As filed with the Securities and Exchange Commission on April 27, 1999
Registration No. 333-75653
===========================================================================
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 (IRS Employer
diction of Incorporation Industrial Classification Identification No.)
or Organization) Code Number)
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
SENIOR VICE PRESIDENT AND SECRETARY
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. HARRY K. KANTARIAN, ESQ.
WARNER NORCROSS & JUDD LLP HOUSLEY KANTARIAN & BRONSTEIN, P.C.
111 LYON STREET N.W., SUITE 900 SUITE 700, 1220 19TH STREET N.W.
GRAND RAPIDS, MICHIGAN 49503-2487 WASHINGTON, D.C. 20036
(616) 752-2752 (202) 822-9611
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 <F1> OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED PER SHARE <F2> PRICE <F2> FEE <F2> <F4>
Common Stock, $1.00 5,375,098 Shares N/A $216,511,408.80 $60,190.17
par value<F3>
<FN>
<F1> Plus such additional shares as may be issued pursuant to the terms of
the Agreement and Plan of Merger to prevent dilution resulting from
stock splits, stock dividends, or similar transactions covered by Rule
416(a).
<F2> The registration fee has been computed pursuant to Rule 457(f)(1).
Pursuant to that rule, the Maximum Aggregate Offering Price is based
on the market value of CFSB Bancorp, Inc., Common Stock, $0.01 per
share, as of March 31, 1999.
<F3> 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.
<F4> 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.
===========================================================================
[CFSB BANCORP LOGO] [OLD KENT LOGO]
PROSPECTUS AND PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS OF
CFSB BANCORP, INC.
IN CONNECTION WITH AN OFFERING OF UP TO
5,375,098 SHARES OF COMMON STOCK OF
OLD KENT FINANCIAL CORPORATION
The Board of Directors of CFSB Bancorp, Inc. is furnishing this prospectus
and proxy statement to you as a stockholder of CFSB to solicit your proxy
to vote at a special meeting of CFSB stockholders to be held on June 8,
1999 and at any adjournment or postponement of that meeting. At the
special meeting, CFSB stockholders will vote upon adoption of an Agreement
and Plan of Merger with Old Kent Financial Corporation.
If the merger is completed as proposed, Old Kent will acquire CFSB. Old
Kent will issue 0.6222 shares of Old Kent common stock in exchange for each
share of CFSB common stock. Old Kent will also pay cash for fractional
shares.
The Board of Directors of CFSB has received the written opinion of Feldman
Financial Advisors, Inc., CFSB's financial advisor, that the number of
shares of Old Kent common stock to be exchanged for each share of CFSB
common stock in the merger is fair, from a financial point of view, to
CFSB's stockholders.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS UNANIMOUSLY
DETERMINED THE MERGER TO BE FAIR AND IN THE BEST INTERESTS OF CFSB
STOCKHOLDERS AND DECLARED THE MERGER ADVISABLE. THE BOARD OF
DIRECTORS OF CFSB UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
ADOPTION OF THE MERGER AGREEMENT.
The merger cannot be completed unless, among other conditions, CFSB
stockholders adopt the Merger Agreement and Old Kent obtains regulatory
approval of the merger.
YOUR VOTE IS IMPORTANT. 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.
Old Kent's common stock is quoted on the New York Stock Exchange under the
symbol "OK." 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.
- ---------------------------------------------------------------------------
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.
- ---------------------------------------------------------------------------
May 4, 1999
TABLE OF CONTENTS
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
The Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SELECTED FINANCIAL DATA (UNAUDITED). . . . . . . . . . . . . . . . . . . .4
Historical Selected Financial Data. . . . . . . . . . . . . . . . . . .4
Unaudited Pro Forma Combined
Condensed Financial Information. . . . . . . . . . . . . . . . . . .5
Comparative Per Share Information . . . . . . . . . . . . . . . . . . .6
Summary of First Quarter Financial Information. . . . . . . . . . . . .7
THE SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Date, Time and Place of the Special Meeting . . . . . . . . . . . . . .8
Purpose of the Special Meeting. . . . . . . . . . . . . . . . . . . . .8
Stockholder Record Date for the
Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Vote of CFSB Stockholders Required for
Adoption of the Merger Agreement. . . . . . . . . . . . . . . . . .9
Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
THE MERGER AND MERGER AGREEMENT. . . . . . . . . . . . . . . . . . . . . 10
What You Will Receive . . . . . . . . . . . . . . . . . . . . . . . . 10
Structure of the Merger . . . . . . . . . . . . . . . . . . . . . . . 11
Background of the Merger. . . . . . . . . . . . . . . . . . . . . . . 11
Merger Recommendation and Reasons
for the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Opinion of CFSB's Financial Advisor . . . . . . . . . . . . . . . . . 13
Stock Price Condition . . . . . . . . . . . . . . . . . . . . . . . . 17
Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 18
Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . . 18
Bank Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Distribution of Old Kent Common Stock . . . . . . . . . . . . . . . . 18
Exclusive Commitment to Old Kent. . . . . . . . . . . . . . . . . . . 19
Conduct of CFSB Pending the Completion
of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Insurance and Indemnification . . . . . . . . . . . . . . . . . . . . 22
Management of Old Kent After the Merger . . . . . . . . . . . . . . . 22
Conditions to Closing the Merger. . . . . . . . . . . . . . . . . . . 23
Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Description of Old Kent Capital Stock . . . . . . . . . . . . . . . . 26
Stock Option Agreement. . . . . . . . . . . . . . . . . . . . . . . . 26
Comparison of Rights of Old Kent's and
CFSB's Stockholders . . . . . . . . . . . . . . . . . . . . . . . 30
Restrictions on CFSB Affiliates . . . . . . . . . . . . . . . . . . . 35
Material Federal Income Tax Consequences. . . . . . . . . . . . . . . 35
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . . 36
Appraisal Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
VOTING AND MANAGEMENT INFORMATION. . . . . . . . . . . . . . . . . . . . 37
Voting Securities and Principal Stockholders
of CFSB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Interests of Certain Persons in the Merger. . . . . . . . . . . . . . 39
GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Independent Public Accountants. . . . . . . . . . . . . . . . . . . . 40
Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . . . . 40
Legal Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Sources of Information. . . . . . . . . . . . . . . . . . . . . . . . 41
WHERE YOU CAN FIND MORE INFORMATION. . . . . . . . . . . . . . . . . . . 41
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 42
AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . Appendix A
STOCK OPTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . Appendix B
OPINION OF FELDMAN FINANCIAL
ADVISORS, INC.. . . . . . . . . . . . . . . . . . . . . . . . Appendix C
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 CFSB and Old Kent
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" refer to each stockholder of CFSB.
THE COMPANIES
OLD KENT FINANCIAL CORPORATION
111 Lyon Street N.W.
Grand Rapids, Michigan 49503
(616) 771-5000
Old Kent Financial Corporation is a financial services organization that
operates as a bank holding company headquartered in Grand Rapids, Michigan.
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. At
December 31, 1998, Old Kent had, on a consolidated basis, assets of
$16.6 billion, deposits of $12.9 billion, a net loan portfolio of $8.7
billion, and shareholders' equity of $1.1 billion.
The services offered by Old Kent's subsidiaries cover a wide range of
banking, fiduciary and other financial services. These include commercial,
mortgage, and retail loans, business and personal checking accounts,
savings and retirement accounts, time deposit instruments, ATMs, debit
cards and other 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 and
investment advisory services, and access to insurance products.
CFSB BANCORP, INC.
112 East Allegan Street
Lansing, Michigan 48933
(517) 371-2911
-1-
CFSB Bancorp, Inc. is a savings and loan holding company and the parent
company of Community First Bank, a state-chartered savings bank
headquartered in Lansing, Michigan. CFSB's principal activities have
consisted of its ownership of all of the issued and outstanding capital
stock of Community First Bank. At December 31, 1998, CFSB had, on a
consolidated basis, total assets of $880.3 million, total net loans of
$786.4 million, total deposits of $586.7 million and total stockholders'
equity of $69.3 million.
Community First Bank operates through its main office located in Lansing,
Michigan and through 15 branch offices serving the Greater Lansing area.
Community First Bank offers a full line of retail deposit services and is
principally engaged in the business of accepting deposits from the general
public and using such deposits, together with Federal Home Loan Bank
advances, to make loans for the purchase and construction of residential
properties. To a lesser extent, it also makes income-producing property
loans, commercial business loans, home equity loans, and various types of
consumer loans. Community First Bank also invests in government, federal
agency and corporate obligations and mortgage-backed securities.
THE MERGER
WHAT YOU WILL RECEIVE (SEE PAGE 10)
If the merger is completed as planned, you will receive 0.6222 shares of
Old Kent common stock for each share of CFSB common stock that you own.
This number will be adjusted if either Old Kent or CFSB declares a stock
split or stock dividend before the completion of the merger. No fractional
shares will be issued. Instead, you will receive a check in payment for
any fractional shares based on the market value of the Old Kent common
stock.
EXAMPLE: IF YOU OWN 100 SHARES OF CFSB STOCK, YOU WILL RECEIVE 62 SHARES
OF OLD KENT COMMON STOCK. IN ADDITION, YOU WILL RECEIVE A CHECK EQUAL TO
0.22 (YOUR FRACTIONAL SHARE) MULTIPLIED BY THE AVERAGE CLOSING PRICE OF OLD
KENT COMMON STOCK FOR THE TEN TRADING DAY PERIOD ENDING 11 BUSINESS DAYS
BEFORE THE CLOSING OF THE MERGER.
You should not send in your stock certificates until instructed to do so by
Old Kent after the merger is completed.
RECOMMENDATION TO CFSB STOCKHOLDERS TO APPROVE THE MERGER
After careful consideration, your Board of Directors unanimously determined
the merger to be fair to CFSB stockholders and in the best interests of
-2-
CFSB stockholders and declared the merger advisable. The Board of
Directors of CFSB unanimously recommends that you vote FOR the proposal to
adopt the Merger Agreement.
CFSB'S FINANCIAL ADVISOR'S OPINION THAT THE EXCHANGE RATIO IS FAIR
(SEE PAGE 13)
In deciding to approve the merger, CFSB's Board of Directors considered the
opinion of its financial advisor, Feldman Financial Advisors, Inc., that the
exchange ratio is fair to CFSB's stockholders from a financial point of
view. Feldman Financial's written opinion is attached as Appendix C to
this prospectus and proxy statement. You are encouraged to read it.
TIME AND LOCATION OF THE CFSB STOCKHOLDER MEETING (SEE PAGE 8)
CFSB will hold a special meeting of its stockholders to vote on the
adoption of the Merger Agreement. The special meeting of CFSB stockholders
will be held:
June 8, 1999
11:00 a.m. E.D.T.
Sheraton Lansing Hotel
925 South Creyts Roads
Lansing, Michigan
To adopt the Merger Agreement, at least a majority of the 8,437,346 shares
of CFSB common stock outstanding as of April 22, 1999 must vote FOR
adoption of the Merger Agreement.
As of April 22, 1999, CFSB's directors, executive officers, and their
affiliates beneficially owned 14.05% of CFSB common stock. They are expected
to vote in favor of adoption of the Merger Agreement.
As of April 19, 1999, Old Kent's directors, executive officers, and their
affiliates did not own any of CFSB common stock. No approval of Old Kent's
stockholders is required to complete the merger.
PROCEDURE FOR CASTING YOUR VOTE IF YOUR SHARES ARE HELD BY A BROKER
IN STREET NAME (SEE PAGE 9)
If your shares are held by your broker or other nominee in street name,
your broker may vote your shares only if you provide instructions on how
you want to vote. If you do not provide your broker with voting
-3-
instructions, your shares will not be voted at the special meeting and it
will have the same effect as voting against the adoption of the Merger
Agreement.
CFSB'S RIGHT TO TERMINATE THE MERGER IF OLD KENT'S STOCK PRICE FALLS
BY A CERTAIN AMOUNT (SEE PAGE 17)
CFSB will have the right to terminate the Merger Agreement if, after Old
Kent and CFSB have scheduled a closing of the merger, the "Final Old Kent
Price" of Old Kent's common stock is less than $38.25 per share AND there
is a comparable decline in the trading price of Old Kent relative to a
group of peer institutions identified in the Merger Agreement. The "Final
Old Kent Price" of Old Kent's common stock is determined by taking the
average of the per share closing prices on the ten trading days ending on
the 11th business day prior to the date of the scheduled closing.
For information regarding other circumstances in which Old Kent or CFSB may
have the right to terminate the Merger Agreement, see the discussion under
the caption "Termination" on page 24.
BANK REGULATORS MUST APPROVE THE MERGER (SEE PAGE 18)
The Board of Governors of the Federal Reserve System, referred to as
the Federal Reserve Board, must approve the merger. Old Kent filed its
application for approval with the Federal Reserve Board on April 12, 1999.
CONDITIONS TO COMPLETION OF THE MERGER (SEE PAGE 23)
There are a number of conditions that must be met before Old Kent and CFSB
will be required to complete the merger. These conditions include the
following, among others:
- - CFSB's stockholders must adopt the Merger Agreement by a vote of a
majority of the shares outstanding;
- - The Federal Reserve Board must approve the merger;
- - Old Kent's tax counsel must provide a tax opinion that the merger will
be a tax-free reorganization; and
- - Old Kent's independent public accountant must advise Old Kent 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 OF THE MERGER (SEE PAGE 36)
The merger is structured so that you are not expected to recognize any gain
or loss for federal income tax purposes in the merger. HOWEVER, DUE TO THE
COMPLEXITIES OF FEDERAL, STATE, AND LOCAL INCOME TAX LAWS, YOU ARE STRONGLY
RECOMMENDED TO CONSULT YOUR OWN TAX ADVISORS CONCERNING THE TAX
CONSEQUENCES TO YOU OF THE MERGER.
YOU DO NOT HAVE APPRAISAL RIGHTS (SEE PAGE 37)
Under Delaware law, you are not entitled to dissenter's or appraisal rights
in the merger.
INTERESTS OF CFSB'S OFFICERS AND DIRECTORS IN THE MERGER (SEE PAGE 39)
Certain directors and officers of CFSB and Community First Bank may be
deemed to have certain interests in the merger in addition to their
interests generally as stockholders of CFSB. Such interests include the
right of certain officers to receive change-in-control payments pursuant to
the terms of their existing employment agreements, the right of directors
and officers to receive continuing indemnification and insurance coverage
and the right of officers to receive severance benefits.
In addition, under the terms of CFSB's stock option plans, any unvested
options automatically vest upon the completion of the merger. The number of
shares of CFSB common stock subject to the unvested options held by senior
officers and directors totaled 106,153 as of April 22, 1999.
ACCOUNTING TREATMENT OF THE MERGER (SEE PAGE 37)
Old Kent and CFSB expect the merger to qualify as a "pooling-of-interests"
for accounting and financial reporting purposes.
COMPARATIVE MARKET PRICES OF OLD KENT AND CFSB STOCK
Old Kent common stock is traded on the New York Stock Exchange under the
symbol "OK." CFSB common stock is traded on The Nasdaq Stock Market under
the symbol "CFSB."
The following table sets forth the closing prices per share of Old Kent
common stock and of CFSB common stock on (1) February 23,1999, the business
day preceding public announcement that Old Kent and CFSB had entered into
the Merger Agreement, and (2) April 26, 1999, the last full trading day for
which closing prices were available at the time of the printing of this
prospectus and proxy statement.
The following table also sets forth the equivalent price per share of Old
Kent common stock and shares of CFSB common stock on the dates indicated.
-5-
The equivalent price per share is equal to the closing price of a share of
Old Kent common stock on that date multiplied by 0.6222, the number of
shares of Old Kent common stock to be issued in exchange for each share of
CSFB common stock.
OLD KENT CFSB EQUIVALENT
DATE COMMON STOCK COMMON STOCK PER SHARE
- ---- ------------ ------------ ---------
Feb. 23, 1999 $45.4375 $21.00 $28.27
April 26, 1999 $46.5000 $27.8125 $28.93
This equivalent price per share reflects the value of the Old Kent common
stock you would receive for each share of your CFSB common stock if the
merger was completed on either of these dates.
RECENT DEVELOPMENTS IN OLD KENT'S BUSINESS
On March 19, 1999, Old Kent signed an agreement with Pinnacle Banc Group,
Inc. under which Old Kent will acquire Pinnacle. Pinnacle is a bank holding
company headquartered in the Chicago suburb of Oak Brook, Illinois with
assets of $1.1 billion and deposits of $0.9 billion as of December 31, 1998.
Pinnacle's banking subsidiaries operate from 16 locations with 13 branches
in the Chicago metropolitan area. These are located in Cicero, Chicago, Oak
Park, Harvey, Berwyn, North Riverside, LaGrange Park, Westmont, Niles,
Batavia, Eburn and Warrenville. Pinnacle also has three locations in the
Quad-Cities area of western Illinois.
The acquisition of Pinnacle is subject to the approval of Pinnacle
stockholders and the Federal Reserve Board. The merger, structured as a
pooling-of-interests, is expected to be completed during the third quarter
of 1999. Pinnacle stockholders will receive approximately 5.4 million
shares of Old Kent stock.
SELECTED FINANCIAL DATA (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 CFSB's audited financial statements for 1994
through 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 CFSB's annual
reports on Form 10-K and other information filed with the Securities and
Exchange Commission. See "Where You Can Find More Information."
-6-
HISTORICAL SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(dollars in thousands)
OLD KENT FINANCIAL CORPORATION
Income Statement Data:
Net interest income $ 587,882 $ 582,708 $ 551,873 $ 536,390 $ 518,505
Provision for credit losses 46,828 46,977 35,636 21,666 22,465
Net income 198,798 198,418 179,393 162,044 157,499
Balance Sheet Data (period end):
Assets $16,588,858 $15,706,615 $14,556,841 $13,891,172 $13,349,745
Deposits 12,939,418 11,928,907 11,775,994 11,019,312 11,123,954
Loans 8,883,716 9,144,497 8,715,751 7,961,051 7,333,613
Long-term debt<F1> 200,000 200,000 100,000 100,000 0
FHLB advances 525,000 100,000 100,000 0 0
Shareholders' equity 1,135,110 1,225,595 1,180,197 1,189,754 1,053,461
CFSB BANCORP, INC.
Income Statement Data:
Net interest income $ 25,961 $ 25,370 $ 22,904 $ 20,433 $ 20,102
Provision for credit losses 390 360 240 240 240
Net income 11,844 10,673 5,447 6,803 5,589
Balance Sheet Data (period end):
Assets $ 880,347 $ 852,888 $ 829,800 $ 761,418 $ 727,243
Deposits 586,707 562,412 553,574 527,816 501,690
Loans 791,416 759,536 722,278 614,647 522,715
Long-term debt 0 0 0 0 0
FHLB advances 211,835 212,693 202,639 160,649 160,351
Stockholders' equity 69,277 67,535 62,470 62,743 55,607
(See footnotes beginning on the following page.)
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
Old Kent and CFSB 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 And Merger Agreement--Accounting Treatment"
below.
The following unaudited pro forma financial information reflects the
pooling-of-interests method of accounting and is intended to give you a
-7-
picture of what Old Kent and CFSB 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 accounts of each company.
The companies may have performed differently if they had been combined.
You should not rely on the pro forma information as showing what the
historical results that Old Kent and CFSB would have had if combined or the
future results that they will report after the merger.
YEAR ENDED DECEMBER 31,
-------------------------------------------
1998 1997 1996
---- ---- ----
(dollars in thousands)
Income Statement Data:
Net interest income $ 613,843 $ 608,078 $ 574,777
Provision for credit losses 47,218 47,337 35,876
Net income 210,642 209,091 184,840
Balance Sheet Data (period end)<F2>:
Assets $17,469,205 $16,559,503 $15,386,641
Deposits 13,526,125 12,491,319 12,329,568
Loans 9,675,132 9,904,033 9,438,029
Long-term debt<F1> 200,000 200,000 100,000
FHLB advances 736,835 312,693 302,639
Shareholders' equity 1,204,387 1,293,130 1,242,667
________________________
<FN>
<F1> Includes $100 million guaranteed preferred beneficial interest in Old
Kent's junior subordinated debentures, for the years ended 1998 and
1997.
<F2> The pro forma combined balance sheet data assumes the issuance of
5,131,222 shares of Old Kent common stock in exchange for all of the
outstanding shares of CFSB common stock, assuming an exchange ratio of
0.6222 shares of Old Kent common stock for each share of CFSB common
stock.
</FN>
Under the "risk-based" capital guidelines presently in effect for
banks and bank holding companies and savings institutions, 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 such as Old
Kent are required to maintain minimum risk-based capital ratios. Savings
-8-
and loan holding companies, such as CFSB, do not have any minimum capital
requirements although their subsidiary savings institutions do. Old Kent's
ratios are above the regulatory minimum guidelines and each of Old Kent's
subsidiary banks and Community First Bank met the regulatory criteria to be
categorized as "well-capitalized" institutions at December 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 December 31, 1998:
RISK-BASED CAPITAL
---------------------
LEVERAGE TIER 1 TOTAL
-------- ------ -----
Old Kent's capital ratios 6.89% 9.30% 11.40%
Community First Bank's capital ratios 7.60 13.07 14.05
Pro forma combined capital ratios 6.94 9.48 11.54
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
CFSB on a historical, unaudited pro forma combined, and equivalent basis.
The CFSB "Per Share Equivalents" are calculated by multiplying the
Unaudited Pro Forma Combined per share amounts by 0.6222. CFSB
stockholders will receive 0.6222 shares of Old Kent common stock in
exchange for each share of CFSB common stock.
The pro forma data does not show 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 Securities and Exchange
Commission and are provided for comparative purposes only. The information
presented below has been restated to reflect stock dividends and stock
splits.
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YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
---- ---- ----
OLD KENT COMMON STOCK
Earnings per share - Basic<F1>:
Historical . . . . . . . . . $ 1.86 $ 1.76 $ 1.55
Pro forma<F2> . . . . . . . . 1.88 1.77 1.53
Earnings per share - Diluted<F1>:
Historical . . . . . . . . . $ 1.84 $ 1.75 $ 1.54
Pro forma<F2> . . . . . . . . 1.86 1.76 1.52
Cash dividends declared per share:
Historical . . . . . . . . . $ 0.722 $ 0.641 $0.576
Book value per share - End of period:
Historical . . . . . . . . . $ 10.86 $ 11.12 $10.54
Pro forma<F3> . . . . . . . . 10.99
CFSB COMMON STOCK
Earnings per share - Basic<F1>:
Historical . . . . . . . . . $ 1.44 $ 1.26 $ 0.62
Equivalent pro forma<F4> . . . . 1.17 1.10 0.95
Earnings Per Share - Diluted:
Historical . . . . . . . . . $ 1.38 $ 1.22 $ 0.60
Equivalent pro forma<F4> . . . . 1.16 1.09 0.94
Cash dividends declared per share:
Historical . . . . . . . . . $ 0.51 $ 0.38 $ 0.25
Equivalent pro forma<F4> . . . . 0.45 0.40 0.36
Book value per share - End of period:
Historical . . . . . . . . . $ 8.49 $ 8.07 $ 7.31
Equivalent pro forma<F4> . . . . 6.84
_________________
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<FN>
<F1> Earnings per share were calculated using income 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 CFSB 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 December 31, 1998 pro forma book value per share does not
include the impact of an anticipated $10 million of restructuring and
merger-related charges.
<F4> The equivalent pro forma computations assume that for each share of
CFSB common stock outstanding, CFSB stockholders would receive 0.6222
shares of Old Kent common stock.
</FN>
As of April 22, 1999, there were 102,415,405 shares of Old Kent common
stock issued and outstanding held by 15,932 holders of record. As of
April 22, 1999, there were 8,437,346 shares of CFSB common stock issued
and outstanding held by approximately 1,260 holders of record.
SUMMARY OF FIRST QUARTER FINANCIAL INFORMATION
The following unaudited tables show summary results of CFSB and Old
Kent for the three-month period ended March 31, 1999 and for the comparable
period for the proceeding year, and selected balance sheet data as of March
31, 1999 and 1998. You should read it in conjunction with the financial
statements and other information contained in or incorporated by reference
from Old Kent's and CFSB's reports filed with the Securities and Exchange
Commission. See "Where You Can Find More Information" below.
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QUARTER ENDED MARCH 31,
-------------------------------
1999 1998
-------- --------
CFSB (dollars in thousands, except per share data)
Net Interest Income $ 6,716 $ 6,406
Provision for Credit Losses 105 98
Net Income 2,539 2,830
Per Common Share:
Basic Earnings $ 0.31 $ 0.34
Diluted Earnings 0.30 0.33
Cash Dividends 0.13 0.12
AT MARCH 31,
-------------------------------
1999 1998
--------- ---------
CFSB (dollars in thousands, except per share data)
Total Assets $ 889,071 $ 846,142
Deposits 580,094 576,481
Net Loans 789,924 733,915
Stockholders' Equity 71,416 65,360
Book Value per Common Share $ 8.46 $ 7.95
QUARTER ENDED MARCH 31,
--------------------------------
1999 1998
--------- ---------
OLD KENT (dollars in thousands, except per share data)
Net Interest Income $ 148,618 $ 148,016
Provision for Credit Losses 6,866 15,381
Net Income 58,603 51,523
Per Common Share:
Basic Earnings $ 0.56 $ 0.47
Diluted Earnings 0.56 0.47
Cash Dividends 0.20 0.171
-12-
AT MARCH 31,
-----------------------------------
1999 1998
------------ ------------
OLD KENT (dollars in thousands, except per share data)
Total Assets $ 15,911,816 $ 16,147,378
Deposits 12,490,645 12,001,082
Net Loans 9,137,863 8,735,584
Stockholders' Equity 1,098,966 1,203,323
Book Value per Common Share $ 10.65 $ 11.04
THE SPECIAL MEETING
DATE, TIME AND PLACE OF THE SPECIAL MEETING
The special meeting of stockholders of CFSB is scheduled to be held
as follows:
June 8, 1999
11:00 a.m., E.D.T.
Sheraton Lansing Hotel
925 South Creyts Road
Lansing, Michigan
PURPOSE OF THE SPECIAL MEETING
The special meeting is being held so that stockholders of CFSB may
consider and vote upon a proposal to adopt the Merger Agreement between
CFSB and Old Kent and to transact any other business that properly comes
before the special meeting or any adjournment. Adoption of the Merger
Agreement will also constitute approval of the merger and the other
transactions contemplated by the Merger Agreement.
If the stockholders of CFSB adopt the Merger Agreement, Old Kent
will acquire CFSB. You will receive 0.6222 of a share of Old Kent
common stock for each share of CFSB common stock you hold.
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STOCKHOLDER RECORD DATE FOR THE SPECIAL MEETING
CFSB's Board of Directors has fixed the close of business on April 22,
1999, as the record date for determination of CFSB stockholders entitled
to notice of and entitled to vote at the special meeting. On the record
date, there were 8,437,346 shares of CFSB common stock outstanding, held by
approximately 1,260 holders of record.
VOTE OF CFSB STOCKHOLDERS REQUIRED FOR ADOPTION OF THE MERGER AGREEMENT
A majority of the outstanding shares of CFSB common stock entitled
to vote at the special meeting must be represented, either in person or
by proxy, to constitute a quorum at the special meeting. The
affirmative vote of the holders of at least a majority of CFSB's common
stock outstanding and entitled to vote at the special meeting is
required to adopt the Merger Agreement. You are entitled to one vote
for each share of CFSB common stock held by you on the record date.
As of the record date for the special meeting, directors and
executive officers of CFSB and their affiliates beneficially owned
approximately 1,188,368 shares of CFSB common stock, which stock represented
approximately 14.05% of all outstanding shares of CFSB common stock
entitled to vote at the special meeting.
PROXIES
All shares of CFSB common stock represented by properly executed
proxies received before or at the special meeting will, unless the
proxies are revoked, be voted in accordance with the instructions
indicated on the proxy card. If no instructions are indicated on a
properly executed proxy, the shares will be voted FOR adoption of the
Merger Agreement. You are urged to mark the box on the proxy to
indicate how to vote your shares.
If a properly executed proxy is returned and the stockholder has
abstained from voting on adoption of the Merger Agreement, the CFSB
common stock represented by the proxy will be considered present at the
special meeting for purposes of determining a quorum and for purposes of
calculating the vote, but will not be considered to have been voted in
favor of adoption of the Merger Agreement. Similarly, if an executed
proxy is returned by a broker holding shares of CFSB common stock in
street name that indicates that the broker does not have discretionary
authority to vote on adoption of the Merger Agreement, the shares will
be considered present at the meeting for purposes of determining the
presence of a quorum and calculating the vote, but will not be
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considered to have been voted for adoption of the Merger Agreement.
Your broker will vote your shares only if you provide instructions on
how to vote by following the information provided to you by your broker.
Because adoption of the Merger Agreement requires the affirmative
vote of at least a majority of CFSB's common stock outstanding as of the
record date, abstentions, failures to vote and broker non-votes will
have the same effect as a vote against adoption of the Merger Agreement.
CFSB does not expect that any matter other than adoption of the
Merger Agreement will be brought before the special meeting. If,
however, other matters are properly presented, the persons named as
proxies will vote in accordance with their judgment with respect to
those matters. You may revoke your proxy at any time before it is voted
by:
- Notifying in writing the Secretary of CFSB;
- Granting a subsequent proxy; or
- Appearing in person and voting at the special meeting.
Attendance at the special meeting will not in and of itself constitute
revocation of a proxy.
Proxies to vote at the special meeting are being solicited by CFSB.
In addition, directors, officers and regular employees of CFSB and its
subsidiaries may solicit proxies personally or by telephone or other
electronic means. Such individuals will not receive any additional
compensation for doing so. In addition, CFSB has retained
Morrow & Co., Inc., a professional proxy solicitation firm, to assist in the
solicitation of proxies by mail, in personal or by telephone or other
means of communication. CFSB will pay Morrow & Co., Inc., a fee of $8,500
for its services.
YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXIES. A
TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE EXCHANGE OF YOUR CFSB STOCK
CERTIFICATES WILL BE MAILED TO YOU AS SOON AS PRACTICABLE AFTER
COMPLETION OF THE MERGER.
THE MERGER AND MERGER AGREEMENT
THE MERGER AGREEMENT, ATTACHED AS APPENDIX A, AND THE STOCK OPTION
AGREEMENT, ATTACHED AS APPENDIX B, ARE INCORPORATED IN THIS PROSPECTUS
AND PROXY STATEMENT BY REFERENCE AND SHOULD BE CAREFULLY CONSIDERED.
CERTAIN PROVISIONS OF THE MERGER AGREEMENT AND THE STOCK OPTION
-15-
AGREEMENT HAVE BEEN SUMMARIZED IN THIS PROSPECTUS AND PROXY STATEMENT
FOR YOUR INFORMATION. HOWEVER, THE MERGER AGREEMENT AND THE STOCK
OPTION AGREEMENT, NOT THIS SUMMARY, ARE THE DEFINITIVE STATEMENTS OF THE
TERMS OF THE MERGER.
WHAT YOU WILL RECEIVE
If CFSB stockholders adopt the Merger Agreement and the merger is
completed, Old Kent will acquire CFSB and as a result, will own all the
assets of CFSB, including Community First Bank and each of the subsidiaries
of Community First Bank. In exchange, you will receive 0.6222 shares of
Old Kent common stock for each of your shares of CFSB (the "Exchange
Ratio").
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 "--Description of Old Kent Capital Stock" and "--Comparison
of Rights of Old Kent's and CFSB'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 CFSB common stock outstanding. The purpose of any such
adjustment is to prevent dilution of the interests of the respective
stockholders of Old Kent and CFSB. It has been Old Kent's custom in
recent years to declare a 5% stock dividend each June, payable in late
July to Old Kent stockholders of record as of specified date in late
June. While there is no assurance that such a stock dividend will be
declared by Old Kent in 1999, if such a stock dividend is declared and
the record date of the stock dividend occurs prior to the completion of
the merger, the Exchange Ratio will be adjusted in accordance with the
terms of the Merger Agreement. Old Kent and CFSB do not expect that any
other 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
-16-
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 Final Old Kent Price (defined as the average closing price of Old
Kent common stock for the ten trading day period ending on the 11th
business day prior to the date of the scheduled closing of the merger).
Old Kent will assume all outstanding options to purchase shares of
CFSB common stock at the Effective Time. As a result, such options will
then represent the right to purchase shares of Old Kent common stock.
The number of shares of Old Kent common stock that may be purchased
pursuant to existing CFSB options will equal the number of shares of
CFSB common stock that may be purchased immediately prior to the
Effective Time multiplied by the Exchange Ratio. The exercise price
will equal the per share exercise price immediately prior to the
Effective Time divided by the Exchange Ratio, rounded to the nearest
whole cent. Any options that are not fully vested at the Effective Time
will become fully vested and nonforfeitable as of the Effective Time
pursuant to the terms of CFSB's stock option plans. Except for those
changes, the terms of existing options will not be changed.
STRUCTURE OF THE MERGER
To make the acquisition, Old Kent has formed a subsidiary solely for
purposes of the transaction. The subsidiary will be merged into CFSB and
CFSB will become a wholly owned subsidiary of Old Kent. Old Kent will
immediately liquidate and dissolve CFSB so that the assets of CFSB will be
owned directly by Old Kent.
BACKGROUND OF THE MERGER
Community First Bank commenced operations in 1890, and operated as
a mutual savings association until 1990, when it became a stock savings
bank and a subsidiary of CFSB. From time to time since CFSB became a
publicly-held company in 1990, CFSB's Board of Directors and management
have reviewed CFSB's strategic alternatives for enhancing profitability
and maximizing stockholder value, particularly in view of the changes
and ongoing consolidation that has occurred in the financial services
industry. On a regular basis, CFSB has consulted with its financial
consultants and legal advisors regarding the state of the financial
institutions mergers and acquisitions market. In recent years CFSB has,
however, been successful in maximizing stockholder value through
implementing its strategic plan of internal growth and increased
efficiency, resulting in increased profitability.
In the spring of 1998, as market multiples in combinations for
financial institutions continued to increase, the Board of Directors
again evaluated CFSB's future growth and profitability prospects, in
comparison to the stockholder value that could be generated through a
business combination. The Board of Directors engaged in discussions to
-17-
determine whether it would be advisable for CFSB to continue
implementing its strategic plan, or whether it might be the appropriate
time to pursue a combination with another financial institution.
On June 17, 1998, Feldman Financial and CFSB's legal advisors
addressed the Board on the issues of strategic alliances for CFSB,
stock-for-stock mergers and sales of control, and contrasted these
options with the alternative of CFSB remaining independent. CFSB's
stock price and financial performance were reviewed, as was its
strategic plan, and these were compared to the performance of various
peer groups. An analysis of other recent financial institution merger
transactions was made with a specific focus on bank and thrift
transactions in the Midwest. The financial multiples in these
transactions were applied to a hypothetical transaction involving CFSB
and its likely partners in a combination. CFSB's Board and Feldman
Financial jointly identified five financial institutions in the Midwest,
including Old Kent, that they believed would have the most significant
strategic interest and financial capacity to offer favorable terms to
acquire or merge with CFSB.
The Board of Directors determined that it would be advisable for
Feldman Financial to contact these five institutions on a confidential
basis to explore their interest in a combination with CFSB. In late
June 1998, information regarding CFSB and its operations was distributed
to each of the five institutions. This process continued through the
end of July 1998. However, by early August 1998, none of the five
institutions had expressed a meaningful interest in a combination with
CFSB, and no formal proposals were received from any of the five
companies. A decision was made not to contact a potential second group
of financial institutions, as the Board of Directors and Feldman
Financial believed that it was unlikely that their interest would be any
greater than the interest expressed by the initial group of five
institutions. Although the formal process then ended, the Board
authorized President Robert Becker to continue informal discussions with
one or more of the five parties who had expressed some interest.
However, no serious discussions occurred and no proposals were received.
Old Kent, during this time, was focusing on its own operations, and on
integrating the operations of the newly acquired (in October 1998) First
Evergreen Corporation into its own and was not interested in pursuing
further acquisitions.
In early February of 1999, Old Kent contacted CFSB and expressed
its desire to initiate more serious discussions with CFSB. On February
8, 1999, President Robert Becker and Chief Operating Officer John Abbott
of CFSB met with David Wagner, Chairman, President and Chief Executive
Officer of Old Kent, and Robert Warrington, Vice Chairman and Chief
Financial Officer of Old Kent, to explore the possibility of a strategic
combination. On February 18, 1999, Mr. Abbott and Mark Furlong,
Executive Vice President of Old Kent, met to exchange additional
-18-
information. Following these meetings, discussions concerning the terms
of a possible merger began.
During the period from February 19, 1999 to February 24, 1999,
CFSB, with the assistance of its legal and financial advisors, entered
into prolonged and serious negotiations with Old Kent and its
representatives with respect to a business combination transaction. Old
Kent and CFSB agreed on a value of approximately $28.00 per share, for
each share of CFSB common stock, in a stock-for-stock exchange, based on
the then-trading value of Old Kent stock. The specific pricing criteria
would be agreed upon in the ongoing negotiations over the succeeding
days. Old Kent's Board of Directors met on the afternoon of February
19, 1999, and authorized its executive officers to pursue the
combination and to negotiate and enter into a definitive agreement with
CFSB. The negotiating process continued during the next four days.
CFSB's ad hoc committee of its Board of Directors met with its
legal and financial advisors during the afternoon of February 22, 1999
to discuss the status of the ongoing negotiations and to direct its
advisors as to how they should proceed. The committee authorized CFSB's
executive officers and legal and financial advisors to continue the
negotiating process. Further information was exchanged by the parties
and the process continued over the next day and a half. CFSB's entire
Board of Directors met on the evening of February 23, 1999 to evaluate
the proposed Merger Agreement with Old Kent. At this meeting, Feldman
Financial provided the Board with a comprehensive analysis of the
proposed transaction with Old Kent. The proposed combination with Old
Kent was contrasted with CFSB's likely future prospects on a stand-alone
basis. An extensive discussion ensued regarding the Old Kent proposal,
CFSB's future prospects on a stand-alone basis and other available
options. Feldman Financial concluded its presentation by rendering its
opinion that the consideration to be received by CFSB's stockholders in
the proposed merger was fair to them from a financial point of view.
See "-- Opinion of CFSB's Financial Advisor" for a more complete
description of the basis for this opinion.
CFSB's legal advisors then reviewed with the Board the proposed
Merger Agreement with Old Kent, including the Stock Option Agreement.
Late in the evening on February 23, 1999, CFSB's Board of Directors
unanimously approved the Merger Agreement and the acquisition by Old Kent.
Through the early morning hours of February 24, 1999, the final terms of
the Merger Agreement were negotiated and finalized, and the Merger
Agreement was executed on the morning of February 24, 1999. A joint
press release regarding the merger was issued prior to the opening of
the stock market on Wednesday, February 24, 1999.
On April 19 and 20, 1999, Old Kent and CFSB, respectively, approved
the amendment to and restatement of the Merger Agreement as of April 20,
1999, to modify the structure of the acquisition. This change did not
-19-
affect the amount of Old Kent stock you will receive in the merger or its
tax-free nature to CFSB's stockholders.
MERGER RECOMMENDATION AND REASONS FOR THE MERGER
CFSB
In approving the Merger Agreement, the Board of Directors
considered the form and the value of the consideration to be paid to
CFSB stockholders by Old Kent, CFSB's current performance and future
prospects on a stand-alone basis, and certain related factors. CFSB's
Board of Directors believes that the acquisition by Old Kent will be
beneficial to CFSB's stockholders, as well as to its customers, and will
enhance the services provided to the communities served by CFSB. The
Board believes the merger will benefit CFSB's stockholders by giving
them the opportunity to participate in the future growth and success of
a much larger bank holding company that has had a 40-year history of
consecutive annual increases in per share earnings and dividends.
CFSB's customers will have greater access and more convenience through
the larger number of branches and will be provided with the opportunity
to utilize certain banking products and services not currently offered
by CFSB. The Board of Directors also considered the opinion of Feldman
Financial that the consideration offered under the Merger Agreement was
fair to stockholders from a financial point of view. The Board of
Directors believes that these factors, combined with Old Kent's
financial strength, indicate that Old Kent is likely to have the
resources and ability to respond to the ongoing changes in the highly-
competitive financial services industry.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS
UNANIMOUSLY DETERMINED THE MERGER TO BE FAIR TO, AND IN THE
BEST INTERESTS OF, CFSB STOCKHOLDERS AND DECLARED THE MERGER
ADVISABLE. THE BOARD OF DIRECTORS OF CFSB UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE MERGER
AGREEMENT.
OLD KENT
Old Kent believes the proposed merger will enable Old Kent to
further expand Old Kent's presence in the Lansing, Michigan, area and
surrounding communities. 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 Michigan and elsewhere.
OPINION OF CFSB'S FINANCIAL ADVISOR
CFSB retained Feldman Financial on June 25, 1998 to act as
financial advisor to CFSB and to provide strategic financial advice to
the CFSB Board on various matters, including the evaluation of strategic
-20-
alternatives and the potential enhancement of stockholder value.
Feldman Financial was requested to act as CFSB's financial advisor in
connection with the merger and related matters based upon its
qualifications, expertise and reputation, as well as upon its advisory
relationship and familiarity with CFSB. At the February 23, 1999
meeting of the CFSB Board, Feldman Financial delivered an oral opinion
to the CFSB Board, which opinion was subsequently confirmed in writing,
that as of such date and subject to certain considerations set forth in
such opinion, the Exchange Ratio in the Merger Agreement was fair from a
financial point of view to CFSB stockholders. Feldman Financial
subsequently confirmed its February 23, 1999 opinion by delivery to the
CFSB Board of a written opinion dated as of the date of this prospectus
and proxy statement. In connection with its opinion dated the date of
this prospectus and proxy statement, Feldman Financial updated certain
of the analyses performed in connection with the February 23, 1999
opinion and reviewed the assumptions on which such analyses were based
and the factors that it considered in rendering such an opinion.
THE FULL TEXT OF FELDMAN FINANCIAL'S WRITTEN OPINION DATED AS OF
THE DATE OF THIS PROSPECTUS AND PROXY STATEMENT, WHICH SETS FORTH A
DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
APPENDIX C TO THIS DOCUMENT. YOU SHOULD READ THE OPINION CAREFULLY AND
IN ITS ENTIRETY. FELDMAN FINANCIAL'S OPINION IS DIRECTED TO THE CFSB
BOARD AND ADDRESSES ONLY THE EXCHANGE RATIO. THE OPINION DOES NOT
ADDRESS THE UNDERLYING BUSINESS DECISION OF CFSB TO ENGAGE IN THE MERGER
AND DOES NOT CONSTITUTE A RECOMMENDATION TO YOU AS TO HOW TO VOTE AT THE
SPECIAL MEETING. THE SUMMARY OF FELDMAN FINANCIAL'S OPINION SET FORTH
IN THIS PROSPECTUS AND PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In arriving at its opinion, Feldman Financial reviewed the Merger
Agreement as well as certain publicly available business and financial
information relating to CFSB and Old Kent. Feldman Financial also
reviewed certain other information related to CFSB and Old Kent and met
with the senior management of CFSB and Old Kent to discuss the future
prospects of CFSB and Old Kent. Feldman Financial also considered
certain financial and stock data of CFSB and Old Kent and compared that
data with similar data for other publicly held companies in businesses
similar to those of CFSB and Old Kent and considered the financial terms
of other merger and acquisition transactions that were recently
completed. Feldman Financial also considered such other information,
studies, analyses and examinations, and general financial, economic and
market criteria, that it deemed relevant.
In preparing its opinion, Feldman Financial assumed and relied upon
the accuracy and completeness of all financial and other information
-21-
that it received, reviewed, or discussed. With respect to certain
financial forecasts, Feldman Financial assumed that such forecasts were
reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of CFSB and Old Kent. The
projections furnished to Feldman Financial and used by it in certain of
its analyses were prepared by management of CFSB and Old Kent. Neither
CFSB nor Old Kent publicly discloses internal management projections of
the type provided to Feldman Financial and, as a result, such
projections were not prepared with a view towards public disclosure.
The projections were based on numerous variables and assumptions that
are inherently uncertain, including, without limitation, factors related
to general economic and competitive conditions, and accordingly, actual
results could vary significantly from those set forth in such
projections. Feldman Financial did not assume any responsibility for
independently verifying such information, did not undertake an
independent evaluation or appraisal of the assets or liabilities of CFSB
or Old Kent, and was not furnished with any such appraisal or
evaluation. Feldman Financial was not retained to and did not review
any individual loan credit files. Feldman Financial's opinion was
necessarily based upon financial, economic, market and other conditions
as they existed and could be evaluated on the date of its opinion.
Feldman Financial did not express any opinion as to the actual value of
Old Kent common stock when issued pursuant to the merger or the prices
at which Old Kent common stock will trade subsequent to the merger.
In formulating its opinion to the CFSB Board, Feldman Financial
prepared a variety of financial and comparative analyses, including
those described below. The following is a summary of the material
financial analyses performed by Feldman Financial and reviewed with the
CFSB Board on February 23, 1999 in connection with its opinion dated
February 23, 1999, and does not purport to be a comprehensive
description of the analyses underlying Feldman Financial's opinion. The
preparation of a fairness opinion is a complex process involving various
determinations as to the most relevant and appropriate methods of
financial analyses and the application of these methods to the
particular circumstances. Therefore, such an opinion is not readily
susceptible to summary description. Accordingly, Feldman Financial
believes that its analyses must be considered as a whole and selecting
portions of the analyses and factors, without considering all factors
and analyses, could create a misleading or incomplete view of the
processes underlying such analyses and its opinion.
CALCULATION OF IMPLIED VALUE OF EXCHANGE RATIO. Feldman Financial
calculated the implied value of the Exchange Ratio based upon the
closing stock price of Old Kent common stock of $45.00 as of February
19, 1999 (the last full day of trading prior to the meeting of the
CFSB Board to consider the Merger Agreement), which indicated an
-22-
acquisition offer value for CFSB of $28.00 per share. The indicated
offer value of $28.00 per share equated to implied multiples for CFSB
of 329.8% of book value, 329.8% of tangible book value, 20.3 times
last twelve months earnings, a 30.9% tangible book premium to core
deposits, and a 33.3% premium to the prior trading market price of
CFSB common stock. These ratios were based on CFSB's historical
financial data as of December 31, 1998.
COMPARABLE COMPANY ANALYSIS. As part of its analysis, Feldman
Financial compared certain financial performance and stock market
valuation data of CFSB with corresponding publicly available
information of a selected group of 17 publicly traded thrift
institutions based in the Midwest and with total assets between
$500 million and $1.5 billion ("Thrift Comparables"): Camco
Financial Corporation, CFS Bancorp, Emerald Financial Corporation,
FFY Financial Corp., Fidelity Bancorp, First Defiance Financial
Corp., First Northern Capital Corporation, First Place Financial
Corp., Harrington Financial Group, HF Financial Corp., HMN
Financial Inc., Home Federal Bancorp, Jefferson Savings Bancorp,
Metropolitan Financial Corp., Mutual Savings Bank FSB, Ottawa
Financial Corporation and United Community Financial Corp. The
return on average assets for CFSB was 1.38% versus the average of
0.76% for the Thrift Comparables. The return on average equity for
CFSB was 17.59% versus the average of 7.91% for the Thrift
Comparables. CFSB's price to book ratio was 247.4%, as compared to
the average price to book ratio of 132.8% for the Thrift
Comparables. CFSB's price to earnings ratio was 15.2 times, as
compared to the average price to earnings ratio of 15.3 times for
the Thrift Comparables. Historical financial information used in
connection with the ratios provided above and below was the latest
available as of December 31, 1998 and market price information was
as of February 19, 1999.
Feldman Financial also compared certain financial performance and
stock market valuation data of Old Kent with corresponding publicly
available information of a selected group of 17 publicly traded bank
holding companies with total assets between $10 billion and $25
billion ("Bank Comparables"): AmSouth Bancorporation, Associated
Banc-Corp, BancWest Corporation, Colonial BancGroup, Commerce
Bancshares, Compass Bancshares, First American Corporation, First
Security Corporation, First Tennessee National Corporation, Hibernia
Corporation, M&T Bank Corporation, Marshall & Ilsley Corporation,
North Fork Bancorporation, Pacific Century Financial Corporation,
Popular Inc., TCF Financial Corporation and Zions Bancorporation.
The return on average assets for Old Kent was 1.26% versus the
average of 1.22% for the Bank Comparables. The return on average
equity for Old Kent was 17.08% versus the average of 15.09% for the
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Bank Comparables. Old Kent's price to book ratio was 414.3%, as
compared to the average price to book ratio of 272.1% for the Bank
Comparables. Old Kent's price to earnings ratio was 24.5 times, as
compared to the average price to earnings ratio of 19.2 times for the
Bank Comparables.
COMPARABLE TRANSACTION ANALYSIS. Feldman Financial reviewed
publicly available information for 20 transactions announced since
January 1, 1998 involving the acquisition of thrifts with total
assets between $500 million and $2 billion ("Comparable Thrift
Transactions"). Offer price ratios analyzed were based upon
information available at the time of announcement. Feldman Financial
compared the price to book value, price to tangible book value, price
to last twelve months earnings and tangible book premium to core
deposits paid in the merger to the Comparable Thrift Transactions.
The Comparable Thrift Transactions consisted of the following
(identified by acquirer/acquiree): Anchor BanCorp Wisconsin/FCB
Financial Corp.; Dime Bancorp/Lakeview Financial Corp.; Republic
Bancorp/D & N Financial Corp.; Temple-Inland Inc./HF Bancorp; Centura
Banks Inc./First Coastal Bankshares; Sovereign Bancorp/Peoples
Bancorp; Peoples Heritage Financial Group/SIS Bancorp; Richmond
County Financial Corp./Bayonne Bancshares; First Source Bancorp/Pulse
Bancorp; Summit Bancorp/NSS Bancorp; Republic Security Financial
Corp./First Palm Beach Bancorp; First Charter Corp./HFNC Financial
Corp.; UCBH Holdings Inc./USB Holdings; FirstMerit Corp./Security
First Corp.; HUBCO Inc./IBS Financial Corp.; HUBCO Inc./Dime
Financial Corp.; Commercial Federal Corp./First Colorado Bancorp;
BB&T Corp./Maryland Federal Bancorp; Commercial Federal Corp./AmerUs
Bank; and Seacoast Financial Services Corp./Sandwich Bancorp. The
analysis of the Comparable Thrift Transactions yielded the following
ratios: (1) average price to book ratio of 221.1% with a range
between 111.7% and 349.4% (compared with a ratio of 329.8% for CFSB),
(2) average price to tangible book value ratio of 230.4% with a range
between 115.1% and 354.9% (compared with a ratio of 329.8% for CFSB),
(3) average price to earnings ratio of 20.4 times, excluding ratios
greater than 30.0 times, with a range of 10.0 to 28.3 times (compared
with 20.3 times for CFSB), and (4) average tangible book premium to
core deposits of 20.6% with a range between 3.0% and 45.6% (compared
with 30.9% for CFSB). The acquisition ratios for CFSB were based on
the closing price of Old Kent common stock on February 19, 1999.
Feldman Financial also reviewed publicly available information for
17 transactions announced since January 1, 1998 involving the
acquisition of thrifts and banks with total assets between $500
million and $2 billion, a return on average assets greater than 1.00%
and an equity to assets ratio less than 10.0% ("Comparable
Performance Transactions"). The Comparable Performance Transactions
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consisted of the following (identified by acquirer/acquiree): Summit
Bancorp/Prime Bancorp; Independence Community Bank Corp./Broad
National Bancorp; BB&T Corp./Mason-Dixon Bancshares; First Financial
Bancorp/Sand Ridge Financial Corp.; Dime Bancorp/Lakeview Financial
Corp.; Union Planters Corp./Ready State Bank; FirstMerit Corp./Signal
Corp.; Banknorth Group Inc./Evergreen Bancorp; Citizens
Bancshares/Ohio Bank; First Source Bancorp/Pulse Bancorp; Compass
Bancshares/Arizona Bank; FirstMerit Corp./Security First Corp.; HUBCO
Inc./Dime Financial Corp.; First Security Corp./California State
Bank; Cullen/Frost Bankers Inc./Overton Bancshares; Commercial
Federal Corp./AmerUs Bank; and First Midwest Bancorp/Heritage
Financial Services. The analysis of the Comparable Performance
Transactions yielded the following ratios: (1) average price to book
ratio of 316.1% with a range between 193.1% and 465.0% (compared with
a ratio of 329.8% for CFSB), (2) average price to tangible book ratio
of 343.0% with a range between 196.7% and 466.9% (compared with a
ratio of 329.8% for CFSB), (3) average price to earnings ratio of
21.0 times, excluding ratios greater than 30.0 times, with a range of
10.0 to 28.2 times (compared with 20.3 times for CFSB) and (4)
average tangible book premium to core deposits of 28.5% with a range
between 11.4% and 49.8% (compared with 30.9% for CFSB).
No company or transaction used in the comparable company or
comparable transaction analyses is identical to CFSB or the merger.
Accordingly, an analysis of the results involves complex
considerations and judgments concerning differences in financial and
operating characteristics of the various companies as well as other
factors that may affect trading values or announced merger values of
CFSB or the comparable companies.
PRO FORMA MERGER ANALYSIS. Feldman Financial performed a pro forma
merger analysis, combining CFSB's and Old Kent's balance sheet and
historical and projected earnings based upon certain assumptions
provided by the management of CFSB and Old Kent and earnings
projections obtained from a published consensus estimate as
formulated by stock research analysts. This analysis indicated that
the merger would be accretive to Old Kent's earnings per share for
the historical 1998 and estimated 1999 periods before the impact of
non-recurring merger-related charges. The analysis also indicated
that the merger would be accretive to Old Kent's book value per share
at December 31, 1998. The analysis included estimates of cost
savings and other synergies expected to result following the merger.
The actual results achieved by the combined company may vary from the
estimated results and the variations may be material.
DISCOUNTED CASH FLOW AND TERMINAL VALUE ANALYSIS. Feldman
Financial performed a discounted cash flow analysis to determine a
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range of present values per share of CFSB common stock, assuming CFSB
continued to operate as an independent company. This range was
determined by adding (1) the present value of the estimated future
dividend stream that CFSB could generate over the five-year period
from 1999 through 2003, and (2) the present value of the terminal
value of CFSB common stock at the end of the year 2003. The earnings
projections that formed the basis for the dividends and the terminal
values were based on annual growth rates ranging from 5.0% to 7.6%.
The terminal value of CFSB common stock at the end of the period was
determined by applying a range of market valuation ratios
representing price to earnings multiples from 14.0 to 18.0 times and
price to book ratios from 240% to 280%. The dividend stream and
terminal values were discounted to present values using discount
rates from 10% to 14%. Based on the above assumptions, this analysis
yielded a range of per share values for CFSB common stock of $15.30
to $26.78.
CONTRIBUTION ANALYSIS. Feldman Financial computed and reviewed the
relative pro forma contributions of CFSB and Old Kent to the combined
company's pro forma financial results as of the year ended December
31, 1998. The computation indicated that CFSB and Old Kent would
respectively contribute to the combined company approximately 5.0%
and 95.0% of total assets, 6.6% and 93.4% of total loans, 4.3% and
95.7% of total deposits, 5.8% and 94.2% of total equity, and 5.1% and
94.9% of net income before any cost savings or merger-related
charges. Feldman Financial calculated that the Exchange Ratio would
result in allocation between CFSB's and Old Kent's stockholders of
pro forma ownership equal to approximately 4.7% and 95.3%,
respectively.
In performing its analyses, Feldman Financial made numerous
assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond the
control of CFSB or Old Kent. The analyses performed by Feldman
Financial are not necessarily indicative of actual values or actual
future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as a
part of Feldman Financial's analysis of the fairness from a financial
point of view of the Exchange Ratio in the Merger Agreement to CFSB
stockholders and were conducted in connection with the delivery of
Feldman Financial's opinion. As described above, Feldman Financial's
opinion and the information provided by Feldman Financial to the CFSB
Board were among various factors taken into consideration by the CFSB
Board in making its determination to approve the Merger Agreement. The
Exchange Ratio was determined through negotiations between CFSB and Old
Kent, and was approved by the entire CFSB Board.
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The CFSB Board retained Feldman Financial to act as financial
advisor to CFSB in connection with the merger based upon Feldman
Financial's experience and expertise and its familiarity with CFSB and
transactions similar to the merger. As part of its business, Feldman
Financial is regularly engaged in the valuation of businesses and
securities in connection with mergers and acquisitions, initial public
offerings, private placements and recapitalizations. In the past,
Feldman Financial has provided other financial advisory services to CFSB
for which services Feldman Financial received customary fees. In the
past two years, Feldman Financial has been paid professional fees
aggregating approximately $25,000 for other financial advisory services
rendered to CFSB. Pursuant to a letter agreement executed June 25, 1998
between CFSB and Feldman Financial, CFSB has agreed to pay Feldman
Financial (1) a retainer fee of $25,000 that was paid subsequent to
signing of the letter agreement, (2) an advisory fee of $100,000 which
was paid subsequent to execution of the Merger Agreement, and (3) a
transaction fee of 0.62% of the aggregate consideration received by
CFSB's stockholders and optionholders under the Merger Agreement, less
any amounts paid in accordance with (1) and (2), payable upon
consummation of the merger. Based on the current market price of Old
Kent common stock, the estimated fee payable to Feldman Financial under
the preceding formula equals approximately $1.5 million. The letter
agreement with Feldman Financial also provides that CFSB will reimburse
Feldman Financial for its out-of-pocket expenses and indemnify and hold
harmless Feldman Financial and related parties from and against certain
liabilities and expenses, which may include certain liabilities under
securities laws, in connection with the performance of services by
Feldman Financial under this engagement.
STOCK PRICE CONDITION
CFSB has the right to terminate the Merger Agreement and not
complete the merger if (1) the Final Old Kent Price is less than
$38.25, and (2) the number determined by dividing the Final Old Kent
Price by $45.00 is less than the number obtained by subtracting 0.15
from the quotient obtained by dividing the weighted average of the
average closing prices per share of each of the common stocks for the 27
regional bank holding companies of similar size (as specified in Exhibit
B of the Merger Agreement attached as Appendix A to this prospectus and
proxy statement) (the "Peer Institutions") by the weighted average of
the closing prices per share of each of the common stocks of those same
companies as of February 19, 1999. In other words, if the average of
the per share closing prices of Old Kent common stock on the ten trading
days ending on the 11th business day prior to the date of the scheduled
closing of the merger is less than $38.25 and there is a decline of
approximately 15% in the trading price of Old Kent relative to the Peer
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Institutions as calculated above, CFSB 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 CFSB
after the Final Old Kent Price has been determined, which will only be
determinable once the closing of the merger is scheduled.
Old Kent and CFSB have agreed to schedule the closing of the merger
on a mutually agreed upon date. If they cannot agree upon a date,
either party may schedule the closing by giving the other party ten
days' prior written notice of the desired closing date. However,
neither party may give such notice unless and until (1) all applicable
government approvals have been obtained (including the expiration of any
applicable waiting periods), and (2) the CFSB stockholders have adopted
the Merger Agreement.
REGULATORY APPROVALS
Before Old Kent and CFSB 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 CFSB
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. However, if the Department of Justice does not issue
adverse comments during the first 15 days of this period, Old Kent and
CFSB may complete the merger at that time. Old Kent filed its
application to approve the merger with the Federal Reserve Board on
April 12, 1999. 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 CFSB have agreed to schedule the closing of the merger
on a mutually agreed upon date. If they cannot agree upon a date,
either party may schedule the closing by giving the other party ten
days' prior written notice of the desired closing date. However,
neither party may give such notice unless and until (1) all applicable
government approvals have been obtained (including the expiration of any
applicable waiting periods), and (2) the CFSB stockholders have adopted
the Merger Agreement. The Effective Time will be the next business day,
or other mutually agreed upon date, following the closing as specified
in Certificates of Merger filed with the states of Michigan and
Delaware. Old Kent and CFSB anticipate that the closing will occur June
29, 1999 and the Effective Time will be July 1, 1999.
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BANK CONSOLIDATION
Old Kent anticipates that immediately after the Effective Time,
when Community First Bank and Old Kent Bank are both wholly owned
subsidiaries of Old Kent, Old Kent will consolidate (I.E., merge)
Community First Bank with and into Old Kent Bank. CFSB has agreed to
assist Old Kent prior to the Effective Time in connection with obtaining
any necessary regulatory approvals for this bank consolidation.
However, such approvals are not required prior to the completion of the
acquisition of CFSB by Old Kent.
DISTRIBUTION OF OLD KENT COMMON STOCK
As of the Effective Time, you will cease to be a stockholder of
CFSB. Certificates that represented your shares of CFSB common stock
outstanding immediately prior to the Effective Time (referred to as "Old
Certificates") will then represent the right to receive (1) shares of Old
Kent common stock having all of the voting and other rights of shares of
Old Kent common stock, and (2) cash in lieu of fractional shares.
If Old Kent declares a dividend on the Old Kent common stock
payable to stockholders of record of Old Kent as of a record date at or
after the Effective Time you will be entitled to receive that dividend.
However, you will not actually receive dividends payable to holders of
record of Old Kent common stock after the Effective Time 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 Old Kent stock certificates
to you. The Exchange Agent will deliver certificates in the name and to
the address appearing on CFSB's stock records as of the Effective Time
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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 will not transfer on the stock
transfer books of CFSB any shares of CFSB common stock that were issued
and outstanding immediately prior to the Effective Time of the merger.
If, after the Effective Time, a former CFSB 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 CFSB has agreed,
except in the case of a "Fiduciary Event," to recommend the adoption of
the Merger Agreement to CFSB's stockholders. A "Fiduciary Event" will
be deemed to have occurred if and when CFSB's Board of Directors has:
- Received in writing a "Superior Proposal" (see below), that is
then still pending;
- Determined in good faith that the failure to withdraw, modify, or
change its recommendation would cause the Board of Directors to
breach its fiduciary duties to CFSB's stockholders under
applicable law; and
- Determined to accept and recommend the Superior Proposal to CFSB's
stockholders.
A "Superior Proposal" is defined to mean any bona fide unsolicited
offer, proposal, solicitation, or expression of interest made by a third
party on terms that the Board of Directors determines in good faith,
-30-
based on the written advice of Feldman Financial or another financial
advisor of nationally recognized reputation, to be more financially
favorable to CFSB's stockholders than the Merger Agreement.
The withdrawal, modification, or change of the CFSB Board's
recommendation of the acquisition by Old Kent, if a Fiduciary Event has
occurred, will not be a breach of the Merger Agreement, provided that
CFSB provides Old Kent at least three business days advance notice.
However, Old Kent will retain its rights under the Stock Option
Agreement (see "--Stock Option Agreement" below).
NO NEGOTIATIONS WITH THIRD PARTIES
In addition to the CFSB Board of Director's commitment to recommend
the acquisition by Old Kent to you, CFSB 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
CFSB or any of CFSB's subsidiaries. Further, CFSB has agreed not to
negotiate with any other party regarding a possible sale of CFSB, except
only in the event of what would otherwise constitute a Fiduciary Event
but for the fact that CFSB'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 CFSB's Board has yet to accept and recommend the Superior
Proposal, CFSB has agreed not to provide any confidential information
about itself or any of CFSB's subsidiaries to any party other than Old
Kent.
CONDUCT OF CFSB PENDING THE COMPLETION OF THE MERGER
In the Merger Agreement, CFSB 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
CFSB has agreed to conduct its business and manage its property
only in the usual, regular, and ordinary course in substantially the
same manner as prior to the execution of the Merger Agreement. In
particular, CFSB has agreed, among other things, to: (1) refrain from
taking any action that would be inconsistent with or contrary to the
Merger Agreement; (2) comply in all material respects with all laws,
regulations and court and administrative codes; (3) make no change in
its Certificate of Incorporation, Bylaws (except other than to amend the
Bylaws to reduce the number of seats on the CFSB Board of Directors to
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eliminate any vacant positions), or capital stock (except as
contemplated by the Stock Option Agreement); (4) use all reasonable
efforts to preserve its business organization intact; (5) charge off
loans and maintain its reserve for loan losses in accordance with its
prior practices and regulatory and accounting standards; (6) 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; (7) except for previously planned salary
increases, certain bonuses, and payments pursuant to the CFSB Bank
Management Incentive Compensation Plan for calendar year 1998 and on a
pro rata basis for calendar year 1999 to be paid no later than at the
Effective Time, 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 past practice; (8) take no action to enter into any
employment agreement that is not terminable by CFSB or any of CFSB's
subsidiaries without cost or penalty upon 60 days' or less notice,
except as contemplated by the Merger Agreement; (9) notify Old Kent of
the threat or commencement of any lawsuit or other proceeding against or
relating to CFSB or CFSB's subsidiaries, their directors, officers, or
employees in their capacities as such, or the merger or the Merger
Agreement; and (10) 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 $90,000 and will not,
without Old Kent's prior consent, commit CFSB or CFSB's subsidiaries to
expenditures after 1999.
DIVIDENDS
CFSB will not pay or make any dividend or purchase or redeem any
shares of common stock other than the regular 10% stock dividend and
regular quarterly cash dividends per share on CFSB common stock in
a manner consistent with past practice.
If the customary payment date for the next regular cash dividend
payable after the Effective Time of Old Kent common stock that is
eligible to be received by CFSB stockholders is more than 90 days after
the payment date of the last regular cash dividend paid or to be paid on
CFSB common stock prior to the Effective Time, then CFSB may declare and
set aside immediately prior to the Effective Time, a special pro rata
dividend. The special pro rata dividend will be payable in cash and not
exceed the product of the normal regular dividend amount multiplied by
the number of days greater than 90 days since the last dividend, then
divided by 90 days.
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If CFSB's payment of the cash dividend is not made or is reduced
because it would disqualify the merger from being treated as a pooling-
of-interests for accounting purposes, Old Kent and CFSB 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
CFSB has agreed to permit Old Kent to conduct an environmental
assessment of each parcel of CFSB's currently owned real property and any
real estate acquired by CFSB's subsidiaries 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 CFSB, identify the facts or conditions underlying
that risk, and provide CFSB 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, clean-up the environmental risk.
All work plans for any investigation and clean-up shall be mutually
satisfactory to Old Kent and CFSB.
If Old Kent and CFSB are unable to agree upon a course of action to
promptly complete any investigation and clean-up and/or a mutually
acceptable modification to the Merger Agreement, and Old Kent cannot be
reasonably assured that the after-tax cost of the sum of (1) the actual
cost of all investigative and remedial or other corrective actions or
measures undertaken by CFSB, (2) the estimated cost of all investigative
and remedial or other corrective actions or measures not undertaken by
CFSB but required by law or necessary to avoid future exposure to
material liability, and (3) all decreases in the value of such
properties, in the aggregate, will not exceed $3,000,000; then Old Kent
may terminate the Merger Agreement.
DATA PROCESSING CONTRACTS
CFSB or its subsidiaries may not enter into any new data processing
agreement without the consent of Old Kent and Old Kent must not unreasonably
withhold its consent if the agreement is necessary for CFSB to conduct
business in the ordinary course. CFSB has agreed to advise Old Kent of all
-33-
anticipated renewals or extensions of existing data processing service
agreements, data processing software license agreements, data processing
hardware lease agreements with independent vendors and to cooperate with
Old Kent in negotiating with those vendors the length of any extension
or renewal term of those agreements. Unless Old Kent otherwise agrees,
any extension or renewal must not exceed one year from the date of
renewal. CFSB 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 CFSB and Old Kent.
401(K) PLAN
Pursuant to the Merger Agreement, the existing 401(k) plan of CFSB
will be terminated at a mutually agreed upon date no earlier than 30
days before the Effective Time.
EMPLOYEE STOCK OWNERSHIP PLAN
In connection with the merger, the ESOP will be terminated and all
participant accounts will become fully vested and non-forfeitable. The
termination of the ESOP will require the ESOP trustees to use a certain
portion of the proceeds received from the exchange of shares of CFSB
common stock pursuant to the Merger Agreement to repay the related
outstanding debt. Pursuant to the ESOP, any amounts remaining after the
repayment of the debt will be distributed to the ESOP participants.
INSURANCE AND INDEMNIFICATION
Following the Effective Time, Old Kent has agreed to indemnify,
defend, and hold harmless, and advance expenses for present and former
directors and officers of CFSB and its subsidiaries against all losses,
expenses, claims, damages, or liabilities arising from any acts or
omissions by such person occurring prior to the Effective Time to the
same extent they are indemnified under CFSB's Certificate of
Incorporation and Bylaws in effect at the date of the Merger Agreement
and applicable state and federal law.
In addition, Old Kent has agreed that the officers and directors of
CFSB and Community First Bank will be covered for a period of at least
six years from the Effective Time by the directors' and officers'
liability insurance policy maintained by CFSB and its subsidiaries,
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
-34-
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 pay more than $140,000 to maintain or
procure insurance coverage pursuant to the Merger Agreement. If Old
Kent does not advise CFSB in writing prior to 30 days before the
scheduled closing of the merger that it has procured such coverage for
at least six years or agrees to do so without regard to the $140,000
limit, CFSB shall be permitted, in lieu of receiving the foregoing
insurance coverage, to purchase 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 Community
First Bank into Old Kent Bank, Old Kent's directors and executive
officers will remain the same. None of the directors of CFSB will
become directors of Old Kent. However, Old Kent anticipates that some
of the executive officers of CFSB or Community First Bank will become
officers of Old Kent Bank.
CONDITIONS TO CLOSING THE MERGER
MUTUAL CONDITIONS TO CLOSE
The obligations of each Old Kent and CFSB to complete the merger
are subject to the fulfillment of certain conditions, including the
following:
- The stockholders of CFSB must have adopted the Merger Agreement;
- Each company's representations and warranties to the other in the
Merger Agreement must be true as of February 24, 1999 (the date the
Merger Agreement was signed) and as of the closing, 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;
- Each governmental agency having jurisdiction over the merger must
have approved or consented to the merger without imposing any non-
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standard conditions to approval that are not reasonably
satisfactory to Old Kent;
- Old Kent and CFSB 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
Securities and Exchange Commission 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 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, CFSB and
Community First Bank, taken as a whole; or the ability of Old Kent or
CFSB, 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: (1) changes in GAAP that
are generally applicable to financial institutions and their holding
companies, (2) actions and omissions of a party taken with the prior
written consent of the other party, (3) changes in economic conditions
(including change in the level of interest rates) generally affecting
financial institutions and (4) fees, charges, and expenses reasonably
related to the merger (such as any additional insurance coverages,
employment and consulting services, legal, accounting, and investment
banking fees and expenses, and severance and retention provisions); will
not be 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:
- There must not be any investigation, lawsuit, or other proceeding
pending or threatened against or relating to CFSB or any of CFSB's
subsidiaries (or their officers or directors, in their capacity as
such) or any of their properties or business that may reasonably
result in a liability to CFSB that could have a Material Adverse
Effect on CFSB;
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- CFSB must have obtained the consent or waiver of any material
rights of the other party under certain specified contracts and
under any other agreements containing a provision triggered by a
change of control of CFSB and the result of which could have a
Material Adverse Effect on CFSB;
- 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 CFSB in
exchange for the shares of Old Kent common stock to be issued in
the merger;
- CFSB must have received and delivered to Old Kent a letter from
its independent public accountants to the effect that CFSB is
eligible to participate in a pooling-of-interests business
combination;
- Old Kent must have received a letter from its independent public
accountants to the effect that the merger should qualify as a
transaction to be accounted for as a pooling-of-interests;
- Old Kent must have received a certificate from the secretary of
CFSB dated as of the closing certifying as to the number of shares
of CFSB common stock outstanding on the day immediately prior to
the closing as well as the number of shares of CFSB common stock
that are issuable on or after that date; and
- CFSB shall have delivered to Old Kent any consent, amendment or
supplemental agreement necessary to confirm that neither the
execution of the Merger Agreement nor completion of the merger
will result in any default or penalty under the employee stock
ownership plan loan and plan documents.
CFSB'S CONDITIONS TO CLOSE
In addition, CFSB's obligation to complete the merger is subject
to the fulfillment of certain other conditions, including the following:
- CFSB must have received a tax opinion from Warner Norcross & Judd
LLP (see "--Material Federal Income Tax Consequences" below);
- CFSB's financial advisor, Feldman Financial, must have delivered
an opinion that, as of February 24, 1999 and renewed as of the
date of this prospectus and proxy statement, the Exchange Ratio is
fair to CFSB's stockholders from a financial point of view and
that opinion must not have been subsequently withdrawn;
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- The Old Kent common stock to be issued in the merger must have
been authorized for listing on the New York Stock Exchange; and
- CFSB shall have received a certificate from the Exchange Agent
certifying receipt of certificates for shares of Old Kent common
stock to be issued in the merger and sufficient cash to make
payments in lieu of fractional shares.
TERMINATION
Prior to the Effective Time, the Merger Agreement may be
terminated by Old Kent or CFSB by mutual consent, or by either of them
if the merger has not been completed on or before October 1, 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, notwithstanding CFSB's best efforts to comply, 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
$3,000,000 and Old Kent has given the requisite notice to CFSB;
- Old Kent's independent public accountants advise Old Kent that the
merger is unlikely to qualify for pooling-of-interests accounting
treatment;
- CFSB's stockholders fail to adopt the Merger Agreement at the
special meeting; or
- An event that caused or is reasonably likely to cause a Material
Adverse Effect on CFSB.
CFSB
In addition, CFSB may terminate the Merger Agreement and abandon
the merger on its own action upon the occurrence of certain events
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specified in the Merger Agreement, including among others, the
following:
- Any of the conditions to CFSB's obligation to complete the merger,
notwithstanding Old Kent's best efforts to comply have not been
met or waived by CFSB, at such time as such condition can no
longer be satisfied;
- The Final Old Kent Price is less than $38.25 and there is a
substantial decline in the trading price of Old Kent relative to a
group of Peer Institutions set forth in the Merger Agreement (see
"--Stock Price Condition" above);
- CFSB's stockholders fail to adopt the Merger Agreement at the
special meeting;
- Old Kent's independent public accountants advise Old Kent and CFSB
that the merger is unlikely to qualify for pooling-of-interests
accounting treatment; or
- An event that caused or is reasonably likely to cause a Material
Adverse Effect on Old Kent.
EFFECT OF TERMINATION
If either Old Kent or CFSB terminates the Merger Agreement in
accordance with its terms, neither Old Kent, CFSB, nor any of their
respective subsidiaries, officers or directors will be liable to the
others. However, the Stock Option Agreement (unless it is terminated in
accordance with its terms) 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 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 Old Kent 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, 500,000 shares are
designated Series B Preferred Stock, and 1,000,000 are designated
Series C Preferred Stock. The 1,000,000 shares of Series C Preferred
Stock are reserved for issuance pursuant to Series C Preferred Stock
Purchase Rights governed by a Rights Agreement, dated January 20, 1997,
and as amended December 30, 1998, between Old Kent and Old Kent Bank
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(the "Old Kent Rights Agreement"). As of April 22, 1999, Old Kent had
outstanding 102,415,405 shares of Old Kent common stock and no shares of
Preferred Stock.
COMMON STOCK. Old Kent stockholders are entitled to dividends out
of funds legally available for that purpose when, as and if declared by
the Old Kent Board of Directors. The dividend rights of Old Kent common
stock are subject to the rights of Old Kent Preferred Stock that have
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 stockholder
action. Old Kent common stock has no preemptive rights, cumulative
voting rights, conversion rights, or redemption provisions.
In the case of any liquidation, dissolution, or winding up of the
affairs of Old Kent, Old Kent stockholders will be entitled to receive,
pro rata, any assets distributable to common stockholders 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 have 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 issued pursuant to the 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 "--Comparison of Rights of Old Kent's and CFSB'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 the Old Kent 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 stockholder action. For more information on the
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Preferred Stock, see "-- Comparison of Rights of Old Kent's and CFSB's
Stockholders --Anti-Takeover Provisions -- In General" below.
STOCK OPTION AGREEMENT
As an inducement and condition to Old Kent's willingness to enter
into the Merger Agreement, CFSB 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, CFSB has granted Old Kent
an option to purchase up to 1,645,364 shares of CFSB common stock (or,
up to 19.99% of the number of shares of CFSB common stock) (the
"Option"). However, in no event may Old Kent, together with any other
holders of the Option, purchase any shares of CFSB common stock that
have a "Spread Value" (as defined below) in excess of $11.4 million.
The exercise price of the Option is $21.00 per share, subject to
adjustment under specified circumstances described below. The exercise
price, as so adjusted, is referred to as the "Option Price." Under the
Stock Option Agreement, the term "Spread Value" means the difference
between (1) the product of (A) the total number of shares Old Kent
intends to purchase upon exercise of the Option along with those shares
of CFSB common stock previously purchased pursuant to a partial exercise
of the Option, and (B) the closing price of the CFSB common stock as
quoted on The Nasdaq Stock Market on the trading day preceding the
intended date of exercise; and (2) the product of (A) the total number
of shares Old Kent intends to purchase upon exercise of the Option along
with those shares of CFSB common stock previously purchased pursuant to
a partial exercise of the Option, and (B) the applicable Option Price.
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
CFSB prior to the expiration of the Option. The purchase of any shares
of CFSB 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:
- CFSB or Community First 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 CFSB recommends that the stockholders of CFSB adopt or
accept any Acquisition Transaction other than the Merger Agreement
with Old Kent;
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- A third party acquires beneficial ownership (or the right to
acquire beneficial ownership) of 20% or more of the outstanding
shares of CFSB common stock;
- The stockholders of CFSB 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 CFSB;
- CFSB'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
CFSB approve the Merger Agreement, or CFSB 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 files with the Securities and Exchange Commission 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
Securities and Exchange Commission with respect to a potential vote
by its stockholders to approve the issuance of shares to be offered
in such an exchange offer);
- CFSB 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: (1) a merger or any similar transaction
involving CFSB or Community First Bank (other than a merger or similar
transaction in which the CFSB stockholders--as of a time immediately
prior to the transaction--own at least 50% of the outstanding CFSB
common stock immediately after the transaction); (2) a purchase, lease,
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or other acquisition of all or substantially all of the assets or
deposits of CFSB or Community First Bank; (3) a purchase or other
acquisition of securities representing 10% or more of the voting power
of CFSB or Community First Bank; or (4) 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 CFSB common stock; or
- CFSB or Community First 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 CFSB recommends that the stockholders of CFSB approve
or accept any Acquisition Transaction, other than the acquisition by
Old Kent; except that for a purchase or other acquisition of CFSB's
voting securities, the third party must agree to acquire more than
25% of the voting power of CFSB's securities.
The Option will expire upon the earliest of: (1) the Effective
Time of the merger; (2) the termination of the Merger Agreement in
accordance with its terms, assuming that the termination occurs prior to
the occurrence of an Initial Triggering Event; or (3) 18 months after
the termination of the Merger Agreement if such termination follows an
Initial Triggering Event. Old Kent may not exercise the Option at any
time when it is in material breach of the Merger Agreement such that
CFSB would be entitled to terminate the Merger Agreement pursuant to its
terms. The Stock Option Agreement automatically terminates if CFSB
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 six 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 CFSB. In addition, CFSB has
granted Old Kent certain registration rights with respect to the shares
of CFSB common stock issued or issuable pursuant to the Option.
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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, CFSB 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 CFSB 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: (1) the price
per share at which a tender or exchange offer has been made for CFSB
common stock; (2) the price per share of CFSB common stock that any
third party is to pay pursuant to an agreement with CFSB; (3) the
highest sale price per share of CFSB common stock within the six-month
period immediately preceding the date that notice to repurchase is
given; or (4) in the event of a sale of all or substantially all of
CFSB'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 CFSB common stock outstanding at the time of
such sale.
The term "Repurchase Event" means the acquisition by any third
party of beneficial ownership of 50% or more of the outstanding shares
of CFSB common stock or the completion of an Acquisition Transaction
where the purchasing entity acquires 50% or more of the voting power of
CFSB or Community First 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 $11.4 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 CFSB has previously repurchased any Option Shares.
If, prior to the expiration of the Option: (1) CFSB enters into a
transaction in which CFSB is not the surviving corporation, (2) certain
fundamental changes in the capital stock of CFSB occur, or (3) CFSB
sells all or substantially all of its or certain of Community First
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
CFSB.
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The Stock Option Agreement provides that neither Old Kent nor CFSB
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 CFSB 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., CFSB) by a third party. Old Kent and CFSB
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 CFSB compared to the cost had Old
Kent and CFSB not entered into the Stock Option Agreement. In addition,
the provisions of the Stock Option Agreement may prevent a potential
purchaser from accounting for its acquisition of CFSB 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 CFSB, even if such a third party was
prepared to offer to pay consideration to CFSB's stockholders that has a
higher current market price than the shares of Old Kent common stock to
be received by CFSB stockholders pursuant to the Merger Agreement.
To the best knowledge of Old Kent and CFSB, 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 CFSB'S STOCKHOLDERS
If the merger is completed, you will become a stockholder of Old
Kent. As an Old Kent stockholder, 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 CFSB's
Certificate of Incorporation and By-Laws. In addition, as a stockholder
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 CFSB (a Delaware corporation).
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The following comparison of the MBCA, the Old Kent Restated
Articles of Incorporation, and Bylaws, on the one hand, and the DGCL,
the CFSB 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 CFSB Certificate of Incorporation, and the CFSB 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 stockholders' participation in certain types
of business combinations or other transactions that might be proposed in
the future, regardless of whether such transactions were favored by a
majority of stockholders, and could enhance the ability of officers and
directors to retain their positions. CFSB's Certificate of
Incorporation and Bylaws contain similar types of provisions.
Nevertheless, material 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," "-
- - Stockholder Nominations," and "-- Stockholder 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 three 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 three. The
current number of directors of Old Kent is 18. As a result of the
classification of Old Kent's Board of Directors, it would normally take
at least two annual meetings of stockholders to effect a change in a
majority of the Board of Directors of Old Kent.
CFSB's Certificate of Incorporation contain similar Board of
Directors related provisions to Old Kent's Restated Articles of
Incorporation. Pursuant to CFSB's Certificate of Incorporation, CSFB's
Board of Directors is divided into three 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 in the Bylaws, but in no event
may the number of directors be less than five, nor more than 15. The
current number of directors of CSFB is six. As a result of the
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classification of CFSB's Board of Directors, it would normally take at
least two annual meetings of stockholders to effect a change in a
majority of the Board of Directors of CSFB.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
CFSB's Certificate of Incorporation provides that, to the fullest
extent permitted by the DGCL, a director of CFSB shall not be liable to
CFSB or any of its stockholders for monetary damages for breach of
fiduciary duty as a director. The DGCL provides that a corporation's
certificate of incorporation may include a provision limiting the
personal liability of a director to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
However, no such provision can eliminate or limit the liability of a
director for: (1) any breach of the director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith
or that involve intentional misconduct or knowing violation of the law;
(3) violation of certain provisions of the DGCL; (4) any transaction
from which the director derived an improper personal benefit; or (5) any
act or omission prior to the adoption of such a provision in the
certificate of incorporation.
Like CFSB's Certificate of Incorporation, Old Kent's Restated
Articles of Incorporation provide that a director of Old Kent shall not
be liable to Old Kent or its stockholders for monetary damages in breach
of the director's fiduciary duties to the fullest extent provided by
law. The MBCA provides that a corporation cannot limit the liability of
a director for: (1) the amount of a financial benefit received by a
director to which he or she is not entitled; (2) the intentional
infliction of harm on the corporation or its stockholders; (3) an
illegal dividend or distribution; or (4) an intentional criminal act.
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: (1) 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;
(2) the director has been determined 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 determination is no
longer subject to a direct appeal; (3) the director has become mentally
incompetent, whether or not so determined by a court, which mental
incompetency directly affects his or her ability as a director of Old
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Kent; (4) 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 (5)
the director's removal is required or recommended by the Federal Reserve
Board. Removal for cause, as cause is defined in (1) or (2) above, must
be approved by vote of a majority of the total number of directors or by
majority vote of stockholders. Removal for cause, as cause is defined
in (3), (4), or (5) above, must be approved by at least 75% of the total
number of directors.
Under CFSB's Certificate 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 mean (1) conduct as a director of the CFSB or
any subsidiary involving willful material misconduct, breach of material
fiduciary duty involving personal profit, or gross negligence as to
material duties; or (2) conduct, whether or not as a director of CFSB or
any subsidiary, involving dishonesty or breach of trust that is
punishable by imprisonment for a term exceeding one year under state or
federal law. Removal for cause must be approved by at least 80% of the
outstanding shares of capital stock entitled to vote in the election of
directors.
STOCKHOLDER NOMINATIONS
Under Old Kent's Restated Articles of Incorporation, director
nominations at any annual meeting of stockholders or at any special
meeting of stockholders called for election of directors (referred to as
an "Election Meeting") may be made by the Board of Directors or by a
stockholder of record 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, at least 20 days prior to the date of an Election Meeting.
A stockholder of record may make a nomination at an Election
Meeting if, and only if, such stockholder has delivered a notice to the
Secretary of Old Kent setting forth with respect to each proposed
nominee: (1) the name, age, business address, and residence address of
the nominee; (2) the principal occupation or employment of the nominee;
(3) the number of shares of capital stock of Old Kent that are
beneficially owned by the nominee; (4) a statement that the nominee is
willing to be nominated; and (5) such other information concerning the
nominee as would be required under the rules of the Securities and
Exchange Commission 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 seven days following the date of notice
of the Election Meeting in the case of a special meeting.
-48-
Under CFSB's Certificate of Incorporation, a stockholder may
nominate an individual for director at any annual meeting of
stockholders or at any special meeting of stockholders 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.
A stockholder may make a nomination at a meeting if, and only if,
such stockholder has delivered a notice to the Secretary of CFSB setting
forth with respect to each proposed nominee: (1) the name, age, business
address, and, if known, residence address of the nominee; (2) the
principal occupation or employment of the nominee; (3) the number of
shares of capital stock of CFSB that are beneficially owned by the
nominee; and (4) any other information reasonably requested by CFSB.
The notice must be delivered at least 30 days prior but not more than 60
days prior to the date of the meeting, unless less than 40 days notice
of a meeting is given, in which case the stockholder has ten days in
which to submit the nomination from the time the meeting notice was
mailed to the stockholder.
STOCKHOLDER RIGHTS PLAN
The Board of Directors of Old Kent has adopted a stockholder rights
plan. This plan is designed to protect the stockholders 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 stockholders.
Each full Old Kent Right, when exercisable, entitles a stockholder
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 (1) 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, (2) an Acquiring Person
commenced a tender offer or exchange offer that would result in the
Acquiring Person owning 15% or more of the outstanding shares of Old
Kent common stock, or (3) 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, (1) Old Kent was
the surviving corporation in a merger with an Acquiring Person and Old
Kent common stock was not changed or exchanged, (2) 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, (3) an Acquiring
Person was to become the beneficial owner of more than 15% of the then
outstanding shares of Old Kent common stock, (4) a person had been or
-49-
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.
CFSB has not adopted a similar stockholder rights plan. However,
CFSB's Certificate of Incorporation does limit the voting rights of
stockholders that become beneficial owners of more than 10% of any class
of equity security of CFSB. For each vote in excess of 10% the
stockholders would otherwise be entitled to cast, the record holders of
such stock will only be entitled to cast one-hundredth of a vote.
Certain parties, such as employee benefit plans or underwriters, are
exempted from this restriction.
STATE ANTI-TAKEOVER LAWS
Certain provisions of the MBCA 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 stockholders and no less than
two-thirds of the votes of noninterested stockholders 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 stockholder" or certain
"affiliates." An "interested stockholder" 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.
The supermajority vote required by the Fair Price Act does not
apply to business combinations that satisfy certain conditions. These
conditions include, among others: (1) the purchase price to be paid for
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the shares of the corporation in the business combination must be at
least equal to the highest of either (a) the market value of the shares
or (b) the highest per share price paid by an interested stockholder
within the preceding two-year period or in the transaction in which the
stockholder became an interested stockholder, whichever is higher; and
(2) once becoming an interested stockholder, 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 stockholder
becoming an interested stockholder 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 stockholder 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
stockholder first became an interested stockholder.
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 stockholders. 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 stockholders (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 stockholders except the
acquiring person.
Section 203 of the DGCL prohibits a "business combination" (as
defined in Section 203, generally including mergers, sales and leases of
assets, issuances of securities and similar transactions) by CFSB or a
subsidiary with an "interested stockholder" (as defined in Section 203,
generally the beneficial owner of 15% or more of CFSB' voting stock)
within three years after the person or entity becomes an interested
stockholder, unless (1) 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
was approved by the CFSB Board, (2) upon the consummation of the
transaction in which the person or entity became an interested
stockholder, the interested stockholder holds at least 85% of the voting
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stock of CFSB (excluding, for purposes of determining the number of
shares outstanding, shares held by persons who are both officers and
directors of CFSB and shares held by certain employee benefit plans), or
(3) the business combination is approved by the CFSB Board and by the
holders of at least two-thirds of the outstanding voting stock of CFSB,
excluding shares held by the interested stockholder. In connection with
approving the Merger Agreement, the CFSB 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 stockholder 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 stockholders 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 stockholder 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
stockholders as provided in the MBCA, without regard to the exception to
a stockholder'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: (1) first elected or appointed as a
director prior to April 17, 1989; or (2) 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
-52-
Stock Exchange), designated as a national market system security on The
Nasdaq Stock Market, or 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 CFSB's common stock is designated as a
national market system security on The Nasdaq Stock Market, the "market
out" exception applies to CFSB stockholders. Accordingly, appraisal
rights are not available to CFSB 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 can 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 must then evaluate the proposal and determine whether the
proposal is in the best interests of Old Kent and its stockholders. In
evaluating a proposed offer to determine whether it would be in the best
interests of Old Kent and its stockholders, the Board of Directors, in
exercising its judgment, may consider all facts that it deems relevant
including, without limitation: (1) the fairness of the consideration to
be received by Old Kent's stockholders under the proposed offer; (2) 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; (3) 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; (4) the business,
financial condition, safety, soundness, and earning prospects of the
offering party; (5) the competence, experience, and integrity of the
offering party and its management; and (6) the intentions of the
offering party regarding the use of the assets of Old Kent to finance
the transaction.
CFSB's Certificate of Incorporation includes a similar provision
requiring the Board of Directors to consider, in its evaluation of
certain business combinations or tender or exchange offers, the
following: (1) the social and economic effects of the transaction on
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CFSB and its subsidiaries, employees, depositors, loan and other
customers, creditors and the communities in which CFSB and its
subsidiaries operate; (2) the business and financial condition and
earnings prospects of the acquiring party; and (3) the competence,
experience and integrity of the acquiring party and its management.
OLD KENT'S QUOTATION ON THE NEW YORK STOCK EXCHANGE
Old Kent common stock is quoted on the New York Stock Exchange.
CFSB common stock is listed on The Nasdaq Stock Market.
RESTRICTIONS ON CFSB AFFILIATES
All shares of Old Kent common stock received by CFSB 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 (the
"Securities Act")) of CFSB prior to the merger may only be resold in
transactions permitted by the resale provisions of Rule 145 under the
Securities Act or as otherwise permitted under the Securities Act.
Persons who may be deemed to be affiliates of CFSB generally include
individuals or entities that control, are controlled by, or are under
common control with, CFSB and may include certain officers, directors,
and principal stockholders of CFSB.
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 CFSB 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.
In addition, pursuant to the Merger Agreement, Old Kent and CFSB 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 CFSB common stock, respectively, during any
period in which such a transfer would disqualify the merger from
pooling-of-interests accounting treatment.
Each affiliate of CFSB 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 CFSB 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,
-54-
any third party concerning a tender offer, merger, consolidation, share
exchange, or other business combination involving CFSB or concerning the
offer, sale, or disposition of any material assets of CFSB.
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 regulations promulgated
thereunder, existing administrative interpretations, and court
decisions. 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, or who are financial institutions, or
tax-exempt organizations. This discussion also assumes that you hold
your shares of CFSB common stock as capital assets within the meaning of
Section 1221 of the Internal Revenue Code.
It is a condition to the obligations of CFSB 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 CFSB believe, based on the tax opinion of
Warner Norcross & Judd LLP, that the merger will have the following
federal income tax consequences;
- You will not recognize any gain or loss for federal income tax
purposes if you exchange your CFSB 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 CFSB 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 CFSB common stock.
In addition: (1) the merger will constitute a "reorganization"
within the meaning of Section 368(a)(1) of the Code and Old Kent and
CFSB will each be a "party to a reorganization" within the meaning of
Section 368(b); (2) the basis of the CFSB assets in the hands of Old
Kent will be the same as the basis of those assets in the hands of CFSB
-55-
immediately prior to the reorganization; (3) no gain or loss will be
recognized to Old Kent on the receipt by Old Kent of the assets of CFSB in
exchange for Old Kent common stock and the assumption by Old Kent of the
liabilities of CFSB; and (4) the holding period of the assets of CFSB in
the hands of Old Kent will include the holding period during which such
assets were held by CFSB.
The tax opinion will assume the absence of changes in existing
facts and will rely on assumptions, representations, and covenants,
including those contained in certificates of officers of Old Kent and
CFSB. 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.
Opinions of tax counsel do not guarantee favorable tax treatment.
There is a risk that the Internal Revenue Service might determine that
Old Kent, CFSB, 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 CFSB a letter to CFSB from its independent public
accountants, dated as of the date of the closing, to the effect that
CFSB is eligible to participate in a business combination to be treated
as a pooling-of-interests. Old Kent must also receive from its
independent public 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 CFSB 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 CFSB 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.
-56-
APPRAISAL RIGHTS
You are not entitled to exercise dissenter's or appraisal rights as
a result of the merger or to demand payment for your shares under
Delaware law.
VOTING AND MANAGEMENT INFORMATION
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF CFSB
CFSB common stock is the only class of securities entitled to vote
at the special meeting. Stockholders of record as of the close of
business on April 22, 1999 are entitled to one vote for each share then
held. As of April 22, 1999, CFSB had 8,437,396 shares of its common
stock issued and outstanding.
Persons and groups owning in excess of 5% of CFSB's common stock
are required to file certain reports regarding such ownership pursuant
to the Securities Exchange Act of 1934. The following tables set forth,
as of April 22, 1999, the shares of common stock beneficially owned
by each of the directors and executive officers of CFSB, all directors
and officers of the CFSB as a group, and each person who was the
beneficial owner of more than 5% of the CFSB's outstanding shares of
common stock at April 22, 1999, based on information supplied by
CFSB's transfer agent and filings made pursuant to the Securities
Exchange Act of 1934 as to which CFSB had information on April 22,
1999. Management knows of no person other than those set forth below
who owned more than 5% of CFSB's outstanding shares of common stock on
April 22, 1999.
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OLD KENT
COMMON STOCK <F2>
------------------------
CFSB COMMON STOCK <F1> TO BE
---------------------------------------- RECEIVED PERCENT
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT IN THE OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP<F3> OF CLASS MERGER <F4> CLASS <F5>
------------------- --------------------------- -------- ----------- ----------
CFSB Bancorp, Inc.
Employee Stock Ownership
Plan <F6>
112 East Allegan Street
Lansing, Michigan 48933 24,574 <F*> 15,290 <F*>
Robert H. Becker
112 East Allegan Street
Lansing, Michigan 48933 556,775 6.60% 346,425 <F*>
(Footnotes begin following the next table.)
The following table sets forth certain information concerning the
number of shares of CFSB common stock held as of April 22, 1999, by
each of CFSB's directors, each of CFSB's officers whose compensation
exceeded $100,000 in 1998, and all of CFSB's directors and executive
officers as a group:
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OLD KENT
COMMON STOCK <F2>
------------------------
CFSB COMMON STOCK <F1> TO BE
---------------------------------------- RECEIVED PERCENT
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT IN THE OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP<F3> OF CLASS MERGER <F4> CLASS <F5>
------------------- --------------------------- -------- ----------- ----------
Robert H. Becker <F7> 556,775 6.60% 346,425 <F*>
John W. Abbott <F7> 125,711 1.49 78,217 <F*>
Jack G. Nimphie <F7> 52,239 <F*> 32,503 <F*>
James L. Reutter 156,964 1.86 97,663 <F*>
Cecil Mackey 35,058 <F*> 21,813 <F*>
David H. Brogan 83,238 <F*> 51,791 <F*>
William C. Hollister 105,310 1.25 65,524 <F*>
J. Paul Thompson, Jr. 16,386 <F*> 10,195 <F*>
Henry W. Wolcott, IV 5,067 <F*> 3,153 <F*>
Directors and Officers
as a group (13 persons) 1,188,368 <F7> 14.05% 739,403 <F*>
- -------------------
<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 0.6222 shares of Old Kent
common stock for each share of CFSB 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
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reason of joint ownership, trust or other contract or property
right, and shares 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 of CFSB stock held in
fiduciary capacities by Community First 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 CFSB 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 receive in the
merger. It does not include any shares of Old Kent common stock
that may have been previously owned by the named individual. These
percentages were computed with reference to a total of 109,121,257
shares of Old Kent common stock outstanding, representing the sum
of 103,990,035 shares outstanding as of February 19, 1999, and
anticipated 5,131,222 shares to be issued by Old Kent in the
merger. The computation does not take fractional shares into
account.
<F6> Includes 24,574 shares held in a suspense account for future
allocation pursuant to the terms of the Employee Stock Ownership
Plan ("ESOP"), among participating employees as the loans used to
purchase the shares are repaid, and excludes 681,637 shares
allocated to participants. The ESOP Trustee votes all allocated
shares as instructed by the participants, and the ESOP Trustee
votes all unallocated shares and all shares for which no
instructions have been received as directed by the ESOP Committee
or the Board of Directors. See footnote 7 below.
<F7> Includes 109,183 shares held by the ESOP but allocated to certain
directors and officers, and excludes 24,574 shares held by the
ESOP, that have not been allocated to any participating employees
as of April 22, 1999, and over which shares certain directors
and officers of the CFSB, as members of the ESOP Committee, and as
ESOP Trustee, exercise shared voting and investment power.
Each of the following officers has the voting power but no
investment power for the following number of shares held by the
ESOP:
Robert H. Becker 39,509
John W. Abbott 30,066
Jack G. Nimphie 18,187
</FN>
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of CFSB's management and its Board of Directors may
be deemed to have certain interests in the merger in addition to their
interests as stockholders of CFSB generally. CFSB's Board of Directors
was aware of these interests and considered them, among other matters,
in unanimously approving the Merger Agreement.
CHANGE-IN-CONTROL PAYMENTS
Pursuant to the terms of existing employment agreements between
Community First Bank and each of Robert H. Becker, President and Chief
Executive Officer and John W. Abbott, Executive Vice President and Chief
Operating Officer, in the event of their termination of employment in
connection with, or within one year after, any change in control of CFSB
or Community First Bank, they are entitled to receive a sum equal to
2.99 times the average annual compensation they received during the
five-year period immediately prior to the date of change in control.
Old Kent and Messrs. Becker and Abbott agreed to terminate their
employment with CFSB upon the completion of the merger. As a result,
Messrs. Becker and Abbott will become entitled to receive such payments.
Such payments will amount to approximately $945,000 for Mr. Becker and
approximately $530,000 for Mr. Abbott. In connection with the execution
of the Merger Agreement, both Mr. Becker and Mr. Abbott also executed
amendments to their respective employment agreements in which they
agreed to refrain from competing with Old Kent for a three year period
following the Effective Time, although Mr. Abbott's non-compete
agreement is significantly more limited than Mr. Becker's.
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE
Following the Effective Time, Old Kent has agreed to indemnify,
defend and hold harmless, and advance expenses for present and former
directors and officers of CFSB and its subsidiaries against all losses,
expenses, claims, damages or liabilities arising from any acts or
omissions by such person occurring prior to the Effective Time to the
same extent they are indemnified under CFSB's Certificate of
Incorporation and Bylaws in effect at the date of the Merger Agreement
and applicable state and federal law. For the specific terms of
indemnification and insurance, see "THE MERGER AND MERGER AGREEMENT--
Insurance and Indemnification" above.
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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 financial statements of CFSB 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 KPMG LLP, independent public accountants, and are incorporated by
reference herein in reliance upon the authority of said firm as experts
in giving said reports.
STOCKHOLDER PROPOSALS
If CFSB stockholders adopt the Merger Agreement and the merger is
completed, you will become a stockholder of Old Kent and there will be
no annual meeting of CFSB stockholders in 2000. If the merger is not
completed, proposals of CFSB stockholders intended to be presented at
the annual meeting of stockholders in 2000 must be received by CFSB for
consideration for inclusion in its proxy statement on or before November
19, 1999.
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 CFSB by its counsel, Housley
Kantarian & Bronstein, P.C. of Washington, D.C. and Foster, Swift,
Collins & Smith, P.C.
As of March 8, 1999, partners in and attorneys employed by or
associated with Warner Norcross & Judd LLP and their associates were
beneficial owners of a total of approximately 418,968 shares of Old Kent
common stock having an approximate aggregate market value of $19,220,157
and approximately 27,355 shares of CFSB common stock having an
approximate aggregate market value of $748,843 as of that date. Shares
reported as beneficially owned include all shares as to which such
-62-
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.
CFSB has supplied all such information relating to CFSB and Feldman
Financial has supplied all such information relating to Feldman
Financial.
WHERE YOU CAN FIND MORE INFORMATION
Old Kent has filed a registration statement on Form S-4 to register
with the Securities and Exchange Commission 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 Securities and Exchange Commission 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 CFSB are subject to the informational requirements of
the Exchange Act. Accordingly, each files annual, quarterly and current
reports, proxy statements, and other information with the SEC. You may
read and copy any reports, statements, or other information that Old
Kent or CFSB files at the SEC's Public Reference Room at 450 Fifth
Street N.W., Washington, D.C. You may call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Old Kent's and
CFSB's SEC filings are also available to the public from commercial
document retrieval services and at the web site maintained by the
Securities and Exchange Commission at "http://www.sec.gov."
The Securities and Exchange Commission allows Old Kent and CFSB to
incorporate by reference information into this prospectus and proxy
statement. This means that Old Kent and CFSB 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 CFSB have previously filed with the
SEC. These documents contain important information about Old Kent and
CFSB and their finances.
-63-
OLD KENT SEC FILINGS (FILE NO. 0-14591) PERIOD
--------------------------------------- ------
Annual Report on Form 10-K Year ended December 31, 1998
Current Reports on Form 8-K Filed on February 28, March 15, and March 22
and April 20, 1999
Registration Statement on Form 8-A Filed on November 2, 1998
Registration Statement on Form 8-B Filed on May 31, 1984
CFSB SEC FILINGS (FILE NO. 2-94209) PERIOD
----------------------------------- ------
Annual Report on Form 10-K Year ended December 31, 1998
Current Reports on Form 8-K Filed on March 1 and April 15, 1999
The documents subsequently filed by Old Kent and CFSB with the
Securities and Exchange Commission 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
CFSB 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 CFSB Bancorp, Inc.
Attn: Mary E. Tuuk, Secretary Attn: John W. Abbott, Secretary
111 Lyon Street N.W. 112 East Allegan Street
Grand Rapids, Michigan 49503 Lansing, Michigan 48933
Tel: (616) 771-5000 Tel: (517) 371-2911
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY JUNE 1, 1999 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 CFSB has authorized anyone to provide you with
information that is different from what is contained in this prospectus
and proxy statement.
-64-
This prospectus and proxy statement is dated May 4, 1999. 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.
FORWARD-LOOKING STATEMENTS
This prospectus and proxy statement and the documents incorporated in
this prospectus and proxy statement by reference contain forward-looking
statements that are based on management's beliefs, assumptions, current
expectations, estimates, and projections about the financial services
industry, the economy, and about Old Kent and CFSB themselves. Words such
as "anticipates," "believes," "estimates," "expects," "forecasts,"
"intends," "is likely," "plans," "projects," variations of such words and
similar expressions are intended to identify such forward-looking
statements. Assessments concerning Year 2000 readiness are necessarily
statements of belief as to the outcome of future events, based in part on
information provided by vendors and others that Old Kent and CFSB have not
independently verified. 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, implied, or forecasted in
such forward-looking statements.
Future factors that could cause a difference between an ultimate
actual outcome and a preceding forward-looking statement include 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 regulations; changes in tax laws; changes
in prices, levies, and assessments; the impact of technological advances;
governmental and regulatory policy changes; the outcomes of pending and
future litigation and contingencies; trends in customer behaviors as well
as their ability to repay loans; the ability of the companies on which Old
Kent and CFSB rely to make their computer systems Year 2000 compliant; the
ability to locate, correct, and convert all relevant computer codes and
data; the vicissitudes of the national economy; and expected cost savings
from the merger of CFSB into Old Kent and other mergers and acquisitions in
which Old Kent is involved might not be fully realized within the expected
time frame. Neither Old Kent nor CFSB undertakes any obligation to update,
amend or clarify forward-looking statements, whether as a result of new
information, future events, or otherwise.
-65-
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BETWEEN
CFSB BANCORP, INC.
AND
OLD KENT FINANCIAL CORPORATION
Dated as of February 24, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I - THE TRANSACTION. . . . . . . . . . . . . . . . . . . . . . .A-1
1.1 MERGER OF MERGERSUB WITH AND INTO CFSB . . . . . . . . . . . .A-2
1.2 THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . .A-2
1.3 EFFECTIVE TIME OF THE MERGER . . . . . . . . . . . . . . . . .A-2
1.4 BANK CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . .A-2
1.5 ADDITIONAL ACTIONS . . . . . . . . . . . . . . . . . . . . . .A-2
1.6 SURVIVING CORPORATION. . . . . . . . . . . . . . . . . . . . .A-2
ARTICLE II - CONVERSION AND EXCHANGE OF SHARES . . . . . . . . . . . . .A-3
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
2.7 ASSUMPTION OF STOCK OPTIONS. . . . . . . . . . . . . . . . . .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 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . .A-9
3.4 CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . .A-9
3.5 OLD KENT COMMON STOCK. . . . . . . . . . . . . . . . . . . . A-10
3.6 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . A-10
3.7 ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . A-11
3.8 ABSENCE OF MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . A-11
3.9 ABSENCE OF LITIGATION. . . . . . . . . . . . . . . . . . . . A-11
3.10 REGULATORY FILINGS . . . . . . . . . . . . . . . . . . . . . A-11
3.11 REGISTRATION STATEMENT, ETC. . . . . . . . . . . . . . . . . A-11
3.12 INVESTMENT BANKERS AND BROKERS . . . . . . . . . . . . . . . A-12
3.13 ACCOUNTING AND TAX TREATMENT . . . . . . . . . . . . . . . . A-12
3.14 AGREEMENTS WITH BANK REGULATORS. . . . . . . . . . . . . . . A-12
3.15 EVENTS SINCE DECEMBER 31, 1998 . . . . . . . . . . . . . . . A-12
3.16 RESERVE FOR LOAN LOSSES. . . . . . . . . . . . . . . . . . . A-13
3.17 PUBLIC COMMUNICATIONS; SECURITIES OFFERING . . . . . . . . . A-13
3.18 YEAR 2000 COMPLIANCE . . . . . . . . . . . . . . . . . . . . A-13
3.19 TRUE AND COMPLETE INFORMATION. . . . . . . . . . . . . . . . A-13
ARTICLE IV - CFSB'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . A-13
4.1 AUTHORIZATION, NO CONFLICTS, ETC.. . . . . . . . . . . . . . A-13
4.2 ORGANIZATION AND GOOD STANDING . . . . . . . . . . . . . . . A-14
4.3 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . A-14
4.4 CAPITAL STOCK. . . . . . . . . . . . . . . . . . . . . . . . A-15
A-i
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-16
4.10 CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . A-17
4.11 REGULATORY FILINGS . . . . . . . . . . . . . . . . . . . . . A-17
4.12 REGISTRATION STATEMENT, ETC. . . . . . . . . . . . . . . . . A-17
4.13 AGREEMENTS WITH BANK REGULATORS. . . . . . . . . . . . . . . A-17
4.14 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . A-18
4.15 TITLE TO PROPERTIES. . . . . . . . . . . . . . . . . . . . . A-18
4.16 CONDITION OF REAL PROPERTY . . . . . . . . . . . . . . . . . A-18
4.17 REAL AND PERSONAL PROPERTY LEASES. . . . . . . . . . . . . . A-19
4.18 ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . A-19
4.19 REQUIRED LICENSES, PERMITS, ETC. . . . . . . . . . . . . . . A-19
4.20 CERTAIN EMPLOYMENT MATTERS . . . . . . . . . . . . . . . . . A-20
4.21 EMPLOYEE BENEFIT PLANS . . . . . . . . . . . . . . . . . . . A-20
4.22 ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . A-22
4.23 DUTIES AS FIDUCIARY. . . . . . . . . . . . . . . . . . . . . A-23
4.24 INVESTMENT BANKERS AND BROKERS . . . . . . . . . . . . . . . A-23
4.25 CFSB-RELATED PERSONS . . . . . . . . . . . . . . . . . . . . A-23
4.26 CHANGE IN BUSINESS RELATIONSHIPS . . . . . . . . . . . . . . A-23
4.27 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . A-24
4.28 BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . A-24
4.29 LOAN GUARANTEES. . . . . . . . . . . . . . . . . . . . . . . A-24
4.30 EVENTS SINCE DECEMBER 31, 1998 . . . . . . . . . . . . . . . A-24
4.31 RESERVE FOR LOAN LOSSES. . . . . . . . . . . . . . . . . . . A-25
4.32 LOAN ORIGINATION AND SERVICING . . . . . . . . . . . . . . . A-25
4.33 PUBLIC COMMUNICATIONS; SECURITIES OFFERING . . . . . . . . . A-25
4.34 NO INSIDER TRADING . . . . . . . . . . . . . . . . . . . . . A-25
4.35 DATA PROCESSING CONTRACTS. . . . . . . . . . . . . . . . . . A-25
4.36 YEAR 2000 COMPLIANCE . . . . . . . . . . . . . . . . . . . . A-25
4.37 ACCOUNTING AND TAX TREATMENT . . . . . . . . . . . . . . . . A-26
4.38 TRUE AND COMPLETE INFORMATION. . . . . . . . . . . . . . . . A-26
ARTICLE V - COVENANTS PENDING CLOSING. . . . . . . . . . . . . . . . . A-26
5.1 DISCLOSURE STATEMENTS; ADDITIONAL INFORMATION. . . . . . . . A-26
5.2 CHANGES AFFECTING REPRESENTATIONS. . . . . . . . . . . . . . A-26
5.3 CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME--CFSB . . . . A-27
5.4 APPROVAL OF PLAN OF MERGER . . . . . . . . . . . . . . . . . A-29
5.5 REGULAR DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . A-30
5.6 DATA PROCESSING AND RELATED CONTRACTS. . . . . . . . . . . . A-30
5.7 AFFILIATES -- COMPLIANCE WITH ACCOUNTING AND SECURITIES
RULES. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30
5.8 INDEMNIFICATION AND INSURANCE. . . . . . . . . . . . . . . . A-31
5.9 EXCLUSIVE COMMITMENT . . . . . . . . . . . . . . . . . . . . A-32
5.10 REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . A-32
A-ii
5.11 OTHER FILINGS. . . . . . . . . . . . . . . . . . . . . . . . A-33
5.12 MISCELLANEOUS AGREEMENTS AND CONSENTS. . . . . . . . . . . . A-33
5.13 ACCESS AND INVESTIGATION . . . . . . . . . . . . . . . . . . A-33
5.14 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . A-33
5.15 ENVIRONMENTAL INVESTIGATION. . . . . . . . . . . . . . . . . A-34
5.16 ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-35
5.17 TERMINATION OF 401(K) PLAN . . . . . . . . . . . . . . . . . A-35
5.18 EMPLOYMENT AMENDMENTS. . . . . . . . . . . . . . . . . . . . A-35
5.19 ACCOUNTING AND TAX TREATMENT . . . . . . . . . . . . . . . . A-35
5.20 PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . A-35
ARTICLE VI - CONDITIONS PRECEDENT TO OLD KENT'S OBLIGATIONS. . . . . . A-35
6.1 RENEWAL OF REPRESENTATIONS AND WARRANTIES, ETC.. . . . . . . A-36
6.2 OPINION OF LEGAL COUNSEL . . . . . . . . . . . . . . . . . . A-36
6.3 REQUIRED REGULATORY APPROVALS. . . . . . . . . . . . . . . . A-36
6.4 STOCKHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . A-36
6.5 ORDER, DECREE, ETC.. . . . . . . . . . . . . . . . . . . . . A-36
6.6 PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . A-36
6.7 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . A-36
6.8 REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . A-37
6.9 CERTIFICATE AS TO OUTSTANDING SHARES . . . . . . . . . . . . A-37
6.10 CHANGE OF CONTROL WAIVERS. . . . . . . . . . . . . . . . . . A-37
6.11 POOLING ASSURANCES . . . . . . . . . . . . . . . . . . . . . A-37
6.12 NO DEFAULT UNDER ESOP LOAN AGREEMENT . . . . . . . . . . . . A-37
6.13 EMPLOYMENT AMENDMENTS. . . . . . . . . . . . . . . . . . . . A-37
ARTICLE VII - CONDITIONS PRECEDENT TO CFSB'S OBLIGATIONS . . . . . . . A-37
7.1 RENEWAL OF REPRESENTATIONS AND WARRANTIES, ETC.. . . . . . . A-38
7.2 OPINION OF LEGAL COUNSEL . . . . . . . . . . . . . . . . . . A-38
7.3 REQUIRED REGULATORY APPROVALS. . . . . . . . . . . . . . . . A-38
7.4 STOCKHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . A-38
7.5 ORDER, DECREE, ETC.. . . . . . . . . . . . . . . . . . . . . A-38
7.6 TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . A-38
7.7 REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . A-39
7.8 FAIRNESS OPINION . . . . . . . . . . . . . . . . . . . . . . A-39
7.9 LISTING OF SHARES. . . . . . . . . . . . . . . . . . . . . . A-39
7.10 EXCHANGE AGENT CERTIFICATE . . . . . . . . . . . . . . . . . A-39
ARTICLE VIII - ABANDONMENT OF MERGER . . . . . . . . . . . . . . . . . A-39
8.1 MUTUAL ABANDONMENT . . . . . . . . . . . . . . . . . . . . . A-39
8.2 UPSET DATE . . . . . . . . . . . . . . . . . . . . . . . . . A-39
8.3 OLD KENT'S RIGHTS TO TERMINATE . . . . . . . . . . . . . . . A-39
8.4 CFSB'S RIGHTS TO TERMINATE . . . . . . . . . . . . . . . . . A-40
8.5 EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . A-40
ARTICLE IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . A-40
9.1 "MATERIAL ADVERSE EFFECT" DEFINED. . . . . . . . . . . . . . A-40
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS . A-41
A-iii
9.3 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . A-41
9.4 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
9.5 SPECIFIC ENFORCEMENT . . . . . . . . . . . . . . . . . . . . A-41
9.6 JURISDICTION; VENUE; JURY. . . . . . . . . . . . . . . . . . A-41
9.7 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
9.8 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
9.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . A-42
9.10 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . A-42
9.11 THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . . . A-42
9.12 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . A-42
9.13 FURTHER ASSURANCES; PRIVILEGES . . . . . . . . . . . . . . . A-42
9.14 HEADINGS, ETC. . . . . . . . . . . . . . . . . . . . . . . . A-43
9.15 CALCULATION OF DATES AND DEADLINES.. . . . . . . . . . . . . A-43
9.16 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . A-43
DEFINITIONS
- -----------
401(K) PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-35
AMEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
BANK CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . .A-2
BANK CONSOLIDATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . .A-2
BANKING CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-2
BUSINESS COMBINATION . . . . . . . . . . . . . . . . . . . . . . . . . A-32
CALL REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
CERTIFICATES OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . .A-2
CFSB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
CFSB AFFILIATE AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . A-33
CFSB BANK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
CFSB COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . .A-3
CFSB DISCLOSURE STATEMENT. . . . . . . . . . . . . . . . . . . . . . . A-13
CFSB'S FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . A-15
CFSB'S LEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
CFSB'S REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . A-18
CFSB-RELATED PERSON. . . . . . . . . . . . . . . . . . . . . . . . