsel
that the failure to so withdraw, modify, or change its recommendation
would more likely than not cause the Board of Directors of First
Evergreen to breach its fiduciary duties to First Evergreen's
stockholders under applicable law, (c) determined in good faith that
the failure to so withdraw, modify, or change its recommendation would
cause the Board of Directors of First Evergreen to breach its
fiduciary duties to First Evergreen's stockholders under applicable
law, and (d) determined to accept and recommend the Superior Proposal
to the stockholders of First Evergreen.
1.1.3 SUPERIOR PROPOSAL. A "SUPERIOR PROPOSAL" means any bona
fide unsolicited Proposal (as defined in Section 5.10.2 (COMMUNICATION
OF OTHER PROPOSALS)) made by a third party on terms that the Board of
Directors of First Evergreen determines in its good faith judgment,
based upon the written advice of a financial advisor of nationally
recognized reputation, to be more financially favorable to First
Evergreen's stockholders than the Plan of Merger.
1.1.4 NOTICE. First Evergreen agrees that it shall notify Old
Kent at least 48 hours prior to taking any action with respect to such
Superior Proposal or taking any action with respect to the withdrawal,
modification, or change of its recommendation to stockholders for
adoption of this Plan of Merger. Notwithstanding anything to the
contrary contained in this Plan of Merger, any such withdrawal,
modification, or change of recommendation in accordance with the
provisions of this Section shall not constitute a breach of this Plan
of Merger by First Evergreen.
1.2 THE CLOSING. The Merger shall be consummated following the
"CLOSING." The Closing shall be held at such time, date, and location as
may be mutually agreed by the parties. In the absence of such agreement,
the Closing shall be held at the offices of Warner Norcross & Judd LLP,
900 Old Kent Building, 111 Lyon Street, N.W., Grand Rapids, Michigan,
commencing at 11 a.m. on a date specified by either party upon 10 business
days' written notice (or at the election of Old Kent on the last business
day of the month) after the last to occur of the following events: (a)
receipt of all consents and approvals of government regulatory authorities
legally required to consummate the Merger and the expiration of all
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statutory waiting periods; and (b) adoption of this Plan of Merger by First
Evergreen's stockholders. Unless otherwise agreed by Old Kent, the Closing
shall not occur prior to the last business day of September, 1998.
Scheduling or commencing the Closing shall not, however, constitute a
waiver of the conditions precedent of either Old Kent or First Evergreen as
set forth in Articles VI and VII, respectively. Upon completion of the
Closing, First Evergreen and Old Kent shall each execute and file the
certificates of merger as required by the Michigan Act and DGCL to effect
the Merger (collectively, the "CERTIFICATES OF MERGER").
1.3 EFFECTIVE TIME OF THE MERGER. The Merger shall be consummated as
promptly as possible following the Closing by filing the Certificates of
Merger in the manner required by law. The "EFFECTIVE TIME" of the Merger
shall be as of the time and date to be specified in the Certificates of
Merger, but not later than the first business day of the month next
following the month in which the Closing occurs. The parties presently
anticipate that the Effective Time will be on October 1, 1998.
1.4 MERGER OF FIRST EVERGREEN WITH AND INTO OLD KENT. At the
Effective Time, First Evergreen shall be merged with and into Old Kent.
First Evergreen and Old Kent are each sometimes referred to as a
"CONSTITUENT CORPORATION" prior to the Merger. At the Effective Time, the
Constituent Corporations shall become a single corporation, which shall be
Old Kent (the "SURVIVING CORPORATION").
1.5 EFFECTS OF THE MERGER. The effect of the Merger upon each of the
Constituent Corporations and the Surviving Corporation shall be as provided
in Chapter Seven of the Michigan Act and Subchapter IX of the DGCL with
respect to the merger of domestic and foreign corporations, where the
surviving corporation will be subject to the laws of the State of Michigan.
1.6 BANK CONSOLIDATION. After the Effective Time, Old Kent intends
to consolidate First Evergreen Bank and Old Kent Bank into a single
Michigan banking corporation where Old Kent Bank will be the consolidated
bank resulting from the transaction (the "BANK CONSOLIDATION"). The Bank
Consolidation will be effected pursuant to a consolidation agreement (the
"BANK CONSOLIDATION AGREEMENT"), in the form required by the Michigan
Banking Code of 1969, as amended (the "BANKING CODE"), and by the Federal
Deposit Insurance Act, as amended, containing terms and conditions, not
inconsistent with this Agreement, as determined by Old Kent Bank. The Bank
Consolidation shall only occur if the Merger is consummated, and it shall
become effective immediately after the Effective Time or such later time as
may be determined by Old Kent. In order to obtain the necessary regulatory
approval for the Bank Consolidation to occur immediately after the
Effective Time, Old Kent may request that First Evergreen and First
Evergreen Bank each execute and deliver the Bank Consolidation Agreement
and take other reasonably required or convenient steps prior to the
Effective Time to effect the Bank Consolidation. The effectiveness of the
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Bank Consolidation Agreement, regardless of when executed and delivered,
shall be subject to Old Kent's action, in its capacity as the sole
shareholder of First Evergreen Bank, to approve the Bank Consolidation
Agreement immediately after the Effective Time.
1.7 ADDITIONAL ACTIONS. At any time after the Effective Time, the
Surviving Corporation may determine that further assignments or assurances
or any other acts are necessary or desirable to vest, perfect, or confirm,
of record or otherwise, in the Surviving Corporation its rights, title, or
interest in, to, or under any of the rights, properties, or assets of First
Evergreen acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger, or to otherwise carry out the
purposes of this Plan of Merger. First Evergreen hereby grants to the
Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments, and assurances and to do all acts
necessary, proper, or convenient to accomplish this purpose. This limited
power of attorney shall only be operative following the Effective Time.
The proper officers and directors of the Surviving Corporation shall be
fully authorized in the name of First Evergreen to take any and all such
action contemplated by this Plan of Merger.
1.8 SURVIVING CORPORATION. Immediately after the Effective Time, the
Surviving Corporation shall have the following attributes until they are
subsequently changed in the manner provided by law:
1.8.1 NAME. The name of the Surviving Corporation shall be "Old
Kent Financial Corporation."
1.8.2 ARTICLES OF INCORPORATION. The articles of incorporation
of the Surviving Corporation shall be the articles of incorporation of
Old Kent as in effect immediately prior to the Effective Time, without
change.
1.8.3 BYLAWS. The bylaws of the Surviving Corporation shall be
the bylaws of Old Kent as in effect immediately prior to the Effective
Time, without change.
1.8.4 DIRECTORS. The directors of the Surviving Corporation
shall be the same as the directors of Old Kent immediately prior to
the Effective Time.
1.8.5 OFFICERS. The officers of the Surviving Corporation shall
be the same as the officers of Old Kent immediately prior to the
Effective Time.
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ARTICLE II - CONVERSION AND EXCHANGE OF SHARES
Subject to the terms and conditions of this Plan of Merger, the
exchange of the common stock, $25 par value per share of First Evergreen
("FIRST EVERGREEN COMMON STOCK") for the common stock, $1 par value per
share of Old Kent ("OLD KENT COMMON STOCK") shall be effected as follows:
2.1 CONVERSION OF SHARES. At the Effective Time:
2.1.1 CONVERSION OF FIRST EVERGREEN COMMON STOCK. Except as
provided below, each share of First Evergreen Common Stock outstanding
immediately prior to the Effective Time shall be converted into
30.5059 (the "EXCHANGE RATIO") of validly issued, fully paid, and
nonassessable shares of Old Kent Common Stock.
2.1.2 OLD KENT RIGHTS. Each share of Old Kent Common Stock to
be issued in the Merger will have attached to it the number of "Old
Kent Rights" issuable pursuant to the "Old Kent Rights Agreement" (as
those terms are defined in Section 3.3.1) then represented by each
share of Old Kent Common Stock at the Effective Time, provided that
the Old Kent Rights are not then separately transferable.
2.1.3 CONVERSION OF OLD KENT COMMON STOCK. Each share of Old
Kent Common Stock outstanding immediately prior to the Effective Time
shall continue to be outstanding without any change. Each shareholder
of Old Kent whose shares were outstanding immediately before the
Effective Time will hold the same number of shares of the Surviving
Corporation, with identical designations, preferences, limitations,
and relative rights, immediately after the Effective Time.
2.1.4 STOCK HELD BY OLD KENT. Each share of First Evergreen
Common Stock, if any, held by Old Kent or any of its subsidiaries for
its own account, and not in a fiduciary capacity for a person other
than Old Kent or any of its subsidiaries or as a result of debts
previously contracted, shall be canceled and no consideration shall be
issuable or payable with respect to any such share.
2.1.5 TREASURY SHARES. Each share of First Evergreen Common
Stock held by First Evergreen as a treasury share, if any, shall be
canceled and no Old Kent Common Stock or other consideration shall be
issuable or payable with respect to any such share.
2.1.6 DISSENTING SHARES. Any shares of First Evergreen Common
Stock held by a holder who shall not have voted the shares in favor of
the Merger and who shall have complied with the applicable procedures
of Section 262 of the DGCL and becomes entitled to obtain payment for
the appraised value of the shares pursuant to Section 262 of the DGCL
shall be in this Plan of Merger called "DISSENTING SHARES."
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Notwithstanding any other provision of this Plan of Merger, any
Dissenting Shares shall not, after the Effective Time, be entitled to
vote for any purpose or receive any dividends or other distributions
and shall be entitled only to the rights as are afforded in respect of
Dissenting Shares pursuant to the DGCL. All payments in respect of
Dissenting Shares shall be from funds of Old Kent and not from the
acquired assets of First Evergreen.
2.1.7 FIRST EVERGREEN COMMON STOCK NO LONGER OUTSTANDING. Each
share of First Evergreen Common Stock outstanding immediately prior to
the Effective Time shall be deemed to be no longer outstanding and to
represent solely the right to receive shares of Old Kent Common Stock
as provided in this Plan of Merger, together with any dividends and
other distributions payable as provided in Section 2.5.4 (DIVIDENDS
PENDING SURRENDER), but subject to the payment of cash in lieu of
fractional shares as provided in Section 2.6 (NO FRACTIONAL SHARES).
2.2 UPSET PROVISION. After a Closing is properly called pursuant to
Section 1.2 (THE CLOSING), First Evergreen shall have the right to
terminate this Plan of Merger if the Final Old Kent Price is less than
$35.00 (the "UPSET PRICE"). The "FINAL OLD KENT PRICE" means the average
of the closing prices per share of Old Kent Common Stock reported on The
NASDAQ Stock Market during the 10 consecutive trading days ending on the
tenth business day prior to the date of the scheduled Closing (the "PRICING
PERIOD"), as reported in the DOW JONES NEWS/RETRIEVAL system, or other
equally reliable means.
2.3 ADJUSTMENTS. The Exchange Ratio and Upset Price, and the related
computations described in Sections 2.1 (CONVERSION OF SHARES) and 2.2
(UPSET PROVISION) shall be adjusted in the manner provided in this
Section upon the occurrence of any of the following events:
2.3.1 STOCK DIVIDENDS AND DISTRIBUTIONS. If Old Kent declares a
stock dividend, stock split, or other general distribution of Old Kent
Common Stock to holders of Old Kent Common Stock and the ex-dividend
or ex-distribution date for such stock dividend, stock split, or
distribution occurs (a) prior to the beginning of the Pricing Period,
the Upset Price shall be adjusted by multiplying it by that ratio
(i) the numerator of which shall be the total number of shares of Old
Kent Common Stock outstanding immediately prior to such dividend,
split, or distribution; and (ii) the denominator of which shall be the
total number of shares of Old Kent Common Stock that are or will be
outstanding immediately after such dividend, split, or distribution;
and (b) prior to the date of the Effective Time, the Exchange Ratio
shall be adjusted by multiplying it by that ratio (i) the numerator of
which shall be the total number of shares of Old Kent Common Stock
that are or will be outstanding immediately after such dividend,
split, or distribution; and (ii) the denominator of which shall be the
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total number of shares of Old Kent Common Stock outstanding
immediately prior to such dividend, split, or distribution.
2.3.2 OTHER ACTION AFFECTING OLD KENT COMMON STOCK. If there
occurs, other than as described in the preceding subsection, any
merger, business combination, recapitalization, reclassification,
subdivision, or combination that would substantially change the number
and value of outstanding shares of Old Kent Common Stock; a
distribution of warrants or rights with respect to Old Kent Common
Stock; or any other transaction that would have a substantially
similar effect; then the nature or amount of the consideration to be
received by the stockholders of First Evergreen in exchange for their
shares of First Evergreen Common Stock and the Exchange Ratio shall be
adjusted in such manner and at such time as shall be equitable under
the circumstances. It is intended that in the event of a
reclassification of outstanding shares of Old Kent Common Stock or a
consolidation or merger of Old Kent with or into another corporation,
other than a merger in which Old Kent is the surviving corporation and
which merger does not result in any reclassification of Old Kent
Common Stock, holders of First Evergreen Common Stock would receive,
in lieu of each share of Old Kent Common Stock to be issued in
exchange for First Evergreen Common Stock based on the Exchange Ratio,
the kind and amount of shares of Old Kent stock, other securities,
money, and/or property receivable upon such reclassification,
consolidation, or merger by holders of Old Kent Common Stock with
respect to each share of Old Kent Common Stock outstanding immediately
prior to such reclassification, consolidation, or merger.
2.3.3 POSTPONEMENT OF CLOSING. Old Kent and First Evergreen
agree not to convene the Closing at any time that would result in
there being a record date, ex-dividend date, or ex-distribution date
for any transaction described in Sections 2.3.1 (STOCK DIVIDENDS AND
DISTRIBUTIONS) or 2.3.2 (OTHER ACTION AFFECTING OLD KENT COMMON STOCK)
at any time during the Pricing Period.
2.3.4 EMPLOYEE STOCK OPTIONS, ETC. Notwithstanding any other
provisions of this Section, no adjustment shall be made in the event
of the issuance of additional shares of Old Kent Common Stock pursuant
to Old Kent's Dividend Reinvestment Plan, pursuant to the exercise of
stock options under stock option plans of Old Kent, or upon the grant
or sale of shares or rights to receive shares to, or for the account
of, Old Kent directors or employees pursuant to restricted stock,
deferred stock compensation, thrift, employee stock purchase, and
other benefit plans of Old Kent.
2.3.5 AUTHORIZED BUT UNISSUED SHARES. Notwithstanding the other
provisions of this Section, no adjustment shall be made in the event
of the issuance of additional shares of Old Kent Common Stock or other
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securities pursuant to a public offering, private placement, or an
acquisition of one or more banks, corporations, or business assets for
consideration that the board of directors of Old Kent, or a duly
authorized committee thereof, determines to be fair and reasonable.
2.3.6 CHANGES IN CAPITAL. Subject only to making any adjustment
to the Exchange Ratio and related computations prescribed by this
Section, nothing contained in this Plan of Merger is intended to
preclude Old Kent from amending its Restated Articles of Incorporation
to change its capital structure or from issuing additional shares of
Old Kent Common Stock, preferred stock, shares of other capital stock,
or securities that are convertible into shares of capital stock.
2.3.7 INCREASE IN OUTSTANDING SHARES OF FIRST EVERGREEN COMMON
STOCK. In the event that the number of shares of First Evergreen
Common Stock outstanding at the Effective Time is greater than 400,261
for any reason whatsoever (whether or not such increase constitutes a
breach of this Plan of Merger), then the Exchange Ratio shall be
adjusted by (i) the numerator of which shall be 400,261 and (ii) the
denominator of which shall be the total number of shares of First
Evergreen Common Stock outstanding at the Effective Time.
2.4 CESSATION OF STOCKHOLDER STATUS. As of the Effective Time, each
record holder of shares of First Evergreen Common Stock outstanding
immediately prior to the Effective Time shall cease to be a stockholder of
First Evergreen and shall have no rights as a First Evergreen stockholder
except to the extent provided by the DGCL to Dissenters' Shares. Except
with respect to Dissenters' Shares, each stock certificate representing
shares of First Evergreen Common Stock ("OLD CERTIFICATES") shall then be
deemed to represent only the right to receive shares of Old Kent Common
Stock and the right to receive cash in lieu of fractional shares, all as
provided in this Plan of Merger.
2.5 SURRENDER OF OLD CERTIFICATES AND DISTRIBUTION OF OLD KENT COMMON
STOCK. After the Effective Time, Old Certificates shall be exchangeable by
the holders thereof for new stock certificates representing the number of
shares of Old Kent Common Stock to which such holders shall be entitled in
the following manner:
2.5.1 TRANSMITTAL MATERIALS. As soon as practicable after the
Effective Time, Old Kent shall send or cause to be sent to each record
holder of First Evergreen Common Stock as of the Effective Time
transmittal materials for use in exchanging that holder's Old
Certificates for Old Kent Common Stock certificates. The transmittal
materials will contain instructions with respect to the surrender of
Old Certificates.
2.5.2 EXCHANGE AGENT. As soon as practicable after the
Effective Time, Old Kent will deliver to Old Kent Bank, a Michigan
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banking corporation, or such other bank or trust company as Old Kent
may designate (the "EXCHANGE AGENT"), the number of shares of Old Kent
Common Stock issuable and the amount of cash payable for fractional
shares in the Merger. The Exchange Agent shall not be entitled to
vote or exercise any rights of ownership with respect to such shares
of Old Kent Common Stock, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect to
such shares for the account of the persons entitled to such shares.
2.5.3 DELIVERY OF NEW CERTIFICATES. Old Kent shall cause the
Exchange Agent to promptly issue and deliver stock certificates in the
names and to the addresses that appear on First Evergreen's stock
records as of the Effective Time, or in such other name or to such
other address as may be specified by the holder of record in
transmittal documents received by the Exchange Agent; provided, that
with respect to each First Evergreen stockholder, the Exchange Agent
shall have received all of the Old Certificates held by that
stockholder, or an affidavit of loss and indemnity bond for such
certificate or certificates, together with properly executed
transmittal materials; and such certificates, transmittal materials,
affidavits, and bonds are in a form and condition reasonably
acceptable to Old Kent and the Exchange Agent.
2.5.4 DIVIDENDS PENDING SURRENDER. Whenever a dividend is
declared by Old Kent on Old Kent Common Stock that is payable to
shareholders of record of Old Kent as of a record date on or after the
date of the Effective Time, the declaration shall include dividends on
all shares issuable under this Plan of Merger. No former stockholder
of First Evergreen shall be entitled to receive a distribution of any
such dividend until the physical exchange of that stockholder's Old
Certificates for new Old Kent Common Stock certificates shall have
been effected. Upon the physical exchange of that stockholder's Old
Certificates, that stockholder shall be entitled to receive from Old
Kent an amount equal to all such dividends (without interest thereon
and less the amount of taxes, if any, that may have been imposed or
paid thereon) declared and paid with respect to the shares of Old Kent
Common Stock represented thereby.
2.5.5 STOCK TRANSFERS. On or after the Effective Time, there
shall be no transfers on First Evergreen's stock transfer books of the
shares of First Evergreen Common Stock that were issued and
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Old Certificates are properly presented for transfer,
then they shall be canceled and exchanged for stock certificates
representing shares of Old Kent Common Stock as provided in this Plan
of Merger. After the Effective Time, ownership of such shares as are
represented by any Old Certificates may be transferred only on the
stock transfer records of Old Kent.
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2.5.6 EXCHANGE AGENT'S DISCRETION. The Exchange Agent shall
have discretion to determine reasonable rules and procedures relating
to the exchange (or lack thereof) of Old Certificates and the issuance
and delivery of new certificates of Old Kent Common Stock into which
shares of First Evergreen Common Stock are converted in the Merger and
governing the payment for fractional shares of First Evergreen Common
Stock.
2.6 NO FRACTIONAL SHARES. Notwithstanding any other provision of
this Article II, no certificates or scrip representing fractional shares of
Old Kent Common Stock shall be issued in the Merger (taking into account
all shares held by a particular First Evergreen stockholder) upon the
surrender of Old Certificates. No fractional interest in any share of Old
Kent Common Stock resulting from the Merger shall be entitled to any part
of a dividend, distribution, or stock split with respect to shares of Old
Kent Common Stock nor entitle the record holder to vote or exercise any
rights of a shareholder with respect to that fractional interest. In lieu
of issuing any fractional share, each holder of an Old Certificate who
would otherwise have been entitled to a fractional share of Old Kent Common
Stock upon surrender of all Old Certificates for exchange shall be paid an
amount in cash (without interest) equal to such fraction of a share
multiplied by the Final Old Kent Price.
ARTICLE III - OLD KENT'S REPRESENTATIONS AND WARRANTIES
Old Kent represents and warrants to First Evergreen that, except as
otherwise set forth in a disclosure statement (the "OLD KENT DISCLOSURE
STATEMENT") that will be delivered to First Evergreen within 21 days after
the date of this Plan of Merger:
3.1 AUTHORIZATION, NO CONFLICTS, ETC.
3.1.1 AUTHORIZATION OF AGREEMENT. Old Kent has the requisite
corporate power and authority to execute and deliver this Plan of
Merger and to consummate the transactions contemplated by this Plan of
Merger. This Plan of Merger has been duly adopted and the
consummation of the transactions contemplated by this Plan of Merger
have been duly authorized by the Board of Directors of Old Kent and no
other corporate proceedings on the part of Old Kent are necessary to
authorize this Plan of Merger or to consummate the transactions so
contemplated. This Plan of Merger has been duly executed and
delivered by, and constitutes valid and binding obligations of, Old
Kent and is enforceable against Old Kent in accordance with its terms.
3.1.2 NO CONFLICT, BREACH, VIOLATION, ETC. The execution,
delivery, and performance of this Plan of Merger by Old Kent, and the
consummation of the Merger, do not and will not violate, conflict
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with, or result in a breach of: (a) any provision of Old Kent's
Restated Articles of Incorporation or Bylaws; or (b) any statute,
code, ordinance, rule, regulation, judgment, order, writ, arbitral
award, decree, or injunction applicable to Old Kent or its
subsidiaries, assuming the timely receipt of each of the approvals
referred to in Section 3.1.4 (REQUIRED APPROVALS).
3.1.3 NO CONTRACTUAL BREACH, DEFAULT, LIABILITY, ETC. The
execution, delivery, and performance of this Plan of Merger by Old
Kent, and the consummation of the Merger, do not and will not:
(a) AGREEMENTS, ETC. Violate, conflict with, result in a
breach of, constitute a default under, require any consent,
approval, waiver, extension, amendment, authorization, notice or
filing under, or extinguish any material contract right of Old
Kent or any of its subsidiaries under any agreement, mortgage,
lease, commitment, indenture, other instrument, or obligation to
which Old Kent or any of its subsidiaries is a party or by which
they are bound or affected, the result of which would have a
"Material Adverse Effect" (as defined in Section 9.1 ("MATERIAL
ADVERSE EFFECT" DEFINED)) on Old Kent;
(b) REGULATORY RESTRICTIONS. Violate, conflict with,
result in a breach of, constitute a default under, or require any
consent, approval, waiver, extension, amendment, authorization,
notice, or filing under, any memorandum of understanding or
similar regulatory consent agreement to which Old Kent is a party
or subject, or by which it is bound or affected; or
(c) TORTIOUS INTERFERENCE. Subject First Evergreen to
liability for tortious interference with contractual rights.
3.1.4 REQUIRED APPROVALS. No notice to, filing with,
authorization of, exemption by, or consent or approval of, any public
body or authority is necessary for the consummation of the Merger by
Old Kent other than in connection or compliance with the provisions of
the Michigan Act and DGCL, compliance with federal and state
securities laws, bylaws and rules of the National Association of
Securities Dealers, Inc. ("NASD"), and the approval required under the
Federal Bank Holding Company Act.
3.2 ORGANIZATION AND GOOD STANDING. Old Kent is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Michigan. Old Kent possesses all requisite corporate power and
authority to own, operate, and lease its properties and to carry on its
business as it is now being conducted in all material respects. Old Kent
is a bank holding company duly registered as such with the Board of
Governors of the Federal Reserve System (the "FEDERAL RESERVE BOARD") under
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the Bank Holding Company Act of 1956, as amended (the "FEDERAL BANK HOLDING
COMPANY ACT"). Old Kent is qualified or admitted to conduct business as a
foreign corporation in each state in which the failure to be so qualified
or omitted would have a Material Adverse Effect on Old Kent.
3.3 CAPITAL STOCK.
3.3.1 CLASSES AND SHARES. The authorized capital stock of Old
Kent consists of 175,000,000 shares divided into two classes as
follows: (a) except as provided below, 150,000,000 shares of Common
Stock, of which, as of February 20, 1998, a total of 91,696,375 shares
were validly issued and outstanding; and (b) 25,000,000 shares of
preferred stock, without par value, of which 3,000,000 shares are
designated Series A Preferred Stock, 300,000 shares are designated
Series B Preferred Stock, 1,000,000 shares are designated Series C
Preferred Stock, none of which preferred stock were issued and
outstanding as of the date of this Plan of Merger. The 1,000,000
shares of Series C Preferred Stock are reserved for issuance pursuant
to Series C Preferred Stock Purchase Rights (the "OLD KENT RIGHTS")
governed by a Rights Agreement, dated as of January 20, 1997, between
Old Kent and Old Kent Bank (the "OLD KENT RIGHTS AGREEMENT"). On
April 20, 1998, holders of a majority of Old Kent Common Stock
approved an amendment to Old Kent's Restated Articles of Incorporation
authorizing Old Kent to increase the number of authorized shares of
Old Kent Common Stock to 300,000,000. Upon the proper filing and
acceptance of an amendment to Old Kent's Restated Articles of
Incorporation under the Michigan Act sometime after the date of this
Plan of Merger, the number of authorized shares of Old Kent Common
Stock shall equal 300,000,000.
3.3.2 NO OTHER CAPITAL STOCK. As of the execution of this Plan
of Merger: (a) other than Old Kent Common Stock, there is no security
or class of securities issued and outstanding that represents or is
convertible into capital stock of Old Kent; and (b) there are no
outstanding subscriptions, options, warrants, or rights to acquire any
capital stock of Old Kent, or agreements to which Old Kent is a party
or by which it is bound to issue capital stock, except as set forth
in, or as contemplated by, this Plan of Merger, and except (i) the Old
Kent Rights (which as of the date of this Plan of Merger are
represented by and transferable only with certificates representing
shares of Old Kent Common Stock); (ii) stock options awarded pursuant
to stock option plans; (iii) provisions for the grant or sale of
shares or the right to receive shares to, or for the account of,
employees and directors pursuant to restricted stock, deferred stock
compensation, and other benefit plans; (iv) shares of Old Kent Common
Stock issuable under agreements entered into in connection with
acquisitions of direct or indirect subsidiaries or assets of such
subsidiaries in transactions approved by the Old Kent board of
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directors or a committee of such board; and (v) shares of Old Kent
Common Stock issuable under Old Kent's dividend reinvestment plan and
employee stock purchase plan.
3.3.3 ISSUANCE OF SHARES. Between February 20, 1998, and the
execution of this Plan of Merger, no additional shares of capital
stock have been issued by Old Kent, except as described in this Plan
of Merger, and except for shares issued or issuable pursuant to (a)
the exercise of employee stock options under employee stock option
plans; (b) the grant or sale of shares to, or for the account of,
employees and directors pursuant to restricted stock, deferred stock
compensation, or other benefit plans; (c) the grant or sale of shares
of Old Kent Common Stock issuable under agreements entered into in
connection with acquisitions of direct or indirect subsidiaries or
assets of such subsidiaries in transactions approved by the Old Kent
Board of Directors or committee thereof; and (d) Old Kent's dividend
reinvestment plan and employee stock purchase plan.
3.3.4 VOTING RIGHTS. Neither Old Kent nor any of its
subsidiaries has outstanding any security or issue of securities the
holder or holders of which have the right to vote on the approval of
the Merger or this Plan of Merger, or that entitle the holder or
holders to consent to, or withhold consent on, the Merger or this Plan
of Merger.
3.4 OLD KENT COMMON STOCK. The shares of Old Kent Common Stock to be
issued in the Merger in accordance with this Plan of Merger have been duly
authorized and reserved and, when issued as contemplated by this Plan of
Merger, will be validly issued, fully paid, and nonassessable shares.
3.5 SUBSIDIARY. Old Kent owns all of the issued and outstanding
shares of capital stock of Old Kent Bank, free and clear of all claims,
security interests, pledges, or liens of any kind. Old Kent Bank is duly
organized, validly existing, and in good standing as a banking corporation
under the laws of the State of Michigan. There are no outstanding
subscriptions, options, warrants, rights to acquire, or any other similar
agreements pertaining to the capital stock of Old Kent Bank.
3.6 FINANCIAL STATEMENTS. The consolidated financial statements of
Old Kent and its subsidiaries as of and for the each of three years ended
December 31, 1995, 1996, and 1997, as reported on by Old Kent's independent
accountants, and the unaudited consolidated financial statements of Old
Kent and its subsidiaries as of and for the quarter ended March 31, 1998,
including all schedules and notes relating to such statements
(collectively, "OLD KENT'S FINANCIAL STATEMENTS") fairly present the
financial condition and the results of operations, changes in shareholders'
equity, and cash flow of Old Kent as of the respective dates of and for the
periods referred to in such financial statements, all in accordance with
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generally accepted United States accounting principles ("GAAP"), subject,
in the case of interim financial statements, to normal recurring year-end
adjustments (the effect of which will not, individually or in the
aggregate, have a Material Adverse Effect) and the absence of notes that,
if presented, would not differ materially from those included in Old Kent's
Financial Statements as of and for the period ended December 31, 1997. The
unaudited consolidated financial statements of Old Kent and its
subsidiaries as of and for each of the quarters ended March 31, 1998 and
thereafter, including all schedules and notes relating to such statements,
will be correct and complete in all material respects. Old Kent's
Financial Statements reflect the consistent application of GAAP throughout
the periods involved, except as disclosed in the notes to such financial
statements.
3.7 CALL REPORTS. The following reports (including all related
schedules, notes, and exhibits) were prepared and filed in conformity with
applicable regulatory requirements and were correct and complete in all
material respects when filed:
3.7.1 The consolidated reports of condition and income of Old
Kent Bank as of and for each of the years ended December 31, 1995,
1996, and 1997, as filed with the FDIC; and
3.7.2 The FR Y-9 and FR Y-6 for Old Kent and Old Kent Bank as of
and for each of the years ended December 31, 1995, 1996, and 1997, as
filed with the Federal Reserve Board.
All of such reports required to be filed prior to the Closing by Old Kent
and/or Old Kent Bank will be prepared and filed in conformity with
applicable regulatory requirements applied consistently throughout their
respective periods (except as otherwise noted in such reports) and will be
correct and complete in all material respects when filed.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or reserved against in Old Kent's Financial Statements as of
December 31, 1997, as of such date, neither Old Kent nor any of its
subsidiaries had liabilities or obligations, secured or unsecured (whether
accrued, absolute, or contingent) as to which there is a reasonable
probability that they could have a Material Adverse Effect on Old Kent.
3.9 ABSENCE OF MATERIAL ADVERSE CHANGE. Since December 31, 1997,
there has been no change in the financial condition, income, expenses, or
business of Old Kent and its subsidiaries (and not the banking industry as
a whole) that had or in the future will have a Material Adverse Effect on
Old Kent. No facts or circumstances have been discovered from which it
reasonably appears that there is a significant risk and reasonable
probability that there will occur a Material Adverse Effect on Old Kent and
not applicable to the banking industry as a whole.
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3.10 ABSENCE OF LITIGATION. Except as disclosed in Old Kent's
filings with the Securities and Exchange Commission (the "SEC"), there is
no action, suit, proceeding, claim, arbitration, or investigation pending
or threatened by any person, including without limitation any governmental
or regulatory agency, against Old Kent or any of its subsidiaries, or the
assets or business of Old Kent or any of its subsidiaries, any of which has
had or in the future will have a Material Adverse Effect on Old Kent.
There is no factual basis known to Old Kent that presents a reasonable
potential for any such action, suit, proceeding, claim, arbitration, or
investigation.
3.11 REGULATORY FILINGS. In the last two years:
3.11.1 SEC FILINGS. Old Kent has filed, and will continue to
file, in a timely manner all required filings with the SEC, including
without limitation all reports on Form 10-K and Form 10-Q;
3.11.2 REGULATORY FILINGS. Old Kent has filed in a timely
manner all other material filings with other regulatory bodies for
which filings are required; and
3.11.3 COMPLETE AND ACCURATE. All such filings, as of their
respective filing dates, did not contain any untrue statement of
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.12 AGREEMENTS WITH BANK REGULATORS. Neither Old Kent nor Old Kent
Bank is a party to any written agreement or memorandum of understanding
with, or a party to any commitment letter, board resolution or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any governmental
authority that restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or reserve policies or
its management, nor has Old Kent been advised by any governmental authority
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission. Neither Old Kent nor Old Kent
Bank is required by Section 32 of the Federal Deposit Insurance Act to give
prior notice to a Federal banking agency of the proposed addition of an
individual to its board of directors or the employment of an individual as
a senior or executive officer. As of the date of this Plan of Merger, Old
Kent knows of no reason why the regulatory approvals referred to in
Sections 3.1.4 and 4.1.4 (REQUIRED APPROVALS) should not be obtained.
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3.13 REGISTRATION STATEMENT, ETC.
3.13.1 "TRANSACTION DOCUMENTS." The term "TRANSACTION
DOCUMENTS" shall collectively mean: (i) the registration statement to
be filed by Old Kent with the SEC (the "REGISTRATION STATEMENT") in
connection with the Old Kent Common Stock to be issued in the Merger;
(ii) the prospectus and proxy statement (the "PROSPECTUS AND PROXY
STATEMENT") to be mailed to First Evergreen stockholders in connection
with the Stockholders' Meeting; and (iii) any other documents to be
filed with the SEC, the Federal Reserve Board, the states of Michigan
or Delaware, or any other regulatory agency in connection with the
transactions contemplated by this Plan of Merger.
3.13.2 ACCURATE INFORMATION. The information to be supplied by
Old Kent for inclusion or incorporation by reference in any
Transaction Document will not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (a) at the
respective times such Transaction Documents are filed; (b) with
respect to the Registration Statement, when it becomes effective; and
(c) with respect to the Prospectus and Proxy Statement, when it is
mailed and at the time of the Stockholders' Meeting.
3.13.3 COMPLIANCE OF FILINGS. All documents that Old Kent is
responsible for filing with the SEC or any regulatory agency in
connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.
3.14 INVESTMENT BANKERS AND BROKERS. Old Kent has not employed any
broker, finder, or investment banker in connection with the Merger. Old
Kent has no express or implied agreement with any other person or company
relative to any commission or finder's fee payable with respect to this
Plan of Merger or the transactions contemplated by it.
3.15 ACCOUNTING AND TAX TREATMENT. Neither Old Kent nor, to the
best of its knowledge, any of its affiliates, has taken or agreed to take
any action or knows of any reason that, with respect to Old Kent and its
affiliates, would prevent Old Kent from accounting for the business
combination to be effected by the Merger as a pooling-of-interests. Old
Kent is aware of no reason why the Merger will fail to qualify as a
reorganization under Section 368(a) of the Internal Revenue Code.
3.16 NO KNOWN BREACH. As of the date of this Plan of Merger, Old
Kent has no knowledge of any facts provided by First Evergreen to Old Kent
in writing prior to 5 p.m. on April 14, 1998, that Old Kent believes would,
in and of themselves, give Old Kent the right to terminate this Plan of
Merger in accordance with Section 8.3 (OLD KENT'S RIGHTS TO TERMINATE).
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3.17 TRUE AND COMPLETE INFORMATION. No schedule, statement, list,
certificate, or other information furnished or to be furnished by Old Kent
in connection with this Plan of Merger, including the Old Kent Disclosure
Statement, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they
are made, not misleading.
3.18 REPRESENTATIONS AND WARRANTIES AT CLOSING. Old Kent further
warrants that its representations and warranties in this Plan of Merger
will be true in all material respects at the Closing, except as otherwise
expressly contemplated by this Plan of Merger. All of such representations
and warranties made with respect to specified dates or events shall still
be true at the Closing in all material respects with respect to such dates
or events.
ARTICLE IV - FIRST EVERGREEN'S REPRESENTATIONS AND WARRANTIES
First Evergreen represents and warrants to Old Kent that, except as
otherwise set forth in a disclosure statement (the "FIRST EVERGREEN
DISCLOSURE STATEMENT") that will be delivered to Old Kent within 21 days
after the execution of this Plan of Merger:
4.1 AUTHORIZATION, NO CONFLICTS, ETC.
4.1.1 AUTHORIZATION OF AGREEMENT. First Evergreen has the
requisite corporate power and authority to execute and deliver this
Plan of Merger and, subject to adoption by First Evergreen's
stockholders, to consummate the transactions contemplated by this Plan
of Merger. This Plan of Merger has been duly approved and the
consummation of the transactions contemplated by this Plan of Merger
have been duly authorized by the Board of Directors of First Evergreen
and no other corporate proceedings on the part of First Evergreen are
necessary to authorize this Plan of Merger or to consummate the
transactions so contemplated, subject only to adoption by the
stockholders of First Evergreen. This Plan of Merger has been duly
executed and delivered by, and constitutes valid and binding
obligations of, First Evergreen and is enforceable against First
Evergreen in accordance with its terms.
4.1.2 NO CONFLICT, BREACH, VIOLATION, ETC. The execution,
delivery, and performance of this Plan of Merger by First Evergreen,
and the consummation of the Merger, do not and will not violate,
conflict with, or result in a breach of any provision of: (a) First
Evergreen's or First Evergreen Bank's Certificate of Incorporation,
Articles of Association, or By-laws; or (b) any statute, code,
ordinance, rule, regulation, judgment, order, writ, arbitral award,
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decree, or injunction applicable to First Evergreen or First Evergreen
Bank, assuming the timely receipt of each of the approvals referred to
in Section 4.1.4 (REQUIRED APPROVALS).
4.1.3 NO CONTRACTUAL BREACH, DEFAULT, LIABILITY, ETC. The
execution, delivery, and performance of this Plan of Merger by First
Evergreen, and the consummation of the Merger, do not and will not:
(a) AGREEMENTS, ETC. Violate, conflict with, result in a
breach of, constitute a default under, require any consent,
approval, waiver, extension, amendment, authorization, notice or
filing under, or extinguish any material contract right of First
Evergreen or First Evergreen Bank under any agreement, mortgage,
lease, commitment, indenture, other instrument, or obligation to
which First Evergreen or First Evergreen Bank is a party or by
which they are bound or affected, the result of which would have
a Material Adverse Effect on First Evergreen, other than First
Evergreen's or First Evergreen Bank's lease agreement with
respect to its property located at 4400 West 95th Street, Oak
Lawn, Illinois (the "HOSPITAL LEASE"); the Autopay Agreement,
dated October 8, 1987, as amended, between First Evergreen Bank
and SunGard Trust Systems Inc.; the Custodian Agreement, dated
November 7, 1995, as amended, between Bank of New York, First
Evergreen Bank, and SunGard Trust Services Inc.; and the Data
Processing Services Agreement, dated December 29, 1995, as
amended, between M&I Data Services and First Evergreen
(collectively, the "DESIGNATED CONTRACTS");
(b) REGULATORY RESTRICTIONS. Violate, conflict with,
result in a breach of, constitute a default under, or require any
consent, approval, waiver, extension, amendment, authorization,
notice, or filing under, any memorandum of understanding or
similar regulatory consent agreement to which First Evergreen or
First Evergreen Bank is a party or subject, or by which it is
bound or affected; or
(c) TORTIOUS INTERFERENCE. Subject Old Kent or its
subsidiaries to liability for tortious interference with
contractual rights.
4.1.4 REQUIRED APPROVALS. No notice to, filing with,
authorization of, exemption by, or consent or approval of, any public
body or authority is necessary for the consummation of the Merger by
First Evergreen other than in connection or compliance with the
provisions of the Michigan Act and DGCL, compliance with federal and
state securities laws, and the consents, authorizations, approvals, or
exemptions required under the Federal Bank Holding Company Act.
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4.2 ORGANIZATION AND GOOD STANDING. First Evergreen is a corporation
duly organized, validly existing, and in good standing under the laws of
the State of Delaware. First Evergreen possesses all requisite corporate
power and authority to own, operate, and lease its properties and to carry
on its business as it is now being conducted in all material respects.
First Evergreen is a bank holding company duly registered as such with the
Federal Reserve Board under the Federal Bank Holding Company Act. First
Evergreen is duly qualified and admitted to do business as a foreign
corporation in the state of Illinois and is not, and is not required to be,
qualified or admitted to conduct business as a foreign corporation in any
other state, except where such failure would have a Material Adverse Effect
on First Evergreen.
4.3 SUBSIDIARY.
4.3.1 OWNERSHIP OF FIRST EVERGREEN BANK. First Evergreen owns
all of the issued and outstanding shares of capital stock of First
Evergreen Bank, free and clear of all claims, security interests,
pledges, or liens of any kind. First Evergreen Bank is duly
organized, validly existing, and in good standing as a national bank
under the laws of the United States. First Evergreen does not have
"CONTROL" (as defined in Section 2(a)(2) of the Federal Bank Holding
Company Act, using 5 percent rather than 25 percent), either directly
or indirectly, of any corporation engaged in an active trade or
business or that holds any significant assets other than as stated in
this Section.
4.3.2 RIGHTS TO CAPITAL STOCK. There are no outstanding
subscriptions, options, warrants, rights to acquire, or any other
similar agreements pertaining to the capital stock of First Evergreen
Bank.
4.3.3 QUALIFICATION AND POWER. Other than with respect to the
state of Illinois, First Evergreen Bank is qualified or admitted to
conduct business in each state where such qualification or admission
is required except that state or those states where the failure to be
so qualified or admitted would not have a Material Adverse Effect on
First Evergreen. First Evergreen Bank has full corporate power and
authority to carry on its business as and where now being conducted.
4.3.4 DEPOSIT INSURANCE; OTHER ASSESSMENTS. First Evergreen
Bank maintains in full force and effect deposit insurance through the
Bank Insurance Fund of the Federal Deposit Insurance Corporation
("FDIC"). First Evergreen Bank has fully paid to the FDIC as and when
due all assessments with respect to its deposits as are required to
maintain such deposit insurance in full force and effect. First
Evergreen Bank has paid as and when due all material fees, charges,
assessments, and the like to each and every governmental or regulatory
agency having jurisdiction as required by law, regulation, or rule.
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4.4 CAPITAL STOCK.
4.4.1 CLASSES AND SHARES. The authorized capital stock of First
Evergreen consists of 2,000,000 shares of common stock, $25.00 par
value per share, of which 400,261 shares are issued and outstanding.
4.4.2 NO OTHER CAPITAL STOCK. Except for the Option
Agreement, there is no security or class of securities authorized or
issued that represents or is convertible into capital stock of First
Evergreen and there are no outstanding subscriptions, options,
warrants, or rights to acquire any capital stock of First Evergreen,
or agreements to which First Evergreen is a party or by which it is
bound to issue capital stock.
4.4.3 ISSUANCE OF SHARES. After the execution of this Plan of
Merger, the number of issued and outstanding shares of First Evergreen
Common Stock is not subject to change before the Effective Time.
4.4.4 VOTING RIGHTS. Other than the shares of First Evergreen
Common Stock described in this Section, neither First Evergreen nor
First Evergreen Bank has outstanding any security or issue of
securities the holder or holders of which have the right to vote on
the approval of the Merger or this Plan of Merger or that entitle the
holder or holders to consent to, or withhold consent on, the Merger or
this Plan of Merger.
4.5 FINANCIAL STATEMENTS.
4.5.1 FINANCIAL STATEMENTS. The consolidated financial
statements of First Evergreen and First Evergreen Bank as of and for
the each of three years ended December 31, 1995, 1996, and 1997, as
reported on by First Evergreen's independent accountants, and the
unaudited consolidated financial statements of First Evergreen and
First Evergreen Bank as of and for the quarter ended March 31, 1998,
including all schedules and notes relating to such statements, as
previously delivered to Old Kent (collectively, "FIRST EVERGREEN'S
FINANCIAL STATEMENTS") fairly present the financial condition and the
results of operations, changes in stockholders' equity, and cash flow
of First Evergreen as of the respective dates of and for the periods
referred to in such financial statements, all in accordance with GAAP,
subject, in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, have a Material Adverse Effect) and
the absence of notes that, if presented, would not differ materially
from those included in First Evergreen's Financial Statements as of
and for the period ended December 31, 1997. First Evergreen's
Financial Statements reflect the consistent application of GAAP
throughout the periods involved, except as disclosed in the notes to
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such financial statements. When prepared and delivered to Old Kent,
the unaudited consolidated financial statements of First Evergreen and
First Evergreen Bank as of and for each of the quarters ended March
31, 1998 and thereafter, including all schedules and notes (if any)
relating to such statements, will be correct and complete in all
material respects. No financial statements of any entity other than
First Evergreen Bank is required by GAAP to be included in the
consolidated financial statements of First Evergreen.
4.5.2 CALL REPORTS. The following reports (including all
related schedules, notes, and exhibits) were prepared and filed in
conformity with applicable regulatory requirements and were correct
and complete in all material respects when filed:
(a) The consolidated reports of condition and income of
First Evergreen Bank as of and for each of the years ended
December 31, 1995, 1996, and 1997, as filed with the FDIC; and
(b) The FR Y-9 and FR Y-6 for First Evergreen and First
Evergreen Bank as of and for each of the years ended December 31,
1995, 1996, and 1997, as filed with the Federal Reserve Board.
All of such reports required to be filed prior to the Closing by First
Evergreen and/or First Evergreen Bank will be prepared and filed in
conformity with applicable regulatory requirements applied
consistently throughout their respective periods (except as otherwise
noted in such reports) and will be correct and complete in all
material respects when filed. All of the reports identified in this
Section are collectively referred to as the "CALL REPORTS."
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or reserved against in First Evergreen's Financial Statements as
of December 31, 1997, neither First Evergreen nor First Evergreen Bank had,
as of such date, liabilities or obligations, secured or unsecured (whether
accrued, absolute, or contingent) as to which there is a reasonable
probability that they could have a Material Adverse Effect on First
Evergreen.
4.7 ABSENCE OF MATERIAL ADVERSE CHANGE. Except for transactions
contemplated by this Plan of Merger and their related fees and expenses,
since December 31, 1997, there has been no change in the financial
condition, income, expenses, or business of First Evergreen and First
Evergreen Bank (and not the banking industry as a whole) that had or in the
future will have a Material Adverse Effect. No facts or circumstances have
been discovered from which it reasonably appears that there is a
significant risk and reasonable probability that there will occur a change
that would have a Material Adverse Effect on First Evergreen and not
applicable to the banking industry as a whole.
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4.8 ABSENCE OF LITIGATION. There is no action, suit, proceeding,
claim, arbitration, or investigation pending or, to the knowledge of First
Evergreen, threatened by any person, including without limitation any
governmental or regulatory agency, against First Evergreen or First
Evergreen Bank, or the assets or business of First Evergreen or First
Evergreen Bank, any of which has had or may have a Material Adverse Effect
on First Evergreen. To the knowledge of First Evergreen, there is no
factual basis that presents a reasonable potential for any such action,
suit, proceeding, claim, arbitration, or investigation.
4.9 CONDUCT OF BUSINESS. First Evergreen and First Evergreen Bank
have conducted their respective businesses and used their respective
properties substantially in compliance with all federal, state, and local
laws, civil or common, ordinances and regulations, including without
limitation applicable federal and state laws and regulations concerning
banking, securities, truth-in-lending, truth-in-savings, mortgage
origination and servicing, usury, fair credit reporting, consumer
protection, occupational safety, civil rights, employee protection, fair
employment practices, fair labor standards, and insurance; and
Environmental Laws (as defined in Section 4.21.2 (ENVIRONMENTAL LAWS));
except for violations (individually or in the aggregate) that would not
have a Material Adverse Effect on First Evergreen.
4.10 ABSENCE OF DEFAULTS UNDER CONTRACTS. There is no existing
default by First Evergreen or First Evergreen Bank, or any other party,
under any contract or agreement to which First Evergreen or First Evergreen
Bank is a party, or by which they are bound, the result of which would have
a Material Adverse Effect on First Evergreen. Excepting any ordinary and
customary banking relationships, there are no material agreements,
contracts, mortgages, deeds of trust, leases, commitments, indentures,
notes, or other instruments under which another party is in material
default under its obligations to First Evergreen or First Evergreen Bank.
4.11 REGULATORY FILINGS. In the last five years:
4.11.1 SEC FILINGS. First Evergreen has filed, and will
continue to file, in a timely manner all required filings with the
SEC, including without limitation all reports on Form 10-K and Form
10-Q;
4.11.2 REGULATORY FILINGS. First Evergreen has filed in a
timely manner all other filings with other regulatory bodies for which
filings are required; and
4.11.3 COMPLETE AND ACCURATE. All such filings, as of their
respective filing dates, did not contain any untrue statement of
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
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circumstances under which they were made, not misleading. All such
filings complied in all material respects with all regulations, forms,
and guidelines applicable to such filings.
4.12 REGISTRATION STATEMENT, ETC.
4.12.1 ACCURATE INFORMATION. The information to be supplied by
First Evergreen for inclusion or incorporation by reference in any
Transaction Document will not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (a) at the
respective times such Transaction Documents are filed; (b) with
respect to the Registration Statement, when it becomes effective; and
(c) with respect to the Prospectus and Proxy Statement, when it is
mailed and at the time of the Stockholders' Meeting.
4.12.2 COMPLIANCE OF FILINGS. All documents that First
Evergreen is responsible for filing with the SEC or any regulatory
agency in connection with the Merger will comply as to form in all
material respects with the provisions of applicable law.
4.13 AGREEMENTS WITH BANK REGULATORS. Neither First Evergreen nor
First Evergreen Bank is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter, board resolution
or similar undertaking to, or is subject to any order or directive by, or
is a recipient of any extraordinary supervisory letter from, any
governmental authority that restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit or
reserve policies or its management, nor has First Evergreen been advised by
any governmental authority that it is contemplating issuing or requesting
(or is considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission. Neither First
Evergreen nor First Evergreen Bank is required by Section 32 of the Federal
Deposit Insurance Act to give prior notice to a Federal banking agency of
the proposed addition of an individual to its board of directors or the
employment of an individual as a senior or executive officer. As of the
date of this Plan of Merger, First Evergreen knows of no reason why the
regulatory approvals referred to in Sections 3.1.4 and 4.1.4 (REQUIRED
APPROVALS) should not be obtained.
4.14 TAX MATTERS.
4.14.1 TAX RETURNS. First Evergreen and First Evergreen Bank
have duly and timely filed all material tax returns that they have by
law been required to file, including without limitation those with
respect to income, withholding, social security, unemployment,
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franchise, real property, personal property, sales, use, and
intangibles taxes. Each such tax return, report, and statement, as
amended, is correct and complies in all material respects with all
applicable laws and regulations.
4.14.2 TAX ASSESSMENTS AND PAYMENTS. All taxes and assessments,
including any penalties, interest, and deficiencies relating to those
taxes and assessments, due and payable by First Evergreen and First
Evergreen's Bank have been paid in full as and when due, including
applicable extension periods. The provisions made for taxes on First
Evergreen's Financial Statement as of December 31, 1997, are
sufficient for the payment of all federal, state, county, and local
taxes of First Evergreen and First Evergreen Bank accrued but unpaid
as of the date indicated, whether or not disputed, with respect to all
periods through December 31, 1997.
4.14.3 TAX AUDITS. None of the federal consolidated income tax
returns of First Evergreen and First Evergreen Bank filed for any tax
year after 1990 have been audited by the Internal Revenue Service (the
"IRS"). There is no tax audit or legal or administrative proceeding
for assessment or collection of taxes pending or, to First Evergreen's
knowledge, threatened with respect to First Evergreen or First
Evergreen Bank. No claim for assessment or collection of taxes has
been asserted with respect to First Evergreen or First Evergreen Bank.
No waiver of any limitations statute or extension of any assessment or
collection period has been executed by or on behalf of First Evergreen
or First Evergreen Bank.
4.14.4 ILLINOIS NET OPERATING LOSS AMOUNTS. The First Evergreen
Disclosure Schedule accurately sets forth in all material respects the
amount of, tax year, and legal entity governing Illinois net operating
losses existing through December 31, 1997. First Evergreen has
validly succeeded to the Illinois net operating losses of any
previously acquired bank or bank holding company, the losses of which
are accurately set forth in all material respects in the First
Evergreen Disclosure Schedule.
4.15 TITLE TO PROPERTIES. First Evergreen and First Evergreen Bank
have good, sufficient, and marketable title to all of their properties and
assets, whether real, personal, or a combination thereof, reflected in
their books and records as being owned (including those reflected in First
Evergreen's Financial Statements as of December 31, 1997, except as since
disposed of in the ordinary course of business), free and clear of all
liens and encumbrances, except:
4.15.1 REFLECTED ON BALANCE SHEET. As reflected on First
Evergreen's Financial Statements as of December 31, 1997 or March 31,
1998;
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4.15.2 NORMAL TO BUSINESS. Liens for current taxes not yet
delinquent, and liens or encumbrances that are normal to the business
of First Evergreen and First Evergreen Bank and that would not have a
Material Adverse Effect on First Evergreen; and
4.15.3 IMMATERIAL IMPERFECTIONS. Such imperfections of title,
easements, restrictions, and encumbrances, if any, as are not material
in character, amount, or extent, and do not materially detract from
the value, or materially interfere with the present use, of the
properties subject thereto or affected thereby.
4.16 CONDITION OF REAL PROPERTY. With respect to each parcel of real
property owned, legally and beneficially, by First Evergreen or First
Evergreen's Bank, ("FIRST EVERGREEN'S REAL PROPERTY"), to the best
knowledge of First Evergreen:
4.16.1 NO ENCROACHMENTS. No building or improvement to First
Evergreen's Real Property encroaches on any easement or property owned
by another person. No building or property owned by another person
encroaches on First Evergreen's Real Property or on any easement
benefiting First Evergreen's Real Property. None of the boundaries of
First Evergreen's Real Property deviates substantially from those
shown on the survey of such property, if any, included with the First
Evergreen Disclosure Statement or from what the boundaries appear to
be through visual inspection. No claim of encroachment has been
asserted by any person with respect to First Evergreen's Real
Property.
4.16.2 ZONING. Neither First Evergreen, First Evergreen Bank,
nor First Evergreen's Real Property is in material violation of any
zoning regulation, building restriction, restrictive covenant,
ordinance, or other law, order, regulation, or requirement relating to
First Evergreen's Real Property.
4.16.3 BUILDINGS. All buildings and improvements to First
Evergreen's Real Property are in good condition (normal wear and tear
excepted), are structurally sound and are not in need of material
repairs, are fit for their intended purposes, and are adequately
serviced by all utilities necessary for the effective operation of
business as presently conducted at that location.
4.16.4 NO CONDEMNATION. None of First Evergreen's Real Property
is the subject of any condemnation action. There is no proposal under
active consideration by any public or governmental authority or entity
to acquire First Evergreen's Real Property for any governmental
purpose.
4.17 REAL AND PERSONAL PROPERTY LEASES. With respect to each lease
and license pursuant to which First Evergreen or First Evergreen Bank, as
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lessee or licensee, has possession of real or personal property, excluding
any personal property lease with payments of less than $25,000 per year
("FIRST EVERGREEN'S LEASES"):
4.17.1 VALID. Each of First Evergreen's Leases is valid,
effective, and enforceable against the lessor or licensor in
accordance with its terms.
4.17.2 NO DEFAULT. There is no existing default under any of
First Evergreen's Leases or any event that with notice or lapse of
time, or both, would constitute a default with respect to First
Evergreen, First Evergreen Bank, or any other party to the contract,
the result of such default would have a Material Adverse Effect on
First Evergreen.
4.17.3 ASSIGNMENT. None of First Evergreen's Leases, except the
lease of its Christ Hospital Facility, contain a prohibition against
assignment by First Evergreen or First Evergreen Bank, by operation of
law or otherwise, or any provision that would materially interfere
with the possession or use of the property by Old Kent or its
subsidiaries for the same purposes and upon the same rental and other
terms following consummation of the Merger as are applicable to First
Evergreen or First Evergreen Bank.
4.18 REQUIRED LICENSES, PERMITS, ETC.
4.18.1 LICENSES, PERMITS, ETC. First Evergreen and First
Evergreen Bank each hold all licenses, certificates, permits,
franchises, and rights from all appropriate federal, state, and other
public authorities necessary for its conduct of business as presently
conducted, the lack of which would not have a Material Adverse Effect
on First Evergreen.
4.18.2 REGULATORY ACTION. Neither First Evergreen nor First
Evergreen Bank has within the last five years been charged by a
regulatory authority with, or to the best of First Evergreen's
knowledge, is under governmental investigation with respect to, any
actual or alleged violation of any statute, ordinance, rule,
regulation, guideline, or standard, except as set forth on the most
recent examination report on First Evergreen Bank by its primary bank
regulatory. Neither First Evergreen nor First Evergreen Bank is the
subject of any pending or, to First Evergreen's knowledge, threatened
proceeding by any regulatory authority having jurisdiction over its
business, properties, or operations.
4.19 CERTAIN EMPLOYMENT MATTERS.
4.19.1 EMPLOYMENT POLICIES, PROGRAMS, AND PROCEDURES. The
policies, programs and practices of First Evergreen and First
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Evergreen Bank relating to equal opportunity and affirmative action,
wages, hours of work, employee disabilities, and other terms and
conditions of employment are in compliance in all material respects
with applicable federal, state, and local laws, orders, regulations,
and ordinances governing or relating to employment and employer
facilities.
4.19.2 RECORD OF PAYMENTS. There are no existing or outstanding
obligations of First Evergreen or First Evergreen Bank, whether
arising by operation of law, civil or common, by contract, or by past
custom, for Employment-Related Payments (as defined in Section 4.19.3
(EMPLOYMENT-RELATED PAYMENTS)) to any trust, fund, company,
governmental agency, or any person that have not been duly recorded on
the books and records of First Evergreen or First Evergreen Bank and
paid when due or duly accrued in the ordinary course of business in
accordance with GAAP.
4.19.3 EMPLOYMENT-RELATED PAYMENTS. For purposes of this Plan
of Merger, "EMPLOYMENT-RELATED PAYMENTS" include any payment to be
made with respect to any contract for employment; unemployment
compensation benefits; profit sharing, pension or retirement benefits;
social security benefits; fringe benefits, including vacation or
holiday pay, bonuses and other forms of compensation; or for medical
insurance or medical expenses; any of which are payable with respect
to any present or former director, officer, employee, or agent, or his
or her survivors, heirs, legatees, or legal representatives.
4.19.4 EMPLOYMENT CLAIMS. There are no disputes, claims, or
charges, pending or, to the best of First Evergreen's knowledge,
threatened, alleging breach of any express or implied employment
contract or commitment, or breach of any applicable law, order,
regulation, public policy or ordinance relating to employment or terms
and conditions of employment. To the best knowledge of First
Evergreen, there is no factual basis for any valid claim or charge
with regard to such employment-related matters.
4.19.5 DISCLOSURE OF MATERIAL AGREEMENTS. There is no written
or oral, express or implied:
(a) Employment contract or agreement, or guarantee of job
security, made with or to any past or present employee of First
Evergreen or First Evergreen Bank that is not terminable by First
Evergreen or First Evergreen Bank upon 60 days' or less notice
without penalty or obligation;
(b) Plan, contract, arrangement, understanding, or practice
providing for bonuses, pensions, options, stock purchases,
deferred compensation, retirement payments, retirement benefits
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of the type described in Statement of Financial Accounting
Standard No. 106, or profit sharing; or
(c) Plan, agreement, arrangement, or understanding with
respect to payment of medical expenses, insurance (except
insurance continuation limited to that required under provisions
of the Consolidated Omnibus Budget Reconciliation Act), or other
benefits for any former employee or any spouse, child, member of
the same household, estate, or survivor of any employee.
4.20 EMPLOYEE BENEFIT PLANS. With respect to any "employee welfare
benefit plan," any "employee pension benefit plan," or any "employee
benefit plan" within the respective meanings of Sections 3(1), 3(2), and
3(3) of the Employee Retirement Income Security Act of 1974, as amended
"ERISA") (each referred to as an "EMPLOYEE BENEFIT PLAN"), maintained by or
for the benefit of First Evergreen or First Evergreen Bank or to which
First Evergreen or First Evergreen Bank have made payments or contributions
on behalf of its employees:
4.20.1 ERISA COMPLIANCE. First Evergreen and First Evergreen
Bank, each Employee Benefit Plan, and all trusts created thereunder
are in substantial compliance with ERISA, and all other applicable
laws and regulations insofar as such laws and regulations apply to
such plans and trusts.
4.20.2 INTERNAL REVENUE CODE COMPLIANCE. First Evergreen and
First Evergreen Bank, each Employee Benefit Plan that is intended to
be a qualified plan under Section 401(a) of the Internal Revenue Code,
and all trusts created thereunder are in substantial compliance with
the applicable provisions of the Internal Revenue Code.
4.20.3 PROHIBITED TRANSACTIONS. No Employee Benefit Plan and no
trust created thereunder has been involved, subsequent to June 30,
1974, in any nonexempt "prohibited transaction" as defined in Section
4975 of the Internal Revenue Code and in Sections 406, 407, and 408 of
ERISA.
4.20.4 PLAN TERMINATION. No Employee Benefit Plan that is a
qualified plan under Section 401(a) of the Internal Revenue Code and
no trust created thereunder has been terminated, partially terminated,
curtailed, discontinued, or merged into another plan or trust after
January 1, 1985, except in compliance with notice and disclosure to
the Internal Revenue Service and the Pension Benefit Guaranty
Corporation (the "PBGC"), where applicable, as required by the
Internal Revenue Code and ERISA. With respect to each such
termination, all termination procedures have been completed and there
are no pending or potential liabilities to the PBGC, to the plans, or
to participants under such terminated plans. Each such termination,
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partial termination, curtailment, discontinuance, or consolidation has
been accompanied by the issuance of a current favorable determination
letter by the IRS and, where applicable, has been accompanied by plan
termination proceedings with and through the PBGC.
4.20.5 MULTIEMPLOYER PLAN. No Employee Benefit Plan is a
"multiemployer plan" within the meaning of Section 3(37)(A) of ERISA.
4.20.6 DEFINED BENEFIT PLAN. No Employee Benefit Plan in effect
as of December 31, 1997, is a "defined benefit plan" within the
meaning of Section 3(35) of ERISA.
4.20.7 PAYMENT OF CONTRIBUTIONS. First Evergreen and First
Evergreen Bank has made when due all contributions required under each
Employee Benefit Plan and under applicable laws and regulations.
4.20.8 PAYMENT OF BENEFITS. There are no payments that have
become due from any Employee Benefit Plan, the trusts created
thereunder, or from First Evergreen or First Evergreen Bank that have
not been paid through normal administrative procedures to the plan
participants or beneficiaries entitled thereto, except for claims for
benefits for which administrative claims procedures under such plan
have not been exhausted.
4.20.9 ACCUMULATED FUNDING DEFICIENCY. No Employee Benefit Plan
that is intended to be a qualified plan under Section 401(a) of the
Internal Revenue Code and no trust created thereunder has incurred,
subsequent to June 30, 1974, an "accumulated funding deficiency" as
defined in Section 412(a) of the Internal Revenue Code and Section 302
of ERISA (whether or not waived).
4.20.10 FILING OF REPORTS. First Evergreen has filed or caused
to be filed, and will continue to file or cause to be filed, in a
timely manner all filings pertaining to each Employee Benefit Plan
with the IRS, the United States Department of Labor, and the PBGC as
prescribed by the Internal Revenue Code or ERISA, or regulations
issued thereunder. All such filings, as amended, were complete and
accurate in all material respects as of the dates of such filings, and
there were no material misstatements or omissions in any such filing.
4.21 ENVIRONMENTAL MATTERS.
4.21.1 HAZARDOUS SUBSTANCES. For purposes of this Plan of
Merger, "HAZARDOUS SUBSTANCE" has the meaning set forth in Section
9601 of the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, 42 U.S.C.A. <Section> 9601 et seq.
("CERCLA"), and also includes any substance now or in the future
regulated by or subject to any Environmental Law (as defined below)
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and any other pollutant, contaminant, or waste, including, without
limitation, petroleum, asbestos, radon, and polychlorinated biphenyls.
4.21.2 ENVIRONMENTAL LAWS. For purposes of this Plan of Merger,
"ENVIRONMENTAL LAWS" means all laws (civil or common), ordinances,
rules, regulations, guidelines, and orders that: (a) regulate air,
water, soil, or solid waste management, including the generation,
release, containment, storage, handling, transportation, disposal, or
management of Hazardous Substances; (b) regulate or prescribe
requirements for air, water, or soil quality; (c) are intended to
protect public health or the environment; or (d) establish liability
for the investigation, removal, or cleanup of, or damage caused by,
any Hazardous Substance.
4.21.3 OWNED OR OPERATED PROPERTY. Other than the Hospital
Lease, with respect to: (i) the real estate owned or leased by First
Evergreen or First Evergreen Bank or used in the conduct of their
businesses; (ii) other real estate owned by First Evergreen Bank;
(iii) real estate held and administered in trust by First Evergreen
Bank, other than real estate held by First Evergreen Bank as trustee
of an Illinois land trust created in the ordinary course of business;
and (iv) to First Evergreen's knowledge, any real estate formerly
owned or leased by First Evergreen or First Evergreen Bank (for
purposes of this Section, properties described in any of (i) through
(iv) are collectively referred to as "PREMISES"):
(a) CONSTRUCTION AND CONTENT. To the best knowledge of
First Evergreen, none of the Premises is constructed of, or
contains as a component part, any material that (either in its
present form or as it may reasonably be expected to change
through aging or normal use) releases or may release any
Hazardous Substance in violation of any applicable Environmental
Law.
(b) USES OF PREMISES. To the best knowledge of First
Evergreen, no part of the Premises has been used for the
generation, manufacture, handling, storage, disposal, or
management of Hazardous Substances.
(c) UNDERGROUND STORAGE TANKS. To the best knowledge of
First Evergreen, the Premises do not contain, and have never
contained, any underground storage tanks. With respect to any
underground storage tank that is listed in the First Evergreen
Disclosure Statement as an exception to the foregoing, each such
underground storage tank presently or previously located on
Premises is or has been maintained or removed, as applicable, in
compliance with all applicable Environmental Laws, and has not
been the source of any release of a Hazardous Substance to the
environment that has not been remediated.
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(d) ABSENCE OF CONTAMINATION. To the best knowledge of
First Evergreen, the Premises do not contain and are not
contaminated by any reportable quantity, or any quantity in
excess of applicable cleanup standards, of a Hazardous Substance
from any source.
(e) ENVIRONMENTAL SUITS AND PROCEEDINGS. To the best
knowledge of First Evergreen, there is no action, suit,
investigation, liability, inquiry, or other proceeding, ruling,
order, notice of potential liability, or citation involving First
Evergreen or First Evergreen Bank pending, threatened, or
previously asserted under, or as a result of any actual or
alleged failure to comply with any requirement of, any
Environmental Law. Without limiting the generality of this
Section, to the best knowledge of First Evergreen, there is no
basis for any claim against or involving First Evergreen, First
Evergreen Bank, or any of their respective properties or assets
under Section 107 of CERCLA or any similar provision of any other
Environmental Law.
4.21.4 LOAN PORTFOLIO. With respect to any commercial or multi-
family real estate securing any outstanding loan or related security
interest and any owned real estate acquired in full or partial
satisfaction of a debt previously contracted, First Evergreen and
First Evergreen Bank have complied in all material respects with their
policies (as such policies may have been in effect from time to time
and as disclosed in the First Evergreen Disclosure Statement), and all
applicable laws and regulations, concerning the investigation of each
such property to determine whether or not there exists or is
reasonably likely to exist any Hazardous Substance on, in, or under
such property and whether or not a release of a Hazardous Substance
has occurred at or from such property. To First Evergreen's
knowledge, no such property contains or is contaminated by any
quantity of any Hazardous Substance from any source.
4.22 DUTIES AS FIDUCIARY. First Evergreen Bank has performed all of
its duties in any capacity as trustee, executor, administrator, registrar,
guardian, custodian, escrow agent, receiver, or other fiduciary in a
fashion that complies in all material respects with all applicable laws,
regulations, orders, agreements, wills, instruments, and common law
standards. First Evergreen Bank has not received notice of any claim,
allegation, or complaint from any person that First Evergreen Bank failed
to perform these fiduciary duties in the required manner.
4.23 INVESTMENT BANKERS AND BROKERS. First Evergreen has employed
the investment banking firm of Hovde Financial, Inc. First Evergreen's
only financial obligation with respect to investment banking firms is the
payment of fees and expenses paid to Hovde Financial, Inc. as described in
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the First Evergreen Disclosure Statement. First Evergreen has not employed
any other broker, finder, or investment banker in connection with this Plan
of Merger or the transactions contemplated by it. First Evergreen has no
express or implied agreement with any other person or company relative to
any commission or finder's fee payable with respect to this Plan of Merger
or the transactions contemplated by it.
4.24 FIRST EVERGREEN-RELATED PERSONS. For purposes of this Plan of
Merger, the term "FIRST EVERGREEN-RELATED PERSON" shall mean any director
or executive officer of First Evergreen or First Evergreen Bank, their
spouses and children, any person who is a member of the same household as
such persons, and any corporation, partnership, proprietorship, trust, or
other entity of which any such persons, alone or together, have Control.
4.24.1 CONTROL OF MATERIAL ASSETS. Other than in a capacity as
a stockholder, director, or executive officer of First Evergreen or
First Evergreen Bank, no First Evergreen-Related Person owns or
controls any material assets or properties that are used in the
business of First Evergreen or First Evergreen Bank.
4.24.2 CONTRACTUAL RELATIONSHIPS. Other than ordinary and
customary banking relationships, no First Evergreen-Related Person has
any contractual relationship with First Evergreen or First Evergreen
Bank.
4.24.3 LOAN RELATIONSHIPS. No First Evergreen-Related Person
has any outstanding loan or loan commitment from, or on whose behalf
an irrevocable letter of credit has been issued by, First Evergreen or
First Evergreen Bank in a principal amount of $100,000 or more.
4.25 CHANGE IN BUSINESS RELATIONSHIPS. Neither First Evergreen nor
First Evergreen Bank has notice, whether on account of the Merger or
otherwise, that: (a) any customer, agent, representative, or supplier of
First Evergreen or First Evergreen Bank intends to discontinue, diminish,
or change its relationship with First Evergreen or First Evergreen Bank,
the effect of which would have a Material Adverse Effect on First
Evergreen; or (b) any executive officer of First Evergreen or First
Evergreen Bank intends to terminate his or her employment.
4.26 INSURANCE. First Evergreen and First Evergreen Bank maintain in
full force and effect insurance on its assets, properties, premises,
operations, and personnel in such amounts and against such risks and losses
as are customary and adequate for comparable entities engaged in the same
business and industry. There is no unsatisfied claim of $100,000 or more
under such insurance as to which the insurance carrier has denied
liability. During the last five years, no insurance company has canceled
or refused to renew a policy of insurance covering First Evergreen's or
First Evergreen Bank's assets, properties, premises, operations, or
A-32
personnel. First Evergreen and First Evergreen Bank have given adequate
and timely notice to each insurance carrier, and has complied with all
policy provisions, with respect to any known claim for which a defense
and/or indemnification may be available to First Evergreen or First
Evergreen Bank.
4.27 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of First Evergreen and First Evergreen Bank
are complete and correct in all material respects and have been maintained
in accordance with sound business practices, including the maintenance of
an adequate internal control system. The corporate minute books of First
Evergreen and First Evergreen Bank contain accurate and complete records of
all meetings of, and corporate action taken by, their stockholders, boards,
and committees thereof. Since January 1, 1990, the minutes of each meeting
(or corporate action without a meeting) of any such stockholders, boards,
or committees have been duly prepared and are contained in such minute
books.
4.28 LOAN GUARANTEES. To First Evergreen's knowledge, all guarantees
of indebtedness owed to First Evergreen Bank, including but not limited to
those of the Federal Housing Administration, the Small Business
Administration, and other state and federal agencies, are valid and
enforceable.
4.29 EVENTS SINCE DECEMBER 31, 1997. Neither First Evergreen nor
First Evergreen Bank has, since December 31, 1997:
4.29.1 BUSINESS IN ORDINARY COURSE. Other than as contemplated
by this Plan of Merger, conducted its business other than in the
ordinary course, or incurred or become subject to any liability or
obligation, except liabilities incurred in the ordinary course of
business, and except for any single liability or for the aggregate of
any group of related liabilities that do not exceed $100,000.
4.29.2 STRIKES OR LABOR TROUBLE. Experienced or, to the best
knowledge of First Evergreen, been threatened by any strike, work
stoppage, organizational effort, or other labor trouble, or any other
event or condition of any similar character that has had or could
reasonably be expected to have a Material Adverse Effect on First
Evergreen.
4.29.3 DISCHARGE OF OBLIGATIONS. Discharged or satisfied any
lien or encumbrance, or paid any obligation or liability other than
those shown on First Evergreen's Financial Statements as of
December 31, 1997, or incurred after that date, other than in the
ordinary course of business, except for such liens, encumbrances,
liabilities, and obligations that do not in the aggregate exceed
$100,000.
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4.29.4 MORTGAGE OF ASSETS. Mortgaged, pledged, or subjected to
lien, charge, or other encumbrance any of its assets, or sold or
transferred any such assets, except in the ordinary course of
business, except for such mortgages, pledges, liens, charges, and
encumbrances for indebtedness that do not in the aggregate exceed
$100,000.
4.29.5 CONTRACT AMENDMENT OR TERMINATION. Made or permitted any
amendment or early termination of any contract to which it is a party
and that is material to the financial condition, income, expenses,
business, properties, operations, or prospects of First Evergreen or
First Evergreen Bank, except as may be expressly provided in this Plan
of Merger.
4.30 RESERVE FOR LOAN LOSSES. The reserve for loan and lease losses
as reflected in First Evergreen's Financial Statements and Call Reports for
the periods ended December 31, 1997 and March 31, 1998, were and will be,
as of their respective dates, (a) adequate in the reasonable opinion of
management to meet all reasonably anticipated loan and lease losses, net of
recoveries related to loans previously charged off as of those dates, and
(b) consistent with GAAP and safe and sound banking practices.
4.31 LOAN ORIGINATION AND SERVICING. In originating, underwriting,
servicing, purchasing, selling, transferring, and discharging loans,
mortgages, land contracts, and other contractual obligations, either for
its own account or for the account of others, First Evergreen Bank has
complied with all applicable terms and conditions of such obligations and
with all applicable laws, regulations, rules, contractual requirements, and
procedures, except for incidents of noncompliance that would not,
individually or in the aggregate, have a Material Adverse Effect on First
Evergreen.
4.32 PUBLIC COMMUNICATIONS; SECURITIES OFFERING. Each annual report,
quarterly report, proxy material, press release, or other communication
previously sent or released by First Evergreen or First Evergreen Bank to
First Evergreen's stockholders or the public did not contain any untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under that they were made, not misleading.
4.33 NO INSIDER TRADING. First Evergreen has reviewed its stock
transfer records since December 31, 1995, and has questioned its directors
and executive officers concerning known stock transfers since that date.
Based upon that investigation, First Evergreen has not, and to the best of
First Evergreen's knowledge, (a) no director or officer of First Evergreen
or First Evergreen Bank; (b) no person related to any such director or
officer by blood or marriage and residing in the same household, and (c) no
person knowingly provided material nonpublic information by any one or more
A-34
of these persons; has purchased or sold, or caused to be purchased or sold,
any shares of First Evergreen Common Stock during any period when First
Evergreen was in possession of material nonpublic information or in
violation of any applicable provision of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT").
4.34 DATA PROCESSING CONTRACTS. Except with respect to First
Evergreen's agreements with M&I and SunGard, all material data processing
contracts of First Evergreen or First Evergreen Bank are cancelable on or
before December 31, 1998, without cost or penalty.
4.35 YEAR 2000 COMPLIANCE. First Evergreen and First Evergreen Bank
have adopted plans and procedures consistent with good business practices
and the requirements of its primary bank regulator for its "Technology
Products" (as defined below) to be timely modified, upgraded or replaced to
accurately date data (including, but not limited to, calculating, comparing
and sequencing) from, into and between the twentieth and twenty-first
centuries including leap year calculations. Set forth in the First
Evergreen Disclosure Statement are copies of all letters and responses
between First Evergreen and its vendors relating to such compliance
matters. For purposes hereof "TECHNOLOGY PRODUCTS" means hardware,
software, firmware and other information technology products used by First
Evergreen in its business. The cost of compliance referred to in this
Section would not have a Material Adverse Effect on First Evergreen. No
representation is made relating to the compatibility of the Technology
Products of First Evergreen with those of Old Kent or with respect to the
cost of integrating the Technology Products of First Evergreen with those
of Old Kent.
4.36 ACCOUNTING AND TAX TREATMENT. Neither First Evergreen nor, to
the best of its knowledge, any of its affiliates, has taken or agreed to
take any action or knows of any reason that, with respect to First
Evergreen and its affiliates, would prevent Old Kent from accounting for
the business combination to be effected by the Merger as a pooling-of-
interests. First Evergreen is aware of no reason why the Merger will
fail to qualify as a reorganization under Section 368(a) of the Code.
4.37 TRUE AND COMPLETE INFORMATION. No schedule, statement, list,
certificate, or other information furnished or to be furnished by First
Evergreen in connection with this Plan of Merger, including the First
Evergreen Disclosure Statement, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained therein, in light of the
circumstances in which they are made, not misleading.
4.38 REPRESENTATIONS AND WARRANTIES AT CLOSING. First Evergreen
further warrants that its representations and warranties in this Plan of
Merger will be true in all material respects at the Closing, except as
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otherwise expressly contemplated by this Plan of Merger. All of such
representations and warranties made with respect to specified dates or
events shall still be true at the Closing in all material respects with
respect to such dates or events.
ARTICLE V - COVENANTS PENDING CLOSING
Subject to the terms and conditions of this Plan of Merger, First
Evergreen and Old Kent further agree that:
5.1 FIRST EVERGREEN DISCLOSURE STATEMENT. First Evergreen shall
prepare the First Evergreen Disclosure Statement, certified with respect to
Section 4.37 (TRUE AND COMPLETE INFORMATION) on behalf of First Evergreen
by its chief executive officer and its chief financial officer, and shall
deliver two copies of the First Evergreen Disclosure Statement to Old Kent
within 21 days after the execution of this Plan of Merger.
5.1.1 FORM AND CONTENT. The First Evergreen Disclosure
Statement shall be in the general form prescribed by EXHIBIT B and
shall contain appropriate references and cross-references with respect
to disclosures, and appropriate identifying markings with respect to
documents, that pertain to one or more sections or articles of this
Plan of Merger. In addition to any exceptions to First Evergreen's
representations set forth in Article IV, the First Evergreen
Disclosure Statement shall contain true and correct copies of each and
every document specified in EXHIBIT B.
5.1.2 UPDATE. Not less than six business days prior to the
Closing, First Evergreen shall deliver to Old Kent an update to the
First Evergreen Disclosure Statement describing any material changes
and containing any new or amended documents, as specified below, that
are not contained in the First Evergreen Disclosure Statement as
initially delivered. This update shall not cure any breach of a
representation or warranty occurring at the time of execution of this
Plan of Merger.
5.1.3 CERTIFICATION. The First Evergreen Disclosure Statement
and its update shall each be certified with respect to Section 4.37
(TRUE AND COMPLETE INFORMATION) on behalf of First Evergreen by its
chief executive officer and its chief financial officer.
5.2 OLD KENT DISCLOSURE STATEMENT. Old Kent shall prepare the Old
Kent Disclosure Statement, certified with respect to Section 3.17 (TRUE AND
COMPLETE INFORMATION) on behalf of Old Kent by its chief executive officer
and its chief financial officer, and shall deliver two copies of the Old
Kent Disclosure Statement to First Evergreen within 21 days after the
execution of this Plan of Merger.
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5.2.1 FORM AND CONTENT. The Old Kent Disclosure Statement shall
be in the general form prescribed by EXHIBIT C and shall contain
appropriate references and cross-references with respect to
disclosures, and appropriate identifying markings with respect to
documents, that pertain to one or more sections or articles of this
Plan of Merger.
5.2.2 UPDATE. Not less than six business days prior to the
Closing, Old Kent shall deliver to First Evergreen an update to the
Old Kent Disclosure Statement describing any material changes and
containing any new or amended documents that are not contained in the
Old Kent Disclosure Statement as initially delivered. This update
shall not cure any breach of a representation or warranty occurring at
the time of execution of this Plan of Merger.
5.2.3 CERTIFICATION. The Old Kent Disclosure Statement and its
update shall each be certified with respect to Section 3.17 (TRUE AND
COMPLETE INFORMATION) on behalf of Old Kent by its chief executive
officer and its chief financial officer.
5.3 BREACHES OF REPRESENTATIONS. While this Plan of Merger is in
effect, if either Old Kent or First Evergreen becomes aware of any facts or
of the occurrence or impending occurrence of any event that (a) would cause
one or more of the representations and warranties it has given in Article
III or IV, respectively, subject to the exceptions contained in the First
Evergreen Disclosure Statement or the Old Kent Disclosure Statement,
respectively, to become untrue or incomplete, or (b) would have caused one
or more of such representations and warranties to be untrue or incomplete
had such facts been known or had such event occurred prior to the execution
of this Plan of Merger, then such party (the "BREACHING PARTY") shall
immediately give detailed written notice of its breach or potential breach,
including a detailed description of the underlying facts or events, to the
other party; and unless waived by the other party in writing, the Breaching
Party shall use all reasonable efforts to take remedial or preventative
action in order that such representations and warranties will be true and
complete at the Closing. No remedial action taken by a Breaching Party
shall be deemed to cure a breach of any representation or warranty given by
the Breaching Party in this Plan of Merger, unless such cure is to the
reasonable satisfaction of the non-Breaching Party.
5.4 CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME--OLD KENT. Old
Kent agrees that, until the Effective Time, except as consented to in
writing by Old Kent or as otherwise provided in this Plan of Merger, Old
Kent shall, and it shall cause Old Kent Bank to:
5.4.1 NO INCONSISTENT ACTIONS. Take no action that would be
inconsistent with or contrary to the representations, warranties, and
covenants made by Old Kent in this Plan of Merger, and take no action
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that would cause Old Kent's representations and warranties to become
untrue except as and to the extent required by applicable laws and
regulations or regulatory agencies having jurisdiction.
5.4.2 COMPLIANCE. Comply in all material respects with all
laws, regulations, agreements, court orders, and administrative orders
applicable to the conduct of its business unless the application of
such laws, regulations, or orders is being contested in good faith and
First Evergreen has been notified of such contest.
5.5 CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME--FIRST
EVERGREEN. First Evergreen agrees that, until the Effective Time, except
as consented to in writing by Old Kent or as otherwise provided in this
Plan of Merger, First Evergreen shall, and it shall cause First Evergreen
Bank to:
5.5.1 ORDINARY COURSE. Conduct its business and manage its
property only in the usual, regular, and ordinary course and not
otherwise, in substantially the same manner as prior to the execution
of this Plan of Merger, and not make any substantial change to its
methods of management or operation in respect of such business or
property.
5.5.2 NO INCONSISTENT ACTIONS. Take no action that would be
inconsistent with or contrary to the representations, warranties, and
covenants made by First Evergreen in this Plan of Merger, and take no
action that would cause First Evergreen's representations and
warranties to become untrue except as and to the extent required by
applicable laws and regulations or regulatory agencies having
jurisdiction.
5.5.3 COMPLIANCE. Comply in all material respects with all
laws, regulations, agreements, court orders, and administrative orders
applicable to the conduct of its business unless the application of
such laws, regulations, or orders is being contested in good faith and
Old Kent has been notified of such contest.
5.5.4 NO AMENDMENTS. Make no change in its Certificate of
Incorporation or its By-laws.
5.5.5 BOOKS AND RECORDS. Maintain its books, accounts, and
records in the usual and regular manner, and in material compliance
with all applicable laws and accounting standards.
5.5.6 NO CHANGE IN STOCK. Make no change in the number of
shares of its capital stock issued and outstanding; grant no warrant,
option, or commitment relating to its capital stock; enter into no
agreement relating to its capital stock except as contemplated by this
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Plan of Merger or the Option Agreement; and issue no securities
convertible into its capital stock except as contemplated by this Plan
of Merger or the Option Agreement.
5.5.7 MAINTENANCE. Use all reasonable efforts to maintain its
property and assets in their present state of repair, order and
condition, reasonable wear and tear and damage by fire or other
casualty excepted.
5.5.8 PRESERVATION OF GOODWILL. Use all reasonable efforts to
preserve its business organization intact, to keep available the
services of its present officers and employees, and to preserve the
goodwill of its customers and others having business relations with
it.
5.5.9 INSURANCE POLICIES. Use all reasonable efforts to
maintain and keep in full force and effect insurance coverage, so long
as such insurance is reasonably available, on its assets, properties,
premises, operations, and personnel in such amounts, against such
risks and losses, and with such self-insurance requirements as are
presently in force.
5.5.10 CHARGE-OFFS. Charge off loans and maintain its reserve
for loan and lease losses, in each case in a manner in conformity with
the prior practices of First Evergreen and First Evergreen Bank and
applicable industry, regulatory, and accounting standards.
5.5.11 POLICIES AND PROCEDURES. Make no material change in any
policies and procedures applicable to the conduct of its business,
including without limitation any loan and underwriting policies, loan
loss and charge-off policies, investment policies, and employment
policies, except as and to the extent required by law or regulatory
agencies having jurisdiction.
5.5.12 NEW DIRECTORS OR OFFICERS. Except to reelect persons who
are then incumbent officers and directors at annual meetings and to
elect a director to fill a current vacancy at the upcoming annual
meeting of stockholders, not (a) increase the number of directors or
fill any vacancy on the board of directors; or (b) elect or appoint
any person to an executive office.
5.5.13 COMPENSATION AND FRINGE BENEFITS. Except for previously
planned salary increases and bonuses as set forth in the First
Evergreen Disclosure Statement and any retention bonus plan not to
exceed $100,000, take no action to increase, or agree to increase, the
salary, or other compensation payable to, or fringe benefits of, or
pay or agree to pay any bonus to, any officer or director, or any
other class or group of employees as a class or group, except for
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increases, agreements or payments that are reasonable in amount and
consistent with the prior year and that are announced or made only
after first consulting with Old Kent.
5.5.14 BENEFIT PLANS. Take no action to introduce, change, or
agree to introduce or change, any pension, profit-sharing, or employee
benefit plan, fringe benefit program, or other plan or program of any
kind for the benefit of its employees unless required by law or this
Plan of Merger.
5.5.15 NEW EMPLOYMENT AGREEMENTS. Take no action to enter into
any employment agreement that is not terminable by First Evergreen or
First Evergreen Bank without cost or penalty upon 60 days' or less
notice, except as contemplated by this Plan of Merger.
5.5.16 BORROWING. Take no action to borrow money except in the
ordinary course of business.
5.5.17 MORTGAGING ASSETS. Take no action to sell, mortgage,
pledge, encumber, or otherwise dispose of, or agree to sell, mortgage,
pledge, encumber, or otherwise dispose of, any of its property or
assets, except in the ordinary course of business, except for property
or assets, or any group of related properties or assets, that have a
fair market value of less than $100,000.
5.5.18 NOTICE OF ACTIONS. Notify Old Kent of the threat or
commencement of any action, suit, proceeding, claim, arbitration, or
investigation against or relating to: (a) First Evergreen or First
Evergreen Bank; (b) First Evergreen's or First Evergreen Bank'
directors, officers, or employees in their capacities as such;
(c) First Evergreen's or First Evergreen Bank' assets, liabilities,
businesses, or operations; or (d) the Merger or this Plan of Merger.
5.5.19 COOPERATION. Take such reasonable actions as may be
necessary to cooperate in effecting the Merger.
5.5.20 CHARITABLE CONTRIBUTIONS. Make no charitable or similar
contributions or gifts of cash or other assets except for
contributions that, in the aggregate, will have a fair market value
not greater than $800,000 for the year 1998 through the Effective
Time.
5.5.21 LARGE EXPENDITURES. Take no action to pay, agree to pay,
or incur any liability, excepting such liabilities that have been
accrued on its books as of the execution of this Plan of Merger, for
the purchase or lease of any item of real property, fixtures,
equipment, or other capital asset in excess of $50,000 individually or
in excess of $100,000 in the aggregate with respect to First Evergreen
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or First Evergreen Bank, except pursuant to prior commitments or plans
made by First Evergreen or First Evergreen Bank that are disclosed in
the First Evergreen Disclosure Statement.
5.5.22 NEW SERVICE ARRANGEMENTS. Take no action to enter into,
or commit to enter into, any agreement for trust, consulting,
professional, or other services to First Evergreen or First Evergreen
Bank that is not terminable by First Evergreen or First Evergreen Bank
without penalty upon 60 days' or less notice, except for contracts for
services under which the aggregate required payments do not exceed
$50,000, except for legal, accounting, and other ordinary expenses
related to this Plan of Merger, and data processing agreements
relating to Year 2000 compliance.
5.5.23 CAPITAL IMPROVEMENTS. Take no action to open, enlarge,
or materially remodel any bank or other facility, and not lease,
purchase, or otherwise acquire any real property for use as a branch
bank, or apply for regulatory approval of any new branch bank,
excepting pursuant to prior commitments or plans made by First
Evergreen or First Evergreen Bank that are disclosed in the First
Evergreen Disclosure Statement.
5.6 REGULAR DIVIDENDS.
5.6.1 FIRST EVERGREEN DIVIDENDS. First Evergreen shall not
declare, set aside, pay or make any dividend or other distribution or
payment (whether in cash, stock, or property) with respect to, or
purchase or redeem, any shares of the capital stock of any of them
other than a single cash dividend in an amount not to exceed First
Evergreen's current dividend rate, $20 per share, multiplied by the
number of full calendar months of 1998 completed or any partial
calendar month consisting of at least 20 days in 1998, prior to the
Effective Time, divided by 12, payable in a manner consistent with
First Evergreen's past dividend practice in a single payment on or
about the date of Closing, or if the Closing is not held in 1998, upon
the completion of the year. Old Kent and First Evergreen agree that
they will cooperate to assure that, during any month, there shall not
be a duplication of payment of dividends to stockholders of First
Evergreen. Notwithstanding the above, if and to the extent that the
payment of a dividend in the manner provided in this Section would,
under GAAP or the rules, regulations, or interpretations of the SEC or
its staff, disqualify the Merger for pooling-of-interests for
accounting treatment, that dividend shall not be paid, but an
equitable adjustment shall be made to the Exchange Ratio for the
amount of the dividend not paid.
5.6.2 OLD KENT DIVIDENDS. In the case of Old Kent only, take no
action to increase its regular quarterly cash dividend, except
consistent with past practice; and take no action to declare, set
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aside or pay any extraordinary dividend or distribution (other than a
stock dividend) with respect to Old Kent Common Stock.
5.7 DATA PROCESSING AND RELATED CONTRACTS. Until the Effective Time,
First Evergreen shall not enter into any new data processing agreement
without the consent of Old Kent (which consent shall not be unreasonably
withheld or delayed) if such agreement is necessary for First Evergreen to
conduct business in the ordinary course and shall advise Old Kent of all
anticipated renewals or extensions of existing data processing service
agreements, data processing software license agreements, and data
processing hardware lease agreements with independent vendors. First
Evergreen agrees to cooperate with Old Kent in negotiating with those
vendors the length of any extension or renewal term of those agreements,
that, unless otherwise agreed with Old Kent, shall not exceed one year from
the date of renewal. First Evergreen agrees to send to each vendor, as and
when due, such notices of nonrenewal as may be necessary or appropriate
under the terms of the applicable agreements to prevent those agreements
from automatically renewing for a term of more than one year from the date
of renewal, except as otherwise agreed between First Evergreen and Old
Kent.
5.8 AFFILIATES -- COMPLIANCE WITH ACCOUNTING AND SECURITIES RULES.
First Evergreen shall use its best efforts to cause each director,
executive officer, and other person who is an "affiliate" (for purposes of
(a) Rule 145 under the Exchange Act, and (b) qualifying the Merger for
pooling-of-interests accounting treatment) of First Evergreen to deliver to
Old Kent, as soon as practicable after the date of this Plan of Merger, and
prior to the date of the Stockholders' Meetings, a written agreement, in
the form of EXHIBIT D (the "AFFILIATE AGREEMENTS"). Old Kent shall use its
best efforts to publish as promptly as reasonably practical but in no event
later than 45 days after the end of the first month after the Effective
Time in which there are at least 30 days of post-Merger combined operations
(which month may be the month in which the Effective Time occurs), combined
sales and net income figures as contemplated by and in accordance with the
terms of SEC Accounting Series Release No. 135. Old Kent use all
reasonable efforts to cause each director, executive officer, and other
person who is an "affiliate" (for the purpose of qualifying the Merger for
pooling-of-interests accounting treatment) of Old Kent, as soon as
practicable after the date of this Plan of Merger, and prior to the date of
the Stockholders' Meetings, to execute and deliver a written agreement
under which such affiliate agrees not to sell, pledge, transfer, or
otherwise dispose of his or her Old Kent Common Stock during any period
that any such disposition would, under GAAP or the rules, regulations, or
interpretations of the SEC or its staff, disqualify the Merger for
pooling-of-interests accounting treatment.
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5.9 INDEMNIFICATION AND INSURANCE.
5.9.1 INDEMNIFICATION. Old Kent shall honor any and all rights
to indemnification and advancement of expenses now existing in favor
of the directors and officers of First Evergreen and First Evergreen
Bank under their respective Certificate of Incorporation, Articles of
Association, or By-laws which survive the Merger and continue with
respect to acts or omissions occurring before the Effective Time with
the same force and effect as prior to the Effective Time.
5.9.2 INSURANCE. Old Kent shall use all reasonable efforts to
cause the persons serving as officers and directors of First Evergreen
and First Evergreen Bank immediately prior to the Effective Time to be
covered for a period of at least four years from the Effective Time by
the directors' and officers' liability insurance policy maintained by
First Evergreen and First Evergreen Bank (provided that Old Kent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions that are not materially less
advantageous than such policy) with respect to acts or omissions
occurring prior to the Effective Time that were committed by such
officers and directors in their capacity as such; provided, however,
that in no event shall Old Kent be required to expend more than
$140,000 (the "INSURANCE AMOUNT") to maintain or procure insurance
coverage pursuant hereto. If Old Kent does not advise First Evergreen
in writing prior to the commencement of the Pricing Period that it has
procured such coverage for at least four years or agrees to do so
without regard to the Insurance Amount, First Evergreen shall be
permitted, in lieu of receiving the foregoing insurance coverage, to
procure tail coverage for past acts and omissions for a single premium
amount not in excess of the Insurance Amount.
5.10 EXCLUSIVE COMMITMENT. Except as provided below, neither First
Evergreen nor First Evergreen Bank, nor any of their directors, officers,
employees, investment bankers, representatives, or agents, shall take any
action inconsistent with the intent to consummate the Merger upon the terms
and conditions of this Plan of Merger. Without limiting the foregoing:
5.10.1 NO SOLICITATION. Neither First Evergreen nor First
Evergreen Bank, nor any of their respective directors, officers,
employees, investment bankers, representatives, or agents, shall
directly or indirectly invite, initiate, solicit, encourage, or,
unless a Fiduciary Event has occurred and continues (or a Superior
Proposal has been presented and such Superior Proposal would otherwise
give rise to a Fiduciary Event except that the board of directors of
First Evergreen, at that time, has yet to determine to accept and
recommend the Superior Proposal to the stockholders of First
Evergreen), negotiate with any other party, any proposals, offers, or
expressions of interest concerning any tender offer, exchange offer,
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merger, consolidation, sale of shares, sale of assets, or assumption
of liabilities not in the ordinary course, or other business
combination involving First Evergreen or First Evergreen Bank other
than the Merger (a "BUSINESS COMBINATION").
5.10.2 COMMUNICATION OF OTHER PROPOSALS. First Evergreen shall
cause written notice to be delivered to Old Kent promptly upon receipt
of any solicitation, offer, proposal, or expression of interest (a
"PROPOSAL") concerning a Business Combination. Such notice shall
contain the material terms and conditions of the Proposal to which
such notice relates and shall, unless a Fiduciary Event has occurred
and continues, contain a copy of First Evergreen's unequivocal
rejection of the Proposal in the form actually delivered to the person
from whom the Proposal was received. Thereafter, First Evergreen
shall promptly notify Old Kent of any material changes in the terms,
conditions, and status of any Proposal.
5.10.3 FURNISHING INFORMATION. Unless a Fiduciary Event has
occurred and continues (or a Superior Proposal has been presented and
such Superior Proposal would otherwise give rise to a Fiduciary Event
except that the board of directors of First Evergreen, at that time,
has yet to determine to accept and recommend the Superior Proposal to
the stockholders of First Evergreen), neither First Evergreen nor
First Evergreen Bank, nor any of their respective directors, officers,
employees, investment bankers, representatives, or agents, shall
furnish any nonpublic information concerning First Evergreen or First
Evergreen Bank to any person who is not affiliated or under contract
with First Evergreen or Old Kent, except as required by applicable law
or regulations and prior to furnishing such information to such
person, First Evergreen shall receive from such person an executed
confidentiality agreement with terms no less favorable to First
Evergreen than those contained in its confidentiality agreement with
Old Kent and First Evergreen shall provide only such information as
had been so furnished previously to Old Kent.
5.11 REGISTRATION STATEMENT. Old Kent agrees to prepare and file
with the SEC under the Securities Act, the Registration Statement and the
related Prospectus and Proxy Statement included as a part thereof covering
the issuance by Old Kent of the shares of Old Kent Common Stock as
contemplated by this Plan of Merger, together with such amendments as may
reasonably be required for the Registration Statement to become effective.
Old Kent agrees to provide First Evergreen with reasonable opportunities to
review and comment upon the Registration Statement, each amendment to the
Registration Statement, and each form of the Prospectus and Proxy Statement
before filing. Old Kent agrees to provide First Evergreen, upon request,
with copies of all correspondence received from the SEC with respect to the
Registration Statement and its amendments and with all responsive
correspondence to the SEC. Old Kent agrees to notify First Evergreen of
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any stop orders or threatened stop orders with respect to the Registration
Statement. First Evergreen agrees to provide all necessary information
pertaining to First Evergreen and First Evergreen Bank promptly upon
request, and to use all reasonable efforts to obtain the cooperation of
First Evergreen's independent accountants and attorneys in connection with
the preparation of the Registration Statement.
5.12 OTHER FILINGS. Old Kent agrees to prepare and file with the
Federal Reserve Board and each other regulatory agency having jurisdiction
all documents reasonably required to obtain approval of or consent to
consummate the Merger. Old Kent agrees to provide First Evergreen with
reasonable opportunities to review and comment upon such documents before
filing and to make such amendments and file such supplements thereto as
First Evergreen may reasonably request. Old Kent shall provide First
Evergreen with copies of all correspondence received from these agencies
and all responsive correspondence sent to these agencies.
5.13 MISCELLANEOUS AGREEMENTS AND CONSENTS. Subject to the terms and
conditions of this Plan of Merger, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Plan of Merger. Old Kent and First
Evergreen will use all reasonable efforts to obtain consents of all third
parties and governmental bodies necessary or desirable for the consummation
of the Merger.
5.14 ACCESS AND INVESTIGATION. For the purpose of permitting an
examination of one party by the other's officers, attorneys, accountants,
and representatives, each party shall: (a) permit, and shall cause each of
their respective subsidiaries to permit, full access to their respective
properties, books, and records at reasonable times; (b) use reasonable
efforts to cause its and each of respective subsidiaries' officers,
directors, employees, accountants, and attorneys to cooperate fully, for
the purpose of permitting a complete and detailed examination of such
matters by the other party's officers, attorneys, accountants, and
representatives; and (c) furnish to the other, upon reasonable request, any
information reasonably requested respecting its and each of its
subsidiaries' properties, assets, business, and affairs. Each party
acknowledges that certain information may not be disclosed by the other
without the prior written consent of persons not affiliated with that
party. If such information is requested, then the other party shall use
reasonable efforts to obtain such prior consent and shall not be required
to disclose such information unless and until such prior consent has been
obtained. In the event of termination of this Plan of Merger, Old Kent and
First Evergreen each agree to promptly return to the other party or to
destroy all written materials furnished to it by the other party and the
other party's subsidiaries, and all copies, notes, and summaries of such
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written materials. Old Kent and First Evergreen each agree to preserve
intact all such materials that are returned to them and to make such
materials reasonably available upon request or subpoena for a period of not
less than six years from the termination of this Plan of Merger.
5.15 CONFIDENTIALITY. Except as provided below, Old Kent and First
Evergreen each agree:
5.15.1 TREATMENT; RESTRICTED ACCESS. All information furnished
to the other party pursuant to this Plan of Merger shall be treated as
strictly confidential and shall not be disclosed to any other person,
natural or corporate, except for its employees, attorneys,
accountants, regulators, and financial advisers who are reasonably
believed to have a need for such information in connection with the
Merger.
5.15.2 NO OTHER USE. Neither party shall make any use, other
than related to the Merger, of any information it may come to know as
a direct result of a disclosure by the other party, its subsidiaries,
directors, officers, employees, attorneys, accountants, or advisers or
that may come into its possession from any other confidential source
during the course of its investigation.
5.15.3 EXCEPTED INFORMATION. The provisions of this
Section shall not preclude Old Kent or First Evergreen, or their
respective subsidiaries, from using or disclosing information that is
readily ascertainable from public information or trade sources, known
by it before the commencement of discussions between the parties or
subsequently developed by it or its subsidiaries independent of any
investigation under this Plan of Merger, received from any other
person who is not affiliated with a party and who is not under any
obligation to keep such information confidential, or reasonably
required to be included in any filing or application required by any
governmental or regulatory agency.
5.15.4 PROHIBIT INSIDER TRADING. Old Kent and First Evergreen
shall each take responsible steps to assure that any person who
receives nonpublic information concerning the Merger or the other
party will treat the information confidentially as provided in this
Section and not directly or indirectly buy or sell, or advise other
persons to buy or sell, the other party's stock until such information
is properly disclosed to the public.
5.16 ENVIRONMENTAL INVESTIGATION. Old Kent shall be permitted to
conduct an environmental assessment of each parcel of First Evergreen's
Real Property and, at Old Kent's option, (a) any other real estate formerly
owned by First Evergreen or First Evergreen Bank, and (b) acquired by First
Evergreen Bank in satisfaction of a debt previously contracted. As to each
such property:
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5.16.1 PRELIMINARY ENVIRONMENTAL ASSESSMENTS. Old Kent may, at
its expense, engage an environmental consultant to conduct a
preliminary ("PHASE I") assessment of the property or rely upon any
First Evergreen Phase I assessment recertified to Old Kent as of a
recent date. First Evergreen and First Evergreen Bank shall provide
reasonable assistance, including site access and a knowledgeable
contact person, to the consultant for purposes of conducting the Phase
I assessments.
5.16.2 ENVIRONMENTAL RISKS. If there are any facts or
conditions identified in a Phase I assessment that, in its reasonable
discretion, Old Kent believes could potentially pose a current or
future risk of a material liability, interference with use, or
material diminution of value of the property, then Old Kent shall
identify that risk to First Evergreen, identify the facts or
conditions underlying that risk, and provide First Evergreen with a
copy of the Phase I assessment for that property (an "ENVIRONMENTAL
RISK").
5.16.3 ESTIMATES. Old Kent shall obtain one or more
professional estimates of the proposed scope of work and maximum
foreseeable cost of any further environmental investigation,
remediation, or other follow-up work it reasonably deems necessary or
appropriate to assess and, if necessary or appropriate, remediate an
Environmental Risk. Such estimates shall, if appropriate, be based on
field investigations. Old Kent shall provide copies of those
estimates to First Evergreen.
5.16.4 OPTIONAL REMEDIATION. Old Kent and First Evergreen shall
cooperate in the review, approval, and implementation of all work
plans for investigation and remediation. All work plans for any
investigation and remediation shall be mutually satisfactory to Old
Kent and First Evergreen. First Evergreen may, at its option and
expense, undertake mutually agreed upon investigation and remediation
to be completed prior to the Closing.
5.16.5 OLD KENT'S TERMINATION RIGHTS. If (a) Old Kent and First
Evergreen are unable to agree upon a course of action to promptly
complete any investigation and remediation and/or a mutually
acceptable modification to this Plan of Merger, and (b) Old Kent
cannot be reasonably assured that the after-tax cost of the sum of (i)
the actual cost of all investigative and remedial or other corrective
actions or measures undertaken pursuant to Section 5.16.4 (OPTIONAL
REMEDIATION), (ii) the estimated cost of all investigative and
remedial or other corrective actions or measures not undertaken but
required by law or necessary to avoid future exposure to material
liability, and (iii) all diminution of the value of such properties;
in the aggregate, will not exceed $1,000,000; then Old Kent may
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terminate this Plan of Merger as provided in Section 8.3.3
(ENVIRONMENTAL RISKS).
5.17 DISSENTING STOCKHOLDERS' APPRAISAL RIGHTS. Old Kent and First
Evergreen, as applicable, will comply with all applicable notification and
other provisions of regulations or statutes relating to Dissenting Shares.
5.18 EMPLOYMENT AGREEMENTS. Recognizing that continuity of key
management personnel is essential to ensure the continuity of the franchise
value of First Evergreen Bank, First Evergreen shall cause First Evergreen
Bank, and Old Kent shall cause Old Kent Bank, prior to the Closing, to
offer employment agreements effective upon the Effective Time to 14 key
senior officers of First Evergreen or First Evergreen Bank, with the terms
and conditions of such employment to be agreed upon by Old Kent and First
Evergreen (the "EMPLOYMENT AGREEMENTS").
5.19 ACCOUNTING AND TAX TREATMENT. During the Term of this Plan of
Merger, Old Kent and First Evergreen each agree not to take any action that
would adversely affect the ability of Old Kent to treat the Merger as a
pooling-of-interests for accounting purposes or as a "reorganization"
within the meaning of Section 368(a) of the Code; provided, however, that
nothing in this Plan of Merger shall limit Old Kent's ability to exercise
its rights under the Option Agreement. Old Kent and First Evergreen each
agree to take such action as may be reasonably required to negate the
impact of any past actions that might adversely impact the ability of Old
Kent to treat the Merger as a pooling-of-interests.
ARTICLE VI - CONDITIONS PRECEDENT TO OLD KENT'S OBLIGATIONS
All obligations of Old Kent under this Plan of Merger are subject to
the fulfillment (or waiver in writing by a duly authorized officer of Old
Kent), prior to or at the Closing, of each of the following conditions:
6.1 RENEWAL OF REPRESENTATIONS AND WARRANTIES, ETC.
6.1.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of First Evergreen contained in this Plan of Merger shall
be true and correct when made and as of the Effective Time as if made
at and as of such time, except (a) as expressly contemplated or
permitted by this Plan of Merger, (b) for representations and
warranties relating to a time or times other than the Effective Time
that were or will be true and correct at such time or times, and (c)
where the failure or failures of such representations and warranties
to be so true and correct, individually or in the aggregate, does not
result or would not result in a Material Adverse Effect.
6.1.2 COMPLIANCE WITH AGREEMENTS. First Evergreen shall have
performed and complied with all agreements, conditions, and covenants
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required by this Plan of Merger to be performed or complied with by
First Evergreen prior to or at the Closing in all material respects.
6.1.3 CERTIFICATES. Compliance with Sections 6.1.1
(REPRESENTATIONS AND WARRANTIES) and 6.1.2 (COMPLIANCE WITH
AGREEMENTS) shall be evidenced by one or more certificates signed by
appropriate officers of First Evergreen, dated as of the date of the
Closing, certifying the foregoing in such detail as Old Kent may
reasonably request, describing any exceptions to such compliance in
such certificates.
6.2 OPINION OF LEGAL COUNSEL. First Evergreen shall have delivered
to Old Kent an opinion of Ruff, Weidenaar & Reidy, Ltd., counsel for First
Evergreen, dated as of the date of the Closing and substantially in the
form contained in EXHIBIT E, with only such changes as may be reasonably
satisfactory to counsel for Old Kent.
6.3 REQUIRED REGULATORY APPROVALS. Old Kent shall have received all
such approvals, consents, authorizations, and licenses of all regulatory
and other governmental and self-regulatory authorities having jurisdiction
as may be required to permit the performance by First Evergreen and Old
Kent of their respective obligations under this Plan of Merger and the
consummation of the Merger, without the regulating authority's imposition
of non-standard conditions on approval that are not reasonably acceptable
to Old Kent.
6.4 STOCKHOLDER APPROVAL. The stockholders of First Evergreen shall
have adopted this Plan of Merger.
6.5 ORDER, DECREE, ETC. Neither Old Kent nor First Evergreen shall
be subject to any order, decree or injunction of a court or agency of
competent jurisdiction that enjoins or prohibits the consummation of the
Merger.
6.6 PROCEEDINGS. There shall not be any action, suit, proceeding,
claim, arbitration, or investigation pending or threatened: (a) against
or relating to First Evergreen, First Evergreen Bank, or its or their
respective directors (in the capacity as such), officers (in the capacity
as such), properties, or businesses that may result in any liability to
First Evergreen or First Evergreen Bank that could have a Material Adverse
Effect on First Evergreen.
6.7 TAX MATTERS. Old Kent shall have received a tax opinion from its
counsel, reasonably satisfactory in form and substance, that Old Kent shall
use reasonable efforts to obtain. The tax opinion shall be supported by
one or more fact certificates or affidavits in such form and content as may
be reasonably requested by Old Kent's counsel from First Evergreen. The
tax opinion shall be substantially to the effect that:
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6.7.1 REORGANIZATION. The Merger of First Evergreen with and
into Old Kent will constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Internal Revenue Code, and Old Kent and
First Evergreen will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Internal Revenue Code.
6.7.2 ASSETS' TAX BASIS. The basis of the First Evergreen
assets in the hands of Old Kent will be the same as the basis of those
assets in the hands of First Evergreen immediately prior to the
Merger.
6.7.3 NO GAIN OR LOSS. No gain or loss will be recognized to
Old Kent on the receipt by Old Kent of the assets of First Evergreen
in exchange for Old Kent Common Stock and the assumption by Old Kent
of the liabilities of First Evergreen.
6.7.4 HOLDING PERIOD. The holding period of the assets of First
Evergreen in the hands of Old Kent will include the holding period
during which such assets were held by First Evergreen.
6.8 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC and shall not be subject to a stop order
or any threatened stop order.
6.9 CERTIFICATE AS TO OUTSTANDING SHARES. Old Kent shall have
received one or more certificates dated as of the Closing date and signed
by the secretary of First Evergreen on behalf of First Evergreen, and by
the transfer agent for First Evergreen Common Stock, certifying (a) the
total number of shares of capital stock of First Evergreen issued and
outstanding as of the close of business on the day immediately preceding
the Closing; and (b) with respect to the secretary's certification, the
number of shares of First Evergreen Common Stock, if any, that are issuable
on or after that date, all in such form as Old Kent may reasonably request.
6.10 CHANGE OF CONTROL WAIVERS. Old Kent shall have received
evidence of the consents or other waivers of any material rights and the
waiver of the loss of any material rights that may be triggered by the
change of control of First Evergreen upon consummation of the Merger under
the Designated Contracts and any other agreement, contract, mortgage, deed
of trust, lease, commitment, indenture, note, or other instrument, under
which the failure to obtain such consent or waiver could result in a
Material Adverse Effect on First Evergreen; all in form and substance
reasonably satisfactory to Old Kent.
6.11 POOLING ASSURANCES. Old Kent shall have received a letter from
First Evergreen's independent accountants, as of a date reasonably
approximate to the date of the Closing, to the effect that, as of such
date, First Evergreen is eligible to participate in a pooling-of-interests
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combination and a letter from its independent accountants, satisfactory in
form and substance, to the effect that (based in part on the letter from
First Evergreen's independent accountants) the Merger should be treated as
a pooling-of-interests for accounting purposes, subject to satisfaction of
post-Merger conditions.
ARTICLE VII - CONDITIONS PRECEDENT TO FIRST EVERGREEN'S OBLIGATIONS
All obligations of First Evergreen under this Plan of Merger are
subject to the fulfillment (or waiver in writing by a duly authorized
officer of First Evergreen), prior to or at the Closing, of each of the
following conditions:
7.1 RENEWAL OF REPRESENTATIONS AND WARRANTIES, ETC.
7.1.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Old Kent contained in this Plan of Merger shall be true
and correct when made and as of the Effective Time as if made at and
as of such time, except (a) as expressly contemplated or permitted by
this Plan of Merger, (b) for representations and warranties relating
to a time or times other than the Effective Time that were or will be
true and correct at such time or times, and (c) where the failure or
failures of such representations and warranties to be so true and
correct, individually or in the aggregate, does not result or would
not result in a Material Adverse Effect.
7.1.2 COMPLIANCE WITH AGREEMENTS. Old Kent shall have performed
and complied with all agreements, conditions, and covenants required
by this Plan of Merger to be performed or complied with by Old Kent
prior to or at the Closing in all material respects.
7.1.3 CERTIFICATES. Compliance with Sections 7.1.1
(REPRESENTATIONS AND WARRANTIES) and 7.1.2 (COMPLIANCE WITH
AGREEMENTS) shall be evidenced by one or more certificates signed by
appropriate officers of Old Kent, dated as of the date of the Closing,
certifying the foregoing in such detail as Old Kent may reasonably
request, describing any exceptions to such compliance in such
certificates.
7.2 OPINION OF LEGAL COUNSEL. Old Kent shall have delivered to First
Evergreen an opinion of Warner Norcross & Judd LLP, counsel for Old Kent,
dated as of the date of the Closing and substantially in the form
contained in EXHIBIT F, with only such changes as may be reasonably
satisfactory to counsel for First Evergreen.
7.3 REQUIRED REGULATORY APPROVALS. First Evergreen or Old Kent shall
have received all such approvals, consents, authorizations, and licenses of
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all regulatory and other governmental authorities having jurisdiction as
may be required to permit the performance by First Evergreen and Old Kent
of their respective obligations under this Plan of Merger and the
consummation of the Merger.
7.4 STOCKHOLDER APPROVAL. First Evergreen shall have received the
requisite approval of the stockholders of First Evergreen of this Plan of
Merger.
7.5 ORDER, DECREE, ETC. Neither Old Kent nor First Evergreen shall
be subject to any applicable order, decree, or injunction of a court or
agency of competent jurisdiction that enjoins or prohibits the consummation
of the Merger.
7.6 TAX MATTERS. First Evergreen shall have received a tax opinion
from counsel for Old Kent, reasonably satisfactory in form and substance to
First Evergreen's counsel. The tax opinion shall be supported by one or
more fact certificates or affidavits in such form and content as may be
reasonably requested by Old Kent's counsel from Old Kent. The tax opinion
shall be substantially to the effect that:
7.6.1 NO GAIN OR LOSS. No gain or loss will be recognized by
the stockholders of First Evergreen who receive shares of Old Kent
Common Stock in exchange for all of their shares of First Evergreen
Common Stock, except to the extent of any cash received in lieu of a
fractional share of Old Kent Common Stock.
7.6.2 STOCK TAX BASIS. The basis of the Old Kent Common Stock
to be received by stockholders of First Evergreen will, in each
instance, be the same as the basis of the respective shares of First
Evergreen Common Stock surrendered in exchange therefor.
7.6.3 HOLDING PERIOD. The holding period of the Old Kent Common
Stock received by stockholders of First Evergreen will, in each
instance, include the period during which the First Evergreen Common
Stock surrendered in exchange therefor was held, provided that the
First Evergreen Common Stock was, in each instance, held as a capital
asset in the hands of the stockholder of First Evergreen at the
Effective Time.
7.7 REGISTRATION STATEMENT. The Registration Statement shall have
been declared effective by the SEC and shall not be subject to a stop order
or any threatened stop order.
7.8 FAIRNESS OPINION. First Evergreen shall have received an opinion
from Hovde Financial, Inc., dated as of the date of this Plan of Merger and
renewed as of a date approximately the date of the Prospectus and Proxy
Statement, to the effect that the terms of the Merger are fair to First
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Evergreen's stockholders from a financial point of view as of that date and
such opinion shall not have been subsequently withdrawn.
7.9 NASDAQ LISTING. The shares of Old Kent Common Stock that shall
be issued to the stockholders of First Evergreen upon consummation of the
Merger shall have been authorized for listing on The Nasdaq Stock Market.
ARTICLE VIII - ABANDONMENT OF MERGER
This Plan of Merger may be terminated and the Merger abandoned at any
time prior to the Effective Time (notwithstanding that approval of this
Plan of Merger by the stockholders of First Evergreen may have previously
been obtained) as follows:
8.1 MUTUAL ABANDONMENT. By mutual consent of the boards of
directors, or duly authorized committees thereof, of Old Kent and First
Evergreen.
8.2 UPSET DATE. By either Old Kent or First Evergreen if the Merger
shall not have been consummated on or before March 31, 1999.
8.3 OLD KENT'S RIGHTS TO TERMINATE. By Old Kent under any of the
following circumstances:
8.3.1 FIRST EVERGREEN DISCLOSURE STATEMENT; PRECLOSING
INVESTIGATION, ETC. Old Kent shall have reasonably determined that:
(a) any exception to First Evergreen's representations and warranties
or any other information set forth in the First Evergreen Disclosure
Statement fairly indicate that the financial value of First Evergreen
is materially less than indicated by information provided by or on
behalf of First Evergreen to Old Kent in writing prior to 5:00 p.m. on
April 14, 1998; (b) based upon Old Kent's preclosing investigation of
First Evergreen, there exists any set of facts or circumstances that
would have a Material Adverse Effect on First Evergreen; or (c) First
Evergreen or First Evergreen Bank is exposed to risks, or the Merger
could expose Old Kent to risks, that in the reasonable judgment of Old
Kent could result in a Material Adverse Effect; provided that in each
case, Old Kent notifies First Evergreen of such abandonment and
termination not later than 14 days after Old Kent receives the First
Evergreen Disclosure Statement.
8.3.2 FAILURE TO SATISFY CLOSING CONDITIONS. If any of the
conditions specified in Article VI have not been met or waived by Old
Kent, at such time as such condition can no longer be satisfied.
8.3.3 ENVIRONMENTAL RISKS. If Old Kent has given First
Evergreen notice of an unacceptable Environmental Risk as provided in
Section 5.16.5 (OLD KENT'S RIGHT TO TERMINATE).
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8.3.4 POOLING QUALIFICATION. At any time after Old Kent
independent accountants shall have advised Old Kent that the Merger
is unlikely to qualify for treatment as a pooling-of-interests for
accounting purposes.
8.3.5 APPROVAL OF FIRST EVERGREEN'S STOCKHOLDERS. This Plan of
Merger is not approved by First Evergreen's stockholders at the
Stockholders' Meeting.
8.4 FIRST EVERGREEN'S RIGHTS TO TERMINATE. By the board of
directors, or a duly authorized committee thereof, of First Evergreen under
any of the following circumstances:
8.4.1 UPSET CONDITION. If the Final Old Kent Price is less than
the Upset Price, in accordance with Section 2.2 (UPSET PROVISION).
8.4.2 OLD KENT DISCLOSURE STATEMENT. The cumulative effect of
any exceptions to Old Kent's representations and warranties or any
other information set forth in the Old Kent Disclosure Statement would
have a Material Adverse Effect on Old Kent; provided that First
Evergreen notifies Old Kent of such abandonment and termination not
later than 14 days after First Evergreen receives the Old Kent
Disclosure Statement.
8.4.3 FAILURE TO SATISFY CLOSING CONDITIONS. If any of the
conditions specified in Article VII have not been met or waived by
First Evergreen at such time as such condition can no longer be
satisfied.
8.5 EFFECT OF TERMINATION. In the event of termination of this Plan
of Merger by either First Evergreen or Old Kent as provided in this
Article, this Plan of Merger shall forthwith become void and have no
effect, and none of First Evergreen's, Old Kent's, any of their respective
subsidiaries, or any of the officers or directors of any of them shall have
any liability of any nature whatsoever hereunder, or in connection with the
transactions contemplated hereby (other than the Option Agreement), except
that (a) Sections 5.15 (CONFIDENTIALITY), 8.5 (EFFECT OF TERMINATION), 9.2
(NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS), and 9.4
(EXPENSES), shall survive any termination of this Plan of Merger, and
(b) notwithstanding anything to the contrary contained in this Plan of
Merger, neither First Evergreen nor Old Kent shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Plan of Merger.
ARTICLE IX - MISCELLANEOUS
Subject to the terms and conditions of this Plan of Merger, Old Kent
and First Evergreen further agree as follows:
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9.1 "MATERIAL ADVERSE EFFECT" DEFINED. As used in this Plan of
Merger, the term "MATERIAL ADVERSE EFFECT" means any change or effect that,
individually or when taken together with all other such changes or effects
that have occurred prior to the date of determination of the occurrence of
the Material Adverse Effect, is or is reasonably likely to have a material
negative impact on (a) the business, assets, financial condition, results
of operations, or value of Old Kent and its subsidiaries, taken as a whole,
or, as the case may be, First Evergreen and First Evergreen Bank, taken as
a whole; or (b) the ability of Old Kent or First Evergreen, as the case may
be, to satisfy the applicable closing conditions or consummate the Merger
or perform its obligations under the Option Agreement. Notwithstanding the
above, fees and expenses reasonably related to this transaction (such as
any additional insurance coverages, employment and consulting services,
legal, accounting, and investment banking fees and expenses, and severance
and retention provisions) shall not be included in any determination of a
Material Adverse Effect.
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. None
of the representations, warranties, covenants and agreements in this Plan
of Merger or in any other agreement or instrument delivered pursuant to
this Plan of Merger, including any rights arising out of any breach of such
representations, warranties, covenants, and agreements, shall survive the
Effective Time, except for the Option Agreement, Affiliate Agreements,
Employment Agreements, and those covenants and agreements contained herein
and therein that, by their terms, apply or are to be performed in whole or
in part after the Effective Time.
9.3 AMENDMENT. Subject to applicable law, this Plan of Merger may be
amended, modified, or supplemented by, and only by, written agreement of
Old Kent and First Evergreen, or by the respective officers thereunto duly
authorized, at any time prior to the Effective Time.
9.4 EXPENSES. Except as otherwise provided in this Plan of Merger,
First Evergreen and Old Kent shall each pay its own expenses incident to
preparing for, entering into, and carrying out this Plan of Merger, and
incident to the consummation of the Merger. Each party shall pay the fees
and expenses of any investment banker engaged by that party. The costs of
printing and all filing fees pertaining to the Registration Statement shall
be paid by Old Kent. The costs of printing and mailing the Prospectus and
Proxy Statement shall be paid by First Evergreen.
9.5 SPECIFIC ENFORCEMENT. The parties each agree that, consistent
with the terms and conditions of this Plan of Merger, in the event of a
breach by a party to this Plan of Merger, money damages will be inadequate
and not susceptible of computation because of the unique nature of First
Evergreen, First Evergreen Bank, and the Merger. Therefore, the parties
each agree that a federal or state court of competent jurisdiction shall
have authority, subject to the rules of law and equity, to specifically
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enforce the provisions of this Plan of Merger by injunctive order or such
other equitable means as may be determined in the court's discretion.
9.6 JURISDICTION; VENUE; JURY. Old Kent and First Evergreen each
agree to the jurisdiction and venue of any state or federal court located
in Kent County, Michigan. Old Kent and First Evergreen each hereby waive
their right to a trial by jury.
9.7 WAIVER. Any of the terms or conditions of this Plan of Merger
may be waived in writing at any time by action taken by the board of
directors of a party, a duly authorized committee thereof, or a duly
authorized officer of such party. The failure of any party at any time or
times to require performance of any provision of this Plan of Merger shall
in no manner affect such party's right at a later time to enforce the same
provision. No waiver by any party of any condition, or of the breach of
any term, covenant, representation, or warranty contained in this Plan of
Merger, whether by conduct or otherwise, in any one or more instances shall
be deemed to be or construed as a further or continuing waiver of any such
condition or breach, or as a waiver of any other condition or of the breach
of any other term, covenant, representation, or warranty.
9.8 NOTICES. All notices, requests, demands, and other
communications under this Plan of Merger shall be in writing and shall be
deemed to have been duly given if delivered or sent and received by a fax
transmission (if receipt by the intended recipient is confirmed by
telephone and if hard copy is delivered by overnight delivery service the
next day), a hand delivery, or a nationwide overnight delivery service (all
fees prepaid) to the following addresses:
IF TO OLD KENT: WITH A COPY TO:
Old Kent Financial Corporation Warner Norcross & Judd LLP
Attention: Mary E. Tuuk Attention: Gordon R. Lewis, Esq.
111 Lyon Street N.W. 900 Old Kent Building
Grand Rapids, Michigan 49503 111 Lyon Street, N.W.
Fax: (616) 771-4698 Grand Rapids, Michigan 49503-2489
Fax: (616) 752-2500
IF TO FIRST EVERGREEN: WITH A COPY TO:
First Evergreen Corporation Ruff, Weidenaar & Reidy, Ltd.
Attention: Kenneth J. Ozinga Attention: William B. Weidenaar and
3101 W. 95th Street Timothy S. Breems
Evergreen Park, Illinois 60805 1 N. La Salle Street, Suite 4400
Fax: (708) 499-7491 Chicago, Illinois 60602
Fax: (312) 263-1345
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AND AN ADDITIONAL COPY TO:
Silver, Freedman & Taff
Attention: Barry P. Taff
1100 New York Avenue
Washington, D.C. 30005
Fax: (202) 682-0354
9.9 GOVERNING LAW. This Plan of Merger shall be governed, construed,
and enforced in accordance with the laws of the State of Michigan, without
regard to conflicts of law provisions.
9.10 ENTIRE AGREEMENT. This Plan of Merger supersedes all prior
agreements between the parties with respect to its subject matter and
constitutes (along with the agreements and documents referred to in this
Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter; except for matters
set forth in any written instrument concurrently or contemporaneously
executed by the parties. Neither party may assign any of its rights or
obligations under this Plan of Merger to any other person.
9.11 THIRD PARTY BENEFICIARIES. The terms and conditions of this
Plan of Merger shall inure to the benefit of and be binding upon Old Kent
and First Evergreen and their respective successors. Nothing in this Plan
of Merger, express or implied, is intended to confer upon any person other
than these parties any rights, remedies, obligations, or liabilities under
or by reason of this Plan of Merger.
9.12 COUNTERPARTS. This Plan of Merger may be executed in one or
more counterparts, which taken together shall constitute one and the same
instrument. Executed counterparts of this Plan of Merger shall be deemed
to have been fully delivered and shall become legally binding if and when
executed signature pages are received by fax from a party. If so delivered
by fax, the parties agree to promptly send original, manually executed
copies by nationwide overnight delivery service.
9.13 FURTHER ASSURANCES; PRIVILEGES. Either party to this Plan of
Merger shall, at the request of the other party, execute and deliver such
additional documents and instruments and take such other actions as may be
reasonably requested to carry out the terms and provisions of this Plan of
Merger.
9.14 HEADINGS, ETC. The article headings and section headings
contained in this Plan of Merger are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Plan of
Merger.
9.15 CALCULATION OF DATES AND DEADLINES. Unless otherwise
specified, any period of time to be determined under this Plan of Merger
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shall be deemed to commence at 12:01 a.m. on the first full day after the
specified starting date, event, or occurrence. Any deadline, due date,
expiration date, or period-end to be calculated under this Plan of Merger
shall be deemed to end at 5 p.m. on the last day of the specified period.
The time of day shall be determined with reference to the then current
local time in Grand Rapids, Michigan.
9.16 SEVERABILITY. If any term, provision, covenant, or restriction
contained in this Plan of Merger is held by a final and unappealable order
of a court of competent jurisdiction to be invalid, void, or unenforceable,
then the remainder of the terms, provisions, covenants, and restrictions
contained in this Plan of Merger shall remain in full force and effect, and
shall in no way be affected, impaired, or invalidated unless the effect
would be to cause this Plan of Merger to not achieve its essential
purposes.
[BALANCE OF THIS PAGE INTENTIONALLY BLANK]
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In Witness Whereof, the undersigned parties hereto have duly
executed and acknowledged this Plan of Merger as of the date first written
above.
OLD KENT FINANCIAL CORPORATION
By /S/ DAVID J. WAGNER
David J. Wagner
Its Chairman of the Board, President, and
Chief Executive Officer
FIRST EVERGREEN CORPORATION
By /S/ KENNETH J. OZINGA
Kenneth J. Ozinga
Its Chairman of the Board, President, and
Chief Executive Officer
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APPENDIX B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "AGREEMENT") is made as of April
21, 1998, by and between OLD KENT FINANCIAL CORPORATION, a Michigan
corporation ("GRANTEE"), and FIRST EVERGREEN CORPORATION, a Delaware
corporation ("ISSUER").
As a condition to, and contemporaneous with, the execution of
this Agreement, the parties are entering into an Agreement and Plan of
Merger dated April 21, 1998 (the "PLAN OF MERGER"). In consideration
therefor, and as an inducement to Grantee to pursue the transactions
contemplated by the Plan of Merger, Issuer has agreed to grant Grantee the
Option (as defined below). The board of directors of Issuer has approved
the grant of the Option and the Plan of Merger. Capitalized terms used but
not defined in this Agreement shall have the meanings given to those terms
in the Plan of Merger.
In consideration of the foregoing, and the mutual covenants and
agreements set forth in this Agreement and in the Plan of Merger, the
parties agree:
1. GRANT OF OPTION.
(a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "OPTION") to purchase, subject to the terms of this
Agreement, up to 80,012 fully paid and nonassessable shares of Issuer
Common Stock, par value $25.00 ("COMMON STOCK"), at a price per share
equal to $1,067.00; PROVIDED that in the event Issuer issues or agrees to
issue any shares of Common Stock at a price per share less than $1,067.00
(as adjusted pursuant to Section 5(b)), such price shall be equal to such
lesser price (as adjusted, if applicable, the "OPTION PRICE"); FURTHER
PROVIDED, that in no event shall the number of shares for which this Option
is exercisable, together with the number of shares owned by Grantee other
than shares held by Grantee in a fiduciary capacity for a customer as to
which it has no beneficial interest ("FIDUCIARY SHARES"), exceed 19.99% of
the Issuer's issued and outstanding common shares.
(b) The number of shares of Common Stock subject to the Option
shall be increased or decreased, as appropriate, in the event that any
additional shares of Common Stock are issued or otherwise become
outstanding (other than pursuant to this Agreement or pursuant to an event
described in Section 5(a) of this Agreement) or existing shares are
redeemed, retired or otherwise become no longer outstanding after the date
of this Agreement so that, after any such issuance, redemption or
retirement, together with the number of shares previously issued pursuant
to this Agreement or otherwise owned by Grantee other than Fiduciary
Shares, the number of shares of Common Stock subject to the Option equals
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19.99% of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the
Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement shall be considered to authorize Issuer to issue shares in breach
of any provision of the Plan of Merger.
2. EXERCISE OF OPTION.
(a) The holder or holders of the Option (the "HOLDER") may
exercise the Option, in whole or part, if both an Initial Triggering Event
(as defined below) and a Subsequent Triggering Event (as defined below)
shall have occurred prior to the occurrence of an Exercise Termination
Event (as defined below), PROVIDED that the Holder shall have sent notice
of such exercise (as required by Section 2(f)) within six months following
such Subsequent Triggering Event (or such later date as provided in Section
10).
(b) Each of the following shall be an "EXERCISE TERMINATION
EVENT": (i) consummation of the Merger at the Effective Time of the Merger;
(ii) the termination of the Plan of Merger in accordance with the
provisions thereof if such termination occurs before the occurrence of an
Initial Triggering Event, except a termination by Grantee on account of a
Listed Termination (as defined below); and (iii) the passage of 18 months
(or such longer period as provided in Section 10) after termination of the
Plan of Merger if such termination follows the occurrence of an Initial
Triggering Event or is a Listed Termination. For purposes of this
Agreement, each of the following terminations of the Plan of Merger in
accordance with the provisions thereof shall constitute a "LISTED
TERMINATION": (i) termination by Grantee if Issuer's board of directors
shall have failed to recommend that the Merger be approved by Issuer's
shareholders as required by Section 1.1 of the Plan of Merger, withdrawn
such recommendation or modified or changed such recommendation in a manner
adverse in any respect to the interests of Grantee; and (ii) termination by
Grantee resulting from a material breach by Issuer of a provision of the
Plan of Merger (but only if the breach giving rise to the termination was
willful) Notwithstanding anything to the contrary in this Agreement: (i)
the Option may not be exercised at any time when Grantee shall be in
material breach of any of its covenants or agreements contained in the Plan
of Merger such that Issuer shall be entitled to terminate the Plan of
Merger as a result of a material breach; and (ii) this Agreement shall
automatically terminate upon the proper termination of the Plan of Merger
(x) by Issuer as a result of the material breach by Grantee of its
covenants or agreements contained in the Plan of Merger, or (y) by Issuer
or Grantee if the approval by any federal or state governmental agency or
authority necessary to consummate the Merger and the other transactions
contemplated by the Plan of Merger shall have been denied by final
nonappealable action of such agency or authority.
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(c) The term "INITIAL TRIGGERING EVENT" shall mean any of the
following events or transactions occurring on or after the date of this
Agreement:
(i) Issuer or its subsidiary (the "ISSUER SUBSIDIARY"),
without having received Grantee's prior written consent, shall have
entered into an agreement to engage in an Acquisition Transaction (as
defined below) with any person (for purposes of this Agreement, the
term "person" has the meaning given that term in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and the rules and regulations thereunder) other than
Grantee or any of its subsidiaries (a "GRANTEE SUBSIDIARY") or the
board of directors of Issuer shall have recommended that the
shareholders of Issuer approve or accept any Acquisition Transaction
other than the Merger;
(ii) any person other than Grantee or any Grantee Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the outstanding shares of
Common Stock (for purposes of this Agreement, the term "beneficial
ownership" has the meaning given that term in Section 13(d) of the
Exchange Act and the rules and regulations thereunder);
(iii) the shareholders of Issuer shall have voted and failed
to approve the Plan of Merger and the Merger at a meeting which has
been held for that purpose or any adjournment or postponement thereof,
or such meeting shall not have been held in violation of the Plan of
Merger or shall have been canceled prior to termination of the Plan of
Merger if, prior to such meeting (or if such meeting shall not have
been held or shall have been canceled, prior to such termination), it
shall have been publicly announced that any person (other than Grantee
or any Grantee Subsidiary) shall have made, or publicly disclosed an
intention to make, a proposal to engage in an Acquisition Transaction;
(iv) the board of directors of Issuer shall have withdrawn
or modified (or publicly announced its intention to withdraw or
modify) in any manner adverse in any respect to Grantee its
recommendation that the shareholders of Issuer approve the
transactions contemplated by the Plan of Merger, or Issuer or the
Issuer Subsidiary shall have authorized, recommended or proposed (or
publicly announced its intention to authorize, recommend or propose)
an agreement to engage in an Acquisition Transaction with any person
other than Grantee or any Grantee Subsidiary;
(v) any person other than Grantee or any Grantee Subsidiary
shall have made a proposal to Issuer or its shareholders to engage in
an Acquisition Transaction and such proposal shall have been publicly
announced;
B-3
(vi) any person other than Grantee or any Grantee Subsidiary
shall have filed with the Securities and Exchange Commission ("SEC") a
registration statement or tender offer materials with respect to a
potential exchange or tender offer that would constitute an
Acquisition Transaction (or filed a preliminary proxy statement with
the SEC with respect to a potential vote by its shareholders to
approve the issuance of shares to be offered in such an exchange
offer);
(vii) Issuer shall have willfully breached any covenant or
obligation contained in the Plan of Merger in anticipation of engaging
in an Acquisition Transaction, and following such breach Grantee would
be entitled to terminate the Plan of Merger (whether immediately or
after the giving of notice or passage of time, or both);
(viii) any person other than Grantee or any Grantee
Subsidiary shall have filed an application or notice with the Board of
Governors of the Federal Reserve System (the "FEDERAL RESERVE BOARD"),
the Office of the Comptroller of the Currency (the "OCC") or other
federal or state authority or regulatory or administrative agency or
commission (each a "GOVERNMENTAL ENTITY"), which application or notice
has been accepted for processing, for approval to engage in an
Acquisition Transaction; or
(ix) a Fiduciary Event shall have occurred under the Plan of
Merger.
For purposes of this Agreement, "ACQUISITION TRANSACTION" means: (a) a
merger or consolidation, or any similar transaction, involving Issuer or
the Issuer Subsidiary (other than mergers, consolidations or similar
transactions (i) involving solely Issuer and/or one or more wholly-owned
(except for directors' qualifying shares) subsidiaries of the Issuer,
PROVIDED, any such transaction is not entered into in violation of the
terms of the Plan of Merger or (ii) in which the shareholders of Issuer
immediately prior to the completion of such transaction own at least 50% of
the Common Stock of Issuer (or the resulting or surviving entity in such
transaction) immediately after completion of such transaction, PROVIDED,
any such transaction is not entered into in violation of the terms of the
Plan of Merger); (b) a purchase, lease or other acquisition of all or a
substantial part of the assets or deposits of Issuer or the Issuer
Subsidiary; (c) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or the Issuer
Subsidiary; or (d) any substantially similar transaction. For purposes of
this Agreement, "subsidiary" has the meaning given that term in Rule 12b-2
under the Exchange Act.
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(d) The term "SUBSEQUENT TRIGGERING EVENT" shall mean either of
the following events or transactions occurring after the date of this
Agreement:
(i) the acquisition by any person (other than Grantee or
any Grantee Subsidiary) of beneficial ownership of 25% or more of the
then outstanding Common Stock; or
(ii) occurrence of the Initial Triggering Event described in
clause (i) of Section 2(c), except that the percentage referred to for
purposes of defining "Acquisition Transaction" in clause (c) shall be
25%.
(e) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(collectively, "TRIGGERING EVENTS"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of Holder to
exercise the Option.
(f) In the event Holder is entitled and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice
(the date of such notice is referred to as the "NOTICE DATE") specifying:
(i) the total number of shares it will purchase pursuant to such exercise;
and (ii) a place and date not earlier than three business days nor later
than 60 business days from the Notice Date for the closing of such purchase
(the "CLOSING DATE"); PROVIDED, that if prior notification to or approval
of the Federal Reserve Board, the OCC or any other Governmental Entity is
required in connection with such purchase, Holder shall promptly file the
required notice or application for approval, shall notify Issuer of such
filing, and shall expeditiously process the same and the period of time
that otherwise would run pursuant to this sentence shall run instead from
the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option shall be
considered to occur on the Notice Date relating thereto.
(g) At the closing referred to in Section 2(f), Holder shall (i)
pay to Issuer the aggregate purchase price for the shares of Common Stock
purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices; PROVIDED, that failure or refusal of Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude
Holder from exercising the Option.
(h) At the closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(g), Issuer shall
deliver to Holder a certificate or certificates representing the number of
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shares of Common Stock purchased by Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of Holder to
purchase the balance of the shares subject to this Option.
(i) Certificates for Common Stock delivered at a closing under
this Agreement may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of April
21, 1998, between the registered holder hereof and Issuer and to
resale restrictions arising under the Securities Act of 1933, as
amended. A copy of such agreement is on file at the principal
office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if Holder shall have delivered to
Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel, in form and substance reasonably satisfactory to Issuer, to the
effect that such legend is not required for purposes of the Securities Act;
(ii) the reference to the provisions of this Agreement in the above legend
shall be removed by delivery of substitute certificate(s) without such
reference if the shares have been sold or transferred in compliance with
the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the opinion of counsel to
Holder; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required
by law.
(j) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under Section 2(f) and the tender of
the applicable purchase price in immediately available funds, Holder shall
be considered, subject to the receipt of any necessary regulatory
approvals, to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books
of Issuer shall then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to Holder.
Issuer shall pay all expenses, and any and all federal, state and local
taxes and other charges that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section
2 in the name of Holder or its assignee, transferee or designee.
3. COVENANTS OF ISSUER. Issuer agrees: (i) that it shall at all
times maintain, free from preemptive rights, sufficient authorized but
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unissued or treasury shares of Common Stock so that the Option may be
exercised without additional authorization of Common Stock after giving
effect to all other options, warrants, convertible securities and other
rights to purchase Common Stock; (ii) that it will not, by charter
amendment or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or
conditions to be observed or performed under this Agreement by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (x) complying with all applicable premerger notification,
reporting and waiting period requirements and (y) in the event, under the
Bank Holding Company Act of 1956, as amended, or the Change in Bank Control
Act of 1978, as amended, or any state or other federal banking law, prior
approval of or notice to the Federal Reserve Board, OCC or any other
Governmental Entity is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board, the OCC and/or
each such Governmental Entity as they may require) in order to permit
Holder to exercise the Option and Issuer duly and effectively to issue
shares of Common Stock pursuant to this Agreement; and (iv) promptly to
take all action provided in this Agreement to protect the rights of Holder
against dilution.
4. EXCHANGE OF OPTION. This Agreement (and the Option granted by
this Agreement) are exchangeable, without expense, at the option of Holder,
upon presentation and surrender of this Agreement at the principal office
of Issuer, for other Agreements providing for Options of different
denominations entitling Holder to purchase, on the same terms and subject
to the same conditions as are set forth in this Agreement, in the aggregate
the same number of shares of Common Stock subject to this Option. The terms
"Agreement" and "Option" as used in this Agreement include any stock option
agreements and related options for which this Agreement (and the Option
granted by this Agreement) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. ADJUSTMENTS. In addition to the adjustment in the number of
shares of Common Stock that are subject to the Option pursuant to Section 1
of this Agreement, the number of shares of Common Stock subject to the
Option and the Option Price shall be subject to adjustment from time to
time as provided in this Section 5.
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(a) In the event of any change in, or distributions in respect
of, Common Stock by reason of stock dividends, stock splits, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock subject
to the Option shall be appropriately adjusted and proper provision shall be
made so that, in the event that any additional shares of Common Stock are
to be issued or otherwise become outstanding as a result of any such change
(other than pursuant to an exercise of the Option), the number of shares of
Common Stock that remain subject to the Option shall be increased so that,
after such issuance and together with shares of Common Stock previously
issued pursuant to the exercise of the Option (as adjusted on account of
any of the foregoing changes in the Common Stock), such number equals
19.99% of the number of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock subject to the
Option is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of
which shall be equal to the number of shares of Common Stock subject to the
Option prior to the adjustment and the denominator of which shall be equal
to the number of shares of Common Stock subject to the Option after the
adjustment.
6. REGISTRATION RIGHTS. Upon the occurrence of a Subsequent
Triggering Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee delivered within 12 months (or such later
period as provided in Section 10) of such Subsequent Triggering Event
(whether on its own behalf or on behalf of any subsequent holder of this
Option (or part thereof) or any of the shares of Common Stock issued
pursuant hereto), promptly prepare, file and keep current a shelf
registration statement under the Securities Act covering any shares issued
and/or issuable pursuant to this Option and shall use its best efforts to
cause such registration statement to become effective and remain current to
permit the sale or other disposition of any shares of Common Stock issued
upon total or partial exercise of this Option ("OPTION SHARES") in
accordance with any plan of disposition requested by Grantee. Issuer will
use its best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess
of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect
such sales or other dispositions. Grantee shall have the right to demand
two such registrations. The Issuer shall bear the costs of such
registrations (including, without limitation, Issuer's attorneys' fees,
printing costs and filing fees, except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto). Notwithstanding the above, if, at the time of
any request by Grantee for registration of Option Shares as provided above,
Issuer is in the process of registration with respect to an underwritten
public offering by Issuer of shares of Common Stock, and if in the good
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faith judgment of the managing underwriter or managing underwriters (or, if
none, the sole underwriter or underwriters) of such offering the offer and
sale of the Option Shares would interfere with the successful marketing of
the shares of Common Stock offered by Issuer, the number of Option Shares
otherwise to be covered in the registration statement contemplated by this
Section 6 may be reduced; PROVIDED, that, after any such required
reduction, the number of Option Shares included in such offering for the
account of Holder shall constitute at least 25% of the total number of
shares to be sold by Holder and Issuer in the aggregate; PROVIDED FURTHER,
that if such reduction occurs, then the Issuer shall file a registration
statement for the balance of the Option Shares subject to the registration
demand as promptly as practical as to which no reduction pursuant to this
Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the 12 month period referred to
in the first sentence of this Section shall be increased to 24 months.
Each such Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be filed to register
Option Shares. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements for Issuer.
Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be
entitled to registration rights under this Section 6, in each case by
promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies. Notwithstanding anything to the
contrary in this Agreement, in no event shall the number of registrations
that Issuer is obligated to effect be increased by reason of the fact that
there shall be more than one Holder as a result of any assignment or
division of this Agreement.
7. REPURCHASE OF OPTION.
(a) At any time after the occurrence of a Repurchase Event
(defined below): (i) at the request of Holder, delivered prior to an
Exercise Termination Event (or such later period as provided in Section
10), Issuer (or any successor to Issuer) shall repurchase the Option from
Holder at a price (the "OPTION REPURCHASE PRICE") equal to the amount by
which (x) the market/offer price (as defined below) exceeds (y) the Option
Price, multiplied by the number of shares for which this Option may then be
exercised; and (ii) at the request of the owner of Option Shares from time
to time (the "OWNER"), delivered prior to an Exercise Termination Event (or
such later period as provided in Section 10), Issuer (or any successor to
Issuer) shall repurchase such number of the Option Shares from Owner as
Owner shall designate at a price (the "OPTION SHARE REPURCHASE PRICE")
equal to the market/offer price multiplied by the number of Option Shares
so designated. The term "MARKET/OFFER PRICE" shall mean the highest of:
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(i) the price per share of Common Stock at which a tender or exchange offer
therefor has been made; (ii) the price per share of Common Stock to be paid
by any third party pursuant to an agreement with Issuer; (iii) the highest
sale price for shares of Common Stock within the six-month period
immediately preceding the date Holder gives notice of the required
repurchase of this Option or Owner gives notice of the required repurchase
of Option Shares, as the case may be; or (iv) in the event of a sale of all
or any substantial part of Issuer's assets or deposits, the sum of the net
price paid in such sale for such assets or deposits and the current market
value of the remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by Holder or Owner, as the case
may be, and reasonably acceptable to Issuer, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such sale. In
determining the market/offer price, the value of consideration other than
cash shall be determined by a nationally recognized investment banking firm
selected by Holder or Owner, as the case may be, and reasonably acceptable
to Issuer.
(b) Holder or Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option
Shares, as applicable, accompanied by a written notice or notices stating
that Holder or Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares in accordance with the
provisions of this Section 7. As promptly as practicable, and in any event
within five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such notice or
notices relating thereto, Issuer shall deliver or cause to be delivered to
Holder the Option Repurchase Price and/or to Owner the Option Share
Repurchase Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law
or regulation, or as a consequence of administrative policy, from
repurchasing the Option and/or the Option Shares in full, Issuer shall
immediately so notify Holder and/or Owner and thereafter deliver or cause
to be delivered, from time to time, to Holder and/or Owner, as appropriate,
the portion of the Option Repurchase Price and the Option Share Repurchase
Price, respectively, that it is no longer prohibited from delivering,
within five business days after the date on which Issuer is no longer so
prohibited; PROVIDED, that if Issuer at any time after delivery of a notice
of repurchase pursuant to this Section 7(b) is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
delivering to Holder and/or Owner, as appropriate, the Option Repurchase
Price and the Option Share Repurchase Price, respectively, in full (and
Issuer hereby undertakes to use its best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly
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as practicable in order to accomplish such repurchase), Holder or Owner may
revoke its notice of repurchase of the Option or the Option Shares either
in whole or to the extent of the prohibition, whereupon, in the latter
case, Issuer shall promptly: (i) deliver to Holder and/or Owner, as
appropriate, that portion of the Option Repurchase Price or the Option
Share Repurchase Price that Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to Holder, a new Agreement
evidencing the right of Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the
Option Repurchase Price less the portion of the Option Repurchase Price
previously delivered to Holder and the denominator of which is the Option
Repurchase Price, and/or (B) to Owner, a certificate for the Option Shares
it is then so prohibited from repurchasing. If an Exercise Termination
Event shall have occurred prior to the date of the notice by Issuer
described in the first sentence of this Section 7(c), or shall be scheduled
to occur at any time before the expiration of a period ending on the
thirtieth day after such date, Holder shall nonetheless have the right to
exercise the Option until the expiration of such 30-day period.
(d) For purposes of this Section 7, a "REPURCHASE EVENT" shall
be considered to have occurred upon the occurrence of any of the following
events or transactions after the date of this Agreement:
(i) the acquisition by any person (other than Grantee or
any Grantee Subsidiary) of beneficial ownership of 50% or more of the
then outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction
described in Section 2(c)(i), except that the percentage referred to
for purposes of defining "Acquisition Transaction" in clause (c) shall
be 50%.
8. SUBSTITUTE OPTION.
(a) In the event that prior to an Exercise Termination Event,
Issuer shall enter into an agreement to (i) consolidate with or merge into
any person, other than Grantee or any Grantee Subsidiary, or engage in a
plan of exchange with any person, other than Grantee or any Grantee
Subsidiary and Issuer shall not be the continuing or surviving corporation
of such consolidation or merger or the acquirer in such plan of exchange,
(ii) permit any person, other than Grantee or any Grantee Subsidiary, to
merge into Issuer or be acquired by Issuer in a plan of exchange and Issuer
shall be the continuing or surviving corporation, but, in connection with
such merger or plan of exchange, the then outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities of
any other person or cash or any other property or the then outstanding
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shares of Common Stock shall after such merger or plan of exchange
represent less than 50% of the outstanding shares and share equivalents of
the merged or acquiring company, or (iii) sell or otherwise transfer all or
a substantial part of its or the Issuer's assets or deposits to any person,
other than Grantee or any Grantee Subsidiary, then, and in each such case,
the agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such transaction and
upon the terms and conditions set forth in this Agreement, be converted
into, or exchanged for, an option (the "SUBSTITUTE OPTION"), at the
election of Holder, of either (x) the Acquiring Corporation (as defined
below) or (y) any person that controls the Acquiring Corporation.
(b) The following terms have the following meanings:
(i) "ACQUIRING CORPORATION" means: (i) the continuing
or surviving person of a consolidation or merger with Issuer
(if other than Issuer); (ii) the acquiring person in a plan
of exchange in which Issuer is acquired; (iii) Issuer in a
merger or plan of exchange in which Issuer is the continuing
or surviving or acquiring person; and (iv) the transferee of
all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer Subsidiary).
(ii) "SUBSTITUTE COMMON STOCK" means the common stock
to be issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(iii) "ASSIGNED VALUE" means the market/offer price, as
defined in Section 7.
(iv) "AVERAGE PRICE" means the average closing price of
a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of
the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; PROVIDED, that if Issuer
is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company
which controls or is controlled by such person, as Holder
may elect.
(c) The Substitute Option shall have the same terms as the
Option; PROVIDED, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder
or Holders of the Substitute Option in substantially the same form as this
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Agreement (after giving effect for such purpose to the provisions of
Section 9), which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence
of Section 8(a), divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal
to the Option Price multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence
of Section 8(a) and the denominator of which shall be the number of shares
of Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the subsections above, shall
the Substitute Option be exercisable for a number of shares that, together
with the number of shares owned by Grantee other than Fiduciary Shares, is
more than 19.99% of the shares of Substitute Common Stock outstanding prior
to exercise of the Substitute Option. In the event that the Substitute
Option would be exercisable for more than 19.99% of the shares of
Substitute Common Stock outstanding prior to exercise but for this Section
8(e), the issuer of the Substitute Option (the "SUBSTITUTE OPTION ISSUER")
shall make a cash payment to Holder equal to the excess of (i) the value of
the Substitute Option without giving effect to the limitation in this
Section 8(e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this Section 8(e). This difference in value
shall be determined by a nationally recognized investment banking firm
selected by Holder.
(f) Issuer shall not enter into any transaction described in
Section 8(a) unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
under this Agreement.
9. REPURCHASE OF SUBSTITUTE OPTION.
(a) At the request of the holder of the Substitute Option (the
"SUBSTITUTE OPTION HOLDER"), the Substitute Option Issuer shall repurchase
the Substitute Option from the Substitute Option Holder at a price (the
"SUBSTITUTE OPTION REPURCHASE PRICE") equal to the amount by which (i) the
Highest Closing Price (as defined below) exceeds (ii) the exercise price of
the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at
the request of the owner (the "SUBSTITUTE SHARE OWNER") of shares of
Substitute Common Stock, the Substitute Option Issuer shall repurchase the
Substitute Common Stock at a price (the "SUBSTITUTE SHARE REPURCHASE
PRICE") equal to the Highest Closing Price multiplied by the number of
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Substitute Shares so designated. The term "HIGHEST CLOSING PRICE" shall
mean the highest closing price for shares of Substitute Common Stock within
the six-month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or
the Substitute Share Owner gives notice of the required repurchase of the
Substitute Common Stock, as applicable.
(b) The Substitute Option Holder and the Substitute Share Owner,
as the case may be, may exercise its respective rights to require the
Substitute Option Issuer to repurchase the Substitute Option and the
Substitute Common Stock pursuant to this Section 9 by surrendering for such
purpose to the Substitute Option Issuer, at its principal office, the
agreement for such Substitute Option (or, in the absence of such an
agreement, a copy of this Agreement) and certificates for Substitute Common
Stock accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Common Stock in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or
certificates representing Substitute Common Stock and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof that the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Common Stock in part or in full, the Substitute Option Issuer
shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered,
from time to time, to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five business days
after the date on which the Substitute Option Issuer is no longer so
prohibited; PROVIDED, that if the Substitute Option Issuer is at any time
after delivery of a notice of repurchase pursuant to Section 9(b)
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Substitute Option
Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use its best efforts to
obtain all required regulatory and legal approvals as promptly as
practicable to accomplish such repurchase), the Substitute Option Holder or
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Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Common Stock either in whole or to the
extent of the prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly: (i) deliver to the Substitute Option Holder
or Substitute Share Owner, as appropriate, that portion of the Substitute
Option Repurchase Price or the Substitute Share Repurchase Price that the
Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (x) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of Substitute Common Stock obtained by
multiplying the number of shares of Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion of the Substitute
Option Repurchase Price previously delivered to the Substitute Option
Holder and the denominator of which is the Substitute Option Repurchase
Price, and/or (y) to the Substitute Share Owner, a certificate for the
Substitute Common Stock it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the
notice by the Substitute Option Issuer described in the first sentence of
the Section 8(c), or shall be scheduled to occur at any time before the
expiration of a period ending on the thirtieth day after such date, the
Substitute Option Holder shall nevertheless have the right to exercise the
Substitute Option until the expiration of such 30-day period
10. EXTENTION OF EXERCISE PROVISIONS. The 30-day, six-month,
12-month, 18-month or 24-month periods for the exercise of certain rights
under Sections 2, 6, 7, 9, 12 and 14 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of such
rights (for so long as the Holder, Owner, Substitute Option Holder or
Substitute Common Stock Owner, as the case may be, is using commercially
reasonable efforts to obtain such regulatory approvals), and for the
expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the Exchange Act by
reason of such exercise.
11. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been
duly and validly authorized by the board of directors of Issuer prior to
the date of this Agreement and no other corporate proceedings on the part
of Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Issuer. This Agreement is the valid and legally
binding obligation of Issuer.
B-15
(b) Issuer has taken all necessary corporate action to
authorize, reserve and permit it to issue, and at all times from the date
of this Agreement through the termination of this Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum number
of shares of Common Stock at any time and from time to time issuable under
this Agreement, and all such shares, upon issuance pursuant to this
Agreement, will be duly authorized, validly issued, fully paid,
nonassessable and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive
rights.
12. ASSIGNMENT. Neither party to this Agreement may assign any of
its rights or obligations under this Agreement or the Option created under
this Agreement to any other person without the express written consent of
the other party, except that in the event a Subsequent Triggering Event
shall have occurred prior to an Exercise Termination Event, Grantee,
subject to the express provisions of this Agreement, may assign in whole or
in part its rights and obligations under this Agreement; PROVIDED, that
until the date 15 days following the date on which the Federal Reserve
Board has approved an application by Grantee to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its rights under
the Option except in: (i) a widely dispersed public distribution; (ii) a
private placement in which no one party acquires the right to purchase in
excess of 2% of the voting shares of Issuer; (iii) an assignment to a
single party (such as a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf; or
(iv) any other manner approved by the Federal Reserve Board.
13. COOPERATION. Grantee and Issuer each will use its best efforts
to make all filings with, and to obtain consents of, all third parties and
Governmental Entities necessary to the consummation of the transactions
contemplated by this Agreement, including without limitation applying to
the Federal Reserve Board for approval to acquire the shares issuable under
this Agreement, but Grantee shall not be obligated to apply to state
banking authorities for approval to acquire the shares of Common Stock
issuable under this Agreement until such time, if ever, as it considers
appropriate to do so.
14. MINIMUM REPURCHASE PROCEEDS.
(a) Grantee may, at any time following a Repurchase Event and prior
to the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option
Shares issued to and then owned by Grantee) to Issuer in exchange for a
cash fee equal to the Surrender Price; PROVIDED, that Grantee may not
exercise its rights pursuant to this Section 14 if Issuer has repurchased
the Option (or any portion thereof) or any Option Shares pursuant to
B-16
Section 7. The "Surrender Price" shall be equal to $23,350,000.00, (i)
plus, if applicable, Grantee's purchase price with respect to any Option
Shares and (ii) minus, if applicable, the excess of (A) the net cash
amounts, if any, received by Grantee pursuant to the arms' length sale of
Option Shares (or any other securities into which such Option Shares were
converted or exchanged) to any unaffiliated party, over (B) the Option
Price.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 14 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for
Option Shares, if any, accompanied by a written notice stating (i) that
Grantee elects to relinquish the Option and Option Shares, if any, in
accordance with the provisions of this Section 14 and (ii) the Surrender
Price. The Surrender Price shall be payable in immediately available
funds on or before the second business day following receipt of such notice
by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify
Grantee and thereafter deliver or cause to be delivered, from time to time,
to Grantee, the portion of the Surrender Price that it is no longer
prohibited from paying, within five business days after the date on which
Issuer is no longer so prohibited; PROVIDED, that if Issuer at any time
after delivery of a notice of surrender pursuant to this Section 14(b) is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from paying to Grantee the Surrender Price in full:
(i) Issuer shall (A) use its best efforts to obtain all required regulatory
and legal approvals and to file any required notices as promptly as
practicable in order to make such payments, (B) within five days of the
submission or receipt of any documents relating to any such regulatory and
legal approvals, provide Grantee with copies of the same, and (c) keep
Grantee advised of both the status of any such request for regulatory and
legal approvals, as well as any discussions with any relevant regulatory or
other third party reasonably related to the same; and (ii) Grantee may
revoke such notice of surrender by delivery of a notice of revocation to
Issuer and, upon delivery of such notice of revocation, the date of the
Exercise Termination Event shall be extended to a date six months from the
date on which the Exercise Termination Event would have occurred if not for
the provisions of this Section 14(c) (during which period Grantee may
exercise any of its rights under this Agreement, including any and all
rights pursuant to this Section 14).
15. REMEDIES. The parties acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party and that
the obligations of the parties shall be enforceable by either party through
injunctive or other equitable relief. In connection therewith, the parties
waive the posting of any bond or similar requirement.
B-17
16. SEVERABILITY. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that Holder is not
permitted to acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in Section
1(a) (as adjusted pursuant to Sections 1(b) or 5), it is the express
intention of Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification of this Agreement.
17. NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be considered to have been duly
given when delivered in person, by fax, telecopy, or by registered or
certified mail (postage prepaid, return receipt requested) at the
respective addresses of the parties set forth in the Plan of Merger.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Michigan, regardless of the
laws that might otherwise govern under applicable principles of conflicts
of laws.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
20. FEES AND EXPENSES. Except as otherwise expressly provided in
this Agreement, each party shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated under this Agreement, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
21. ENTIRE AGREEMENT. Except as otherwise expressly provided in this
Agreement or in the Plan of Merger, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
under this Agreement and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the parties to this Agreement and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties to this
Agreement, and their respective successors except as assignees, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
B-18
IN WITNESS WHEREOF, the parties has caused this Stock Option
Agreement to be executed by their officers, thereunto duly authorized, as
of the date first written above.
OLD KENT FINANCIAL CORPORATION
By: /S/ DAVID J. WAGNER
David J. Wagner
Chairman, President and Chief Executive
Officer
FIRST EVERGREEN CORPORATION
By: /S/ KENNETH J. OZINGA
Kenneth J. Ozinga
Chairman, President and Chief Executive
Officer
B-19
APPENDIX C
(THE EXCHANGE RATE STATED IN THIS APPENDIX IS AS OF THE DATE OF THE
OPINION. IT HAS NOT BEEN ADJUSTED FOR THE OLD KENT STOCK DIVIDEND.)
OPINION OF HOVDE FINANCIAL, INC.
July 13, 1998
Board of Directors
First Evergreen Corporation
3101 West 95th Street
Evergreen Park, IL 60805
Members of the Board:
First Evergreen Corporation ("First Evergreen"), a Delaware
corporation, and Old Kent Financial Corporation ("Old Kent"), a Michigan
corporation, have entered into an Agreement and Plan of Merger ("Plan of
Merger") dated April 21, 1998, pursuant to which First Evergreen will be
merged with and into Old Kent (the "Merger"). As is set forth in Section
2.1.1 of the Plan of Merger, at the effective time of the Merger each of
the outstanding shares of First Evergreen common stock ("First Evergreen
Common Stock") will be converted into and have the right to receive 30.5059
shares ("Exchange Ratio") of Old Kent common stock ("Old Kent Common
Stock"). In connection therewith, you have requested our opinion as to the
fairness, from a financial point of view, of the Plan of Merger to the
shareholders of First Evergreen.
Hovde Financial, Inc. ("Hovde") specializes in providing investment
banking and financial advisory services to commercial bank and thrift
institutions. Our principals are experienced in the independent valuation
of securities in connection with negotiated underwritings, subscription and
community offerings, private placements, merger and acquisition
transactions and recapitalizations. We are familiar with First Evergreen,
having acted as its financial advisor in connection with, and having
participated in the negotiations leading to, the Plan of Merger.
We were retained by First Evergreen to act as its exclusive financial
advisor with respect to a review of First Evergreen's strategic
alternatives and the possible sale, merger, consolidation, or other
business combination, in one or a series of transactions, involving all or
a substantial amount of the business, securities or assets of First
Evergreen. We will receive compensation from First Evergreen in connection
with our services, a significant portion of which is contingent upon the
consummation of the Merger. At your direction, we solicited the interest
of third parties regarding a possible business combination with First
Evergreen. The Plan of Merger is the result of this solicitation.
Board of Directors
First Evergreen Corporation
July 13, 1998
Page Two
During the course of our engagement, we reviewed and analyzed material
bearing upon the financial and operating conditions of First Evergreen and
Old Kent and material prepared in connection with the proposed transaction,
including the following: the Plan of Merger; certain historical publicly
available information concerning First Evergreen and Old Kent; the terms of
recent merger and acquisition transactions involving banks and bank holding
companies that we considered relevant; historical market prices and trading
volumes for Old Kent Common Stock; and financial and other information
provided to us by the managements of First Evergreen and Old Kent.
In addition, we have conducted meetings with members of the senior
management of First Evergreen and Old Kent for the purpose of reviewing the
future prospects of First Evergreen and Old Kent. We also evaluated the
pro forma ownership of Old Kent Common Stock by First Evergreen's
shareholders relative to the pro forma contribution of First Evergreen's
assets, liabilities, equity and earnings to the pro forma company, and
conducted such other studies, analyses and examinations as we deemed
appropriate. We also took into account our assessment of general economic,
market and financial conditions and our experience in other transactions,
as well as our knowledge of the banking industry and our general experience
in securities valuations.
In rendering this opinion, we have assumed, without independent
verification, the accuracy and completeness of the financial and other
information and representations contained in the materials provided to us
by First Evergreen and Old Kent and in the discussions with First Evergreen
and Old Kent management. We did not independently verify and have relied
on and assumed that the aggregate allowances for loan losses set forth in
the balance sheets of each of First Evergreen and Old Kent at December 31,
1997 were adequate to cover such losses and complied fully with applicable
law, regulatory policy and sound banking practices as of the date of such
financial statements. We were not retained to and did not conduct a
physical inspection of any of the properties or facilities of First
Evergreen or Old Kent, nor did we make any independent evaluation or
appraisal of the assets, liabilities or prospects of First Evergreen or Old
Kent, nor were we furnished with any such evaluation or appraisal, and we
were not retained to and did not review any individual credit files.
Board of Directors
First Evergreen Corporation
July 13, 1998
Page Three
We have assumed that the Merger is, and will be, in compliance with
all laws and regulations that are applicable to First Evergreen and Old
Kent. In rendering this opinion, we have been advised by First Evergreen
and Old Kent and we have assumed that there are no factors that would
impede any necessary regulatory or governmental approval for the Merger and
we have further assumed that in the course of obtaining the necessary
regulatory and governmental approvals, no restriction will be imposed on
Old Kent or the surviving corporation that would have a material adverse
effect on Old Kent or the contemplated benefits of the Merger. We have
also assumed that there would not occur any change in the applicable law or
regulation that would cause a material adverse change in the prospects or
operations of Old Kent or the surviving corporation after the Merger.
Our opinion is based solely upon the information available to us and
the economic, market and other circumstances as they exist as of the date
hereof. Events occurring and information that becomes available after the
date hereof could materially affect the assumptions and analyses used in
preparing this opinion. We have not undertaken to reaffirm or revise this
opinion or otherwise comment upon any events occurring or information that
becomes available after the date hereof.
We are not expressing any opinion herein as to the prices at which
shares of Old Kent Common Stock issued in the Merger may trade if and when
they are issued or at any future time, nor does our opinion constitute a
recommendation to any holder of First Evergreen Common Stock as to how such
holder should vote with respect to the Plan of Merger at any meeting of
holders of First Evergreen Common Stock.
This letter is solely for the information of the Board of Directors of
First Evergreen and is not to be used, circulated, quoted or otherwise
referred to for any other purpose, nor is it to be filed with, included in
or referred to in whole or in part in any registration statement, proxy
statement or any other document, except in each case in accordance with our
prior written consent which shall not be unreasonably withheld; provided,
however, that we hereby consent to the inclusion and reference to this
letter in any registration statement, proxy statement, information
statement or tender offer document to be delivered to the holders of First
Evergreen Common Stock in connection with the Merger if and only if this
letter is quoted in full or attached as an exhibit to such document and
this letter has not been withdrawn prior to the date of such document.
Board of Directors
First Evergreen Corporation
July 13, 1998
Page Four
Subject to the foregoing and based on our experience as investment
bankers, our activities and assumptions as described above, and other
factors we have deemed relevant, we are of the opinion as of the date
hereof that the Plan of Merger is fair, from a financial point of view, to
the shareholders of First Evergreen.
Sincerely,
HOVDE FINANCIAL, INC.
APPENDIX D
SECTION 262 OF DGCL
(APPRAISAL RIGHTS)
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of
this section with respect to such shares, who continuously holds such
shares through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to s 228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As
used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is
ordinarily meant by those words and also membership or membership interest
of a member of a nonstock corporation; and the words "depository receipt"
mean a receipt or other instrument issued by a depository representing an
interest in one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation
to be effected pursuant to s 251 "(other than a merger effected pursuant to
subsection (g) of s 251)", s 252, s 254, s 257, s 258, s 263 or s 264 of
this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of
stock, which stock, or depository receipts in respect thereof, at the
record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more
than 2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of s 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or
D-1
consolidation pursuant to ss 251, 252, 254, 257, 258, 263 and 264 of
this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository
receipts at the effective date of the merger or consolidation
will be either listed on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under s 253 of this title is
not owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares
of any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was
such on the record date for such meeting with respect to shares for
which appraisal rights are available pursuant to subsection (b) or (c)
hereof that appraisal rights are available for any or all of the
D-2
shares of the constituent corporations, and shall include in such
notice a copy of this section. Each stockholder electing to demand the
appraisal of his shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand
for appraisal of his shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of
his shares. A proxy or vote against the merger or consolidation shall
not constitute such a demand. A stockholder electing to take such
action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify
each stockholder of each constituent corporation who has complied with
this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation
has become effective; or
(2) If the merger or consolidation was approved pursuant to s 228
or 253 of this title, the surviving or resulting corporation, either
before the effective date of the merger or consolidation or within 10
days thereafter, shall notify each of the stockholders entitled to
appraisal rights of the effective date of the merger or consolidation
and that appraisal rights are available for any or all of the shares
of the constituent corporation, and shall include in such notice a
copy of this section. The notice shall be sent by certified or
registered mail, return receipt requested, addressed to the
stockholder at his address as it appears on the records of the
corporation. Any stockholder entitled to appraisal rights may, within
20 days after the date of mailing of the notice, demand in writing
from the surviving or resulting corporation the appraisal of his
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw his demand for appraisal and to accept the
terms offered upon the merger or consolidation. Within 120 days after the
effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement
setting forth the aggregate number of shares not voted in favor of the
merger or consolidation and with respect to which demands for appraisal
D-3
have been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of
a copy thereof shall be made upon the surviving or resulting corporation,
which shall within 20 days after such service file in the office of the
Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If
the petition shall be filed by the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and
place fixed for the hearing of such petition by registered or certified
mail to the surviving or resulting corporation and to the stockholders
shown on the list at the addresses therein stated. Such notice shall also
be given by 1 or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The
forms of the notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or resulting
corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented
by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court may
dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining
such fair value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of
the proceeding. Upon application by the surviving or resulting corporation
or by any stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
D-4
determination of the stockholder entitled to an appraisal. Any stockholder
whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
submitted his certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and
the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation
be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances.
Upon application of a stockholder, the Court may order all or a portion of
the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in
subsection (d) of this section shall be entitled to vote such stock for any
purpose or to receive payment of dividends or other distributions on the
stock (except dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the merger or
consolidation); provided, however, that if no petition for an appraisal
shall be filed within the time provided in subsection (e) of this section,
or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of his demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection (e)
of this section or thereafter with the written approval of the corporation,
then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of
Chancery shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms as the
Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized
and unissued shares of the surviving or resulting corporation.
D-5
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Sections 561 through 571 of the Michigan Business Corporation
Act (the "MBCA"), directors and officers of a Michigan corporation may be
entitled to indemnification by the corporation against judgments,
expenses, fines, and amounts paid by the director or officer in settlement
of claims brought against them by third persons or by or in the right of
the corporation if those directors and officers acted in good faith and in
a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation or its shareholders.
Old Kent is obligated under its Restated Articles of Incorporation to
indemnify its directors and executive officers to the full extent permitted
under the MBCA. Old Kent may similarly indemnify persons who are not
directors or executive officers to the extent authorized by Old Kent's
Board of Directors.
The MBCA provides for indemnification of directors and officers if
they acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of Old Kent or its shareholders (and,
if a criminal proceeding, if they had no reasonable cause to believe their
conduct was unlawful) against: (a) expenses (including attorneys' fees),
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding (other than an action by or in the right of Old
Kent) arising out of a position with Old Kent (or with some other entity at
Old Kent's request); and (b) expenses (including attorneys' fees) and
amounts paid in settlement actually and reasonably incurred in connection
with any threatened, pending or completed action, suit or proceeding by or
in the right of Old Kent, unless the director or officer is found liable to
Old Kent, provided that an appropriate court could determine that he or she
is nevertheless fairly and reasonably entitled to indemnity for reasonable
expenses incurred. The MBCA requires indemnification for expenses to the
extent that a director or officer is successful in defending against any
such action, suit, or proceeding.
The MBCA generally requires that the indemnification provided for in
(a) and (b) above be made only on a determination that the director or
officer met the applicable standard of conduct by a majority vote of a
quorum of the board of directors who were not parties or threatened to be
made parties to the action, suit or proceeding, by a majority vote of a
committee of not less than two disinterested directors, by independent
legal counsel, by all independent directors not parties or threatened to be
made parties to the action, suit or proceeding, or by the shareholders. If
the articles of incorporation include a provision eliminating or limiting
the liability of a director, however, a corporation may indemnify a
II-1
director for certain expenses and liabilities without a determination that
the director met the applicable standards of conducts, unless the director
received a financial benefit to which he or she was not entitled,
intentionally inflicted harm on the corporation or its shareholders,
violated Section 551 of the MBCA, or intentionally committed a criminal
act. In connection with an action by or in the right of the corporation,
such indemnification may be for expenses (including attorneys' fees)
actually and reasonably incurred. In connection with an action, suit, or
proceeding other than an action, suit, or proceeding by or in the right of
the corporation, such indemnification may be for expenses (including
attorneys' fees) actually and reasonably incurred, and for judgments,
penalties, fines and amounts paid in settlement actually and reasonably
incurred.
In certain circumstances, the MBCA further permits advances to cover
such expenses before a final determination that indemnification is
permissible or required, upon receipt of a written affirmation by the
director or officer of his or her good faith belief that he or she has met
the applicable standard of conduct and an undertaking, which need not be
secured and which may be accepted without reference to the financial
ability of the person to make repayment, by or on behalf of the director or
officer to repay such amounts if it shall ultimately be determined that he
or she has not met the applicable standard of conduct. If a provision in
the articles of incorporation or bylaws, a resolution of the board or
shareholders, or an agreement makes indemnification mandatory, then the
advancement of expenses is also mandatory, unless the provision, resolution
or agreement specifically provides otherwise.
Indemnification under the MBCA is not exclusive of other rights to
indemnification to which a person may be entitled under Old Kent's Restated
Articles of Incorporation, Bylaws, or a contractual agreement. However,
the total amount of expenses advanced or indemnified from all sources may
not exceed the amount of actual expenses incurred by the person seeking
indemnification or advancement of expenses. The indemnification provided
for under the MBCA continues as to a person who ceases to be a director or
executive officer.
The MBCA permits Old Kent to purchase insurance on behalf of its
directors and officers against liabilities arising out of their positions
with Old Kent, whether or not such liabilities would be within the above
indemnification provisions. Pursuant to this authority, Old Kent maintains
such insurance on behalf of its directors and officers.
Old Kent has entered into indemnity agreements with each of its
directors. The agreements provide that Old Kent will indemnify the
director, subject to certain limitations, for expenses and costs, including
the satisfaction of a judgment, fine or penalty incurred in, or in any
amount paid in settlement of, any proceeding, including a proceeding
II-2
brought by or in the name of Old Kent (such as a shareholder derivative
suit), brought by reason of the fact that the indemnitee was serving as a
director, officer, employee, agent or fiduciary of Old Kent or by reason of
any action taken by the indemnitee while serving as a director, officer,
employee, agent, or fiduciary of Old Kent, or by reason of the fact that
the indemnitee was serving at the request of Old Kent in a similar capacity
with another entity, if such expenses and costs may be indemnified under
the MBCA. In accordance with Old Kent's Restated Articles and Bylaws, the
agreements are designed to provide the maximum protection allowed under
federal and Michigan law. Indemnification is dependent upon the director
meeting the applicable standards of conduct set forth in the indemnity
agreements.
II-3
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. EXHIBITS. The following exhibits are filed as part of this
Registration Statement:
NUMBER EXHIBIT
2.1 AGREEMENT AND PLAN OF MERGER.<F*> Included as Appendix A
to the Prospectus and Proxy Statement.
3.1 RESTATED ARTICLES OF INCORPORATION. Previously filed as
Exhibit 3.1 to Old Kent's Form S-4 Registration Statement
(No. 333-56209) filed June 5, 1998. Here incorporated by
reference.
3.2 BYLAWS. Previously filed as Exhibit 3(b) to Old Kent's
Form 10-Q Quarterly Report filed for the fiscal quarter
ended June 30, 1997. Here incorporated by reference.
4.1 RIGHTS AGREEMENT. Previously filed as an exhibit to Old
Kent's Form 8-A Registration Statement filed January 21,
1997. Here incorporated by reference.
4.2 CERTIFICATE OF DESIGNATION, PREFERENCES, AND RIGHTS OF
SERIES C PREFERRED STOCK. Previously filed as Exhibit
4.3 to Old Kent's Form 8-K filed March 5, 1997. Here
incorporated by reference.
4.3 FORM OF OLD KENT CAPITAL TRUST I FLOATING RATE
SUBORDINATED CAPITAL INCOME SECURITIES (LIQUIDATION
AMOUNT OF $1,000 PER CAPITAL SECURITY). Previously filed
as Exhibit 4.7 to Old Kent's Form S-4 Registration
Statement filed July 10, 1997. Here incorporated by
reference.
4.4 FORM OF OLD KENT FINANCIAL CORPORATION FLOATING RATE
JUNIOR SUBORDINATED DEBENTURE DUE 2027. Previously filed
as Exhibit 4.5 to Old Kent's Form S-4 Registration
Statement filed July 10, 1997. Here incorporated by
reference.
4.5 AMENDED AND RESTATED DECLARATION OF TRUST, DATED AS OF
JANUARY 31, 1997, AMONG OLD KENT; ALBERT T. POTAS, THOMAS
E. POWELL, AND MARY E. TUUK, AS "REGULAR TRUSTEES" (AS
DEFINED THEREIN); BANKERS TRUST COMPANY; AND BANKERS
TRUST (DELAWARE). Previously filed as Exhibit 4.6 to Old
Kent's Form 8-K filed March 5, 1997. Here incorporated
by reference.
II-4
4.6 GUARANTEE AGREEMENT, DATED AS OF AUGUST 21, 1997, BETWEEN
OLD KENT AND BANKERS TRUST COMPANY. Previously filed as
Exhibit 4.7 to Old Kent's Form 8-K filed March 4, 1998.
Here incorporated by reference.
4.7 INDENTURE, DATED AS OF JANUARY 31, 1997, BETWEEN OLD KENT
AND BANKERS TRUST COMPANY. Previously filed as Exhibit
4.8 to Old Kent's Form 8-K filed March 5, 1997. Here
incorporated by reference.
4.8 LONG-TERM DEBT. Old Kent has outstanding long-term debt
that, at the time of this Registration Statement, does
not exceed 10% of Old Kent's total consolidated assets.
Old Kent agrees to furnish copies of the agreements
defining the rights of holders of such long-term
indebtedness to the Securities and Exchange Commission
upon request.
5.1 OPINION OF WARNER NORCROSS & JUDD LLP.<F**>
8.1 OPINION OF WARNER NORCROSS & JUDD LLP AS TO TAX
MATTERS.<F**>
10.1 EXECUTIVE STOCK OPTION PLAN OF 1986. Previously filed as
Exhibit 10 to Old Kent's Form 10-Q Quarterly Report for
its fiscal quarter ended September 30, 1995. Here
incorporated by reference.
10.2 AMENDMENT TO EXECUTIVE STOCK OPTION PLAN OF 1986.
Previously filed as Exhibit 10.19 to Old Kent's Form 8-K
filed March 5, 1997. Here incorporated by reference.
10.3 RESTRICTED STOCK PLAN OF 1987. Previously filed as part
of Old Kent's Definitive Proxy Statement dated March 6,
1992. Here incorporated by reference.
10.4 AMENDMENT TO RESTRICTED STOCK PLAN OF 1987. Previously
filed as Exhibit 10(f) to Old Kent's Form 8-K filed
February 23, 1996. Here incorporated by reference.
10.5 OLD KENT EXECUTIVE RETIREMENT INCOME PLAN AND RELATED
TRUST. Previously filed as Exhibit 10.5 to Old Kent's
Form 8-K filed March 4, 1998. Here incorporated by
reference.
10.6 AMENDMENT TO EXECUTIVE RETIREMENT INCOME PLAN.
Previously filed as Exhibit 10.6 to Old Kent's Form 8-K
filed March 4, 1998. Here incorporated by reference.
II-5
10.7 OLD KENT EXECUTIVE THRIFT PLAN AND RELATED TRUST.
Previously filed as Exhibit 10.7 to Old Kent's Form 8-K
filed March 4, 1998. Here incorporated by reference.
10.8 AMENDMENT TO EXECUTIVE THRIFT PLAN. Previously filed as
Exhibit 10(h) to Old Kent's Form 10-K Annual Report for
its fiscal year ended December 31, 1994. Here
incorporated by reference.
10.9 OLD KENT DEFERRED COMPENSATION PLAN AND RELATED TRUST
Previously filed as Exhibit 10.9 to Old Kent's Form 8-K
filed March 4, 1998. Here incorporated by reference.
10.10 STOCK OPTION INCENTIVE PLAN OF 1992. Previously filed as
Exhibit 10(b) to Old Kent's Form 10-Q Quarterly Report
for its fiscal quarter ended June 30, 1995. Here
incorporated by reference.
10.11 AMENDMENT TO STOCK OPTION INCENTIVE PLAN OF 1992.
Previously filed as Exhibit 10.20 to Old Kent's Form 8-K
filed March 5, 1997. Here incorporated by reference.
10.12 AMENDMENT TO STOCK OPTION INCENTIVE PLAN OF 1992.
Previously filed as Exhibit 10(d) to Old Kent's Form 10-Q
Quarterly Report for the fiscal quarter ended June 30,
1997. Here incorporated by reference.
10.13 DEFERRED STOCK COMPENSATION PLAN AND RELATED TRUST.
Previously filed as Exhibit 10(j) to Old Kent's Form 10-K
Annual Report for its fiscal year ended December 31,
1994. Here incorporated by reference.
10.14 OLD KENT DIRECTORS' DEFERRED COMPENSATION PLAN AND
RELATED TRUST. Previously filed as Exhibit 10(n) to Old
Kent's Form 10-K Annual Report for its fiscal year ended
December 31, 1994. Here incorporated by reference.
10.15 AMENDMENT TO OLD KENT DIRECTORS' DEFERRED COMPENSATION
PLAN. Previously filed as Exhibit 10.15 to Old Kent's
Form 8-K filed March 4, 1998. Here incorporated by
reference.
10.16 EXECUTIVE INCENTIVE BONUS PLAN. Previously filed as part
of Old Kent's Definitive Proxy Statement dated March 1,
1997. Here incorporated by reference.
10.17 EXECUTIVE STOCK INCENTIVE PLAN OF 1997. Previously
filed as part of Old Kent's Definitive Proxy Statement
dated March 1, 1997. Here incorporated by reference.
II-6
10.18 AMENDMENT TO EXECUTIVE STOCK INCENTIVE PLAN OF 1997.
Previously filed as Exhibit 10(d) to Old Kent's Form 10-Q
Quarterly Report for the fiscal quarter ended June 30,
1997. Here incorporated by reference.
10.19 POOLING AND SERVICE AGREEMENT. Previously filed as
Exhibit 10(r) to Old Kent's Form 8-K filed February 23,
1996. Here incorporated by reference.
10.20 EXECUTIVE SEVERANCE AGREEMENTS. The form of Executive
Severance Agreement was previously filed as Exhibit 10.17
to Old Kent's Form 8-K filed March 5, 1997. Here
incorporated by reference. An updated participant
schedule was previously filed as Exhibit 10.20 to Old
Kent's Form 8-K filed March 4, 1998. Here incorporated
by reference.
10.21 EXECUTIVE SEVERANCE AGREEMENTS. The form of Executive
Severance Agreement was previously filed as Exhibit 10.18
to Old Kent's Form 8-K filed March 5, 1997. Here
incorporated by reference. An updated participant
schedule was previously filed as Exhibit 10.21 to Old
Kent's Form 8-K filed March 4, 1998. Here incorporated
by reference.
10.22 INDEMNITY AGREEMENT. The form of Indemnity Agreement was
previously filed as Exhibit 10(c) to Old Kent's Form 10-Q
Quarterly Report for the fiscal quarter ended June 30,
1997. Here incorporated by reference. A participant
schedule was previously filed as Exhibit 10.22 to Old
Kent's Form 8-K filed March 4, 1998. Here incorporated
by reference.
10.23 RESTRICTED STOCK AGREEMENT FOR MR. WARRINGTON.
Previously filed as Exhibit 10(p) to Old Kent's Form 8-K
filed February 23, 1996. Here incorporated by reference.
10.24 RESTRICTED STOCK AGREEMENT FOR MR. WARRINGTON.
Previously filed as Exhibit 10(q) to Old Kent's Form 8-K
filed February 23, 1996. Here incorporated by reference.
13 ANNUAL REPORT TO SHAREHOLDERS. Previously filed as
Exhibit 13 to Old Kent's Form 10-K Annual Report for the
year ended December 31, 1997. This exhibit, except for
those portions expressly incorporated by reference in
this filing, is furnished for the information of the
Commission and is not deemed "filed" as part of this
filing.
II-7
21 SUBSIDIARIES OF REGISTRANT. Previously filed as Exhibit
21 to Old Kent's Form 8-K filed March 4, 1998. Here
incorporated by reference.
23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.4 CONSENT OF FINANCIAL ADVISOR.<F*> Included in Appendix C
to the Prospectus and Proxy Statement.
23.5 CONSENT OF COUNSEL.<F*> Included in Exhibit 5.1.
23.6 COUNSEL OF COUNSEL.<F*> Included in Exhibit 8.1.
24 POWERS OF ATTORNEY.<F**>
99.1 STOCK OPTION AGREEMENT.<F*> Included as Appendix B to
the Prospectus and Proxy Statement.
99.2 PRESIDENT'S LETTER TO FIRST EVERGREEN STOCKHOLDERS.<F*>
99.3 NOTICE OF SPECIAL MEETING OF FIRST EVERGREEN
STOCKHOLDERS.<F*>
99.4 FORM OF PROXY FOR FIRST EVERGREEN CORPORATION.<F*>
- --------------------
<F*> Filed herewith.
<F**> Previously filed.
B. FINANCIAL STATEMENTS AND SCHEDULES.
All schedules for which provision is made in Regulation S-X of the
Securities and Exchange Commission have been omitted because they either
are not required under the related instructions or the required information
has been included in the financial statements of Old Kent or notes thereto.
C. OPINION OF FINANCIAL ADVISOR.
The opinion of Hovde Financial, Inc. is included as Appendix C to
the Prospectus and Proxy Statement.
II-8
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE
offering thereof.
The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
The undersigned registrant undertakes that every prospectus: (i)
that is filed pursuant to the paragraph immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Securities Act
of 1933 and is used in connection with an offering of securities subject to
Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that,
for purposes of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial BONA FIDE
offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-9
The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day
of receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Grand
Rapids, State of Michigan, on July 9, 1998.
OLD KENT FINANCIAL CORPORATION
By: /S/ ALBERT T. POTAS
Albert T. Potas
Its Senior Vice President and Controller
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
July 9, 1998 */S/ RICHARD L. ANTONINI
Richard L. Antonini
Director
July 9, 1998 */S/ JOHN D. BOYLES
John D. Boyles
Director
July 9, 1998 */S/ WILLIAM P. CRAWFORD
William P. Crawford
Director
July 9, 1998 */S/ RICHARD M. DEVOS, JR.
Richard M. DeVos, Jr.
Director
July 9, 1998 */S/ WILLIAM G. GONZALEZ
William G. Gonzalez
Director
July 9, 1998 */S/ JAMES P. HACKETT
James P. Hackett
Director
July 9, 1998 */S/ ERINA HANKA
Erina Hanka
Director
II-11
July 9, 1998 */S/ EARL D. HOLTON
Earl D. Holton
Director
July 9, 1998 */S/ MICHAEL J. JANDERNOA
Michael J. Jandernoa
Director
July 9, 1998 */S/ KEVIN T. KABAT
Kevin T. Kabat
Vice Chairman of the Board and Director
July 9, 1998 */S/ FRED P. KELLER
Fred P. Keller
Director
July 9, 1998 */S/ JOHN P. KELLER
John P. Keller
Director
July 9, 1998 */S/ HENDRIK G. MEIJER
Hendrik G. Meijer
Director
July 9, 1998 */S/ PERCY A. PIERRE
Percy A. Pierre
Director
July 9, 1998 */S/ MARILYN J. SCHLACK
Marilyn J. Schlack
Director
July 9, 1998 */S/ PETER F. SECCHIA
Peter F. Secchia
Director
July 9, 1998 */S/ DAVID J. WAGNER
David J. Wagner
Chairman of the Board, President, Chief
Executive Officer, and Director
(Principal Executive Officer)
July 9, 1998 */S/ MARGARET SELLERS WALKER
Margaret Sellers Walker
Director
II-12
July 9, 1998 */S/ ROBERT H. WARRINGTON
Robert H. Warrington
Vice Chairman of the Board, Chief
Financial Officer, and Director
(Principal Financial and Accounting
Officer)
July 9, 1998 *By /S/ ALBERT T. POTAS
Albert T. Potas
Attorney-in-Fact
II-13
EXHIBIT INDEX
NUMBER EXHIBIT
2.1 AGREEMENT AND PLAN OF MERGER.<F*> Included as Appendix A
to the Prospectus and Proxy Statement.
3.1 RESTATED ARTICLES OF INCORPORATION. Previously filed as
Exhibit 3.1 to Old Kent's Form S-4 Registration Statement
(No. 333-56209) filed June 5, 1998. Here incorporated by
reference.
3.2 BYLAWS. Previously filed as Exhibit 3(b) to Old Kent's
Form 10-Q Quarterly Report filed for the fiscal quarter
ended June 30, 1997. Here incorporated by reference.
4.1 RIGHTS AGREEMENT. Previously filed as an exhibit to Old
Kent's Form 8-A Registration Statement filed January 21,
1997. Here incorporated by reference.
4.2 CERTIFICATE OF DESIGNATION, PREFERENCES, AND RIGHTS OF
SERIES C PREFERRED STOCK. Previously filed as Exhibit
4.3 to Old Kent's Form 8-K filed March 5, 1997. Here
incorporated by reference.
4.3 FORM OF OLD KENT CAPITAL TRUST I FLOATING RATE
SUBORDINATED CAPITAL INCOME SECURITIES (LIQUIDATION
AMOUNT OF $1,000 PER CAPITAL SECURITY). Previously filed
as Exhibit 4.7 to Old Kent's Form S-4 Registration
Statement filed July 10, 1997. Here incorporated by
reference.
4.4 FORM OF OLD KENT FINANCIAL CORPORATION FLOATING RATE
JUNIOR SUBORDINATED DEBENTURE DUE 2027. Previously filed
as Exhibit 4.5 to Old Kent's Form S-4 Registration
Statement filed July 10, 1997. Here incorporated by
reference.
4.5 AMENDED AND RESTATED DECLARATION OF TRUST, DATED AS OF
JANUARY 31, 1997, AMONG OLD KENT; ALBERT T. POTAS, THOMAS
E. POWELL, AND MARY E. TUUK, AS "REGULAR TRUSTEES" (AS
DEFINED THEREIN); BANKERS TRUST COMPANY; AND BANKERS
TRUST (DELAWARE). Previously filed as Exhibit 4.6 to Old
Kent's Form 8-K filed March 5, 1997. Here incorporated
by reference.
4.6 GUARANTEE AGREEMENT, DATED AS OF AUGUST 21, 1997, BETWEEN
OLD KENT AND BANKERS TRUST COMPANY. Previously filed as
Exhibit 4.7 to Old Kent's Form 8-K filed March 4, 1998.
Here incorporated by reference.
4.7 INDENTURE, DATED AS OF JANUARY 31, 1997, BETWEEN OLD KENT
AND BANKERS TRUST COMPANY. Previously filed as Exhibit
4.8 to Old Kent's Form 8-K filed March 5, 1997. Here
incorporated by reference.
4.8 LONG-TERM DEBT. Old Kent has outstanding long-term debt
that, at the time of this Registration Statement, does
not exceed 10% of Old Kent's total consolidated assets.
Old Kent agrees to furnish copies of the agreements
defining the rights of holders of such long-term
indebtedness to the Securities and Exchange Commission
upon request.
5.1 OPINION OF WARNER NORCROSS & JUDD LLP.<F**>
8.1 OPINION OF WARNER NORCROSS & JUDD LLP AS TO TAX
MATTERS.<F**>
10.1 EXECUTIVE STOCK OPTION PLAN OF 1986. Previously filed as
Exhibit 10 to Old Kent's Form 10-Q Quarterly Report for
its fiscal quarter ended September 30, 1995. Here
incorporated by reference.
10.2 AMENDMENT TO EXECUTIVE STOCK OPTION PLAN OF 1986.
Previously filed as Exhibit 10.19 to Old Kent's Form 8-K
filed March 5, 1997. Here incorporated by reference.
10.3 RESTRICTED STOCK PLAN OF 1987. Previously filed as part
of Old Kent's Definitive Proxy Statement dated March 6,
1992. Here incorporated by reference.
10.4 AMENDMENT TO RESTRICTED STOCK PLAN OF 1987. Previously
filed as Exhibit 10(f) to Old Kent's Form 8-K filed
February 23, 1996. Here incorporated by reference.
10.5 OLD KENT EXECUTIVE RETIREMENT INCOME PLAN AND RELATED
TRUST. Previously filed as Exhibit 10.5 to Old Kent's
Form 8-K filed March 4, 1998. Here incorporated by
reference.
10.6 AMENDMENT TO EXECUTIVE RETIREMENT INCOME PLAN.
Previously filed as Exhibit 10.6 to Old Kent's Form 8-K
filed March 4, 1998. Here incorporated by reference.
10.7 OLD KENT EXECUTIVE THRIFT PLAN AND RELATED TRUST.
Previously filed as Exhibit 10.7 to Old Kent's Form 8-K
filed March 4, 1998. Here incorporated by reference.
-2-
10.8 AMENDMENT TO EXECUTIVE THRIFT PLAN. Previously filed as
Exhibit 10(h) to Old Kent's Form 10-K Annual Report for
its fiscal year ended December 31, 1994. Here
incorporated by reference.
10.9 OLD KENT DEFERRED COMPENSATION PLAN AND RELATED TRUST
Previously filed as Exhibit 10.9 to Old Kent's Form 8-K
filed March 4, 1998. Here incorporated by reference.
10.10 STOCK OPTION INCENTIVE PLAN OF 1992. Previously filed as
Exhibit 10(b) to Old Kent's Form 10-Q Quarterly Report
for its fiscal quarter ended June 30, 1995. Here
incorporated by reference.
10.11 AMENDMENT TO STOCK OPTION INCENTIVE PLAN OF 1992.
Previously filed as Exhibit 10.20 to Old Kent's Form 8-K
filed March 5, 1997. Here incorporated by reference.
10.12 AMENDMENT TO STOCK OPTION INCENTIVE PLAN OF 1992.
Previously filed as Exhibit 10(d) to Old Kent's Form 10-Q
Quarterly Report for the fiscal quarter ended June 30,
1997. Here incorporated by reference.
10.13 DEFERRED STOCK COMPENSATION PLAN AND RELATED TRUST.
Previously filed as Exhibit 10(j) to Old Kent's Form 10-K
Annual Report for its fiscal year ended December 31,
1994. Here incorporated by reference.
10.14 OLD KENT DIRECTORS' DEFERRED COMPENSATION PLAN AND
RELATED TRUST. Previously filed as Exhibit 10(n) to Old
Kent's Form 10-K Annual Report for its fiscal year ended
December 31, 1994. Here incorporated by reference.
10.15 AMENDMENT TO OLD KENT DIRECTORS' DEFERRED COMPENSATION
PLAN. Previously filed as Exhibit 10.15 to Old Kent's
Form 8-K filed March 4, 1998. Here incorporated by
reference.
10.16 EXECUTIVE INCENTIVE BONUS PLAN. Previously filed as part
of Old Kent's Definitive Proxy Statement dated March 1,
1997. Here incorporated by reference.
10.17 EXECUTIVE STOCK INCENTIVE PLAN OF 1997. Previously
filed as part of Old Kent's Definitive Proxy Statement
dated March 1, 1997. Here incorporated by reference.
10.18 AMENDMENT TO EXECUTIVE STOCK INCENTIVE PLAN OF 1997.
Previously filed as Exhibit 10(d) to Old Kent's Form 10-Q
Quarterly Report for the fiscal quarter ended June 30,
1997. Here incorporated by reference.
-3-
10.19 POOLING AND SERVICE AGREEMENT. Previously filed as
Exhibit 10(r) to Old Kent's Form 8-K filed February 23,
1996. Here incorporated by reference.
10.20 EXECUTIVE SEVERANCE AGREEMENTS. The form of Executive
Severance Agreement was previously filed as Exhibit 10.17
to Old Kent's Form 8-K filed March 5, 1997. Here
incorporated by reference. An updated participant
schedule was previously filed as Exhibit 10.20 to Old
Kent's Form 8-K filed March 4, 1998. Here incorporated
by reference.
10.21 EXECUTIVE SEVERANCE AGREEMENTS. The form of Executive
Severance Agreement was previously filed as Exhibit 10.18
to Old Kent's Form 8-K filed March 5, 1997. Here
incorporated by reference. An updated participant
schedule was previously filed as Exhibit 10.21 to Old
Kent's Form 8-K filed March 4, 1998. Here incorporated
by reference.
10.22 INDEMNITY AGREEMENT. The form of Indemnity Agreement was
previously filed as Exhibit 10(c) to Old Kent's Form 10-Q
Quarterly Report for the fiscal quarter ended June 30,
1997. Here incorporated by reference. A participant
schedule was previously filed as Exhibit 10.22 to Old
Kent's Form 8-K filed March 4, 1998. Here incorporated
by reference.
10.23 RESTRICTED STOCK AGREEMENT FOR MR. WARRINGTON.
Previously filed as Exhibit 10(p) to Old Kent's Form 8-K
filed February 23, 1996. Here incorporated by reference.
10.24 RESTRICTED STOCK AGREEMENT FOR MR. WARRINGTON.
Previously filed as Exhibit 10(q) to Old Kent's Form 8-K
filed February 23, 1996. Here incorporated by reference.
13 ANNUAL REPORT TO SHAREHOLDERS. Previously filed as
Exhibit 13 to Old Kent's Form 10-K Annual Report for the
year ended December 31, 1997. This exhibit, except for
those portions expressly incorporated by reference in
this filing, is furnished for the information of the
Commission and is not deemed "filed" as part of this
filing.
21 SUBSIDIARIES OF REGISTRANT. Previously filed as Exhibit
21 to Old Kent's Form 8-K filed March 4, 1998. Here
incorporated by reference.
23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
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23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.4 CONSENT OF FINANCIAL ADVISOR.<F*> Included in Appendix C
to the Prospectus and Proxy Statement.
23.5 CONSENT OF COUNSEL.<F*> Included in Exhibit 5.1.
23.6 COUNSEL OF COUNSEL.<F*> Included in Exhibit 8.1.
24 POWERS OF ATTORNEY.<F**>
99.1 STOCK OPTION AGREEMENT.<F*> Included as Appendix B to
the Prospectus and Proxy Statement.
99.2 PRESIDENT'S LETTER TO FIRST EVERGREEN STOCKHOLDERS.<F*>
99.3 NOTICE OF SPECIAL MEETING OF FIRST EVERGREEN
STOCKHOLDERS.<F*>
99.4 FORM OF PROXY FOR FIRST EVERGREEN CORPORATION.<F*>
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<F*> Filed herewith.
<F**> Previously filed.
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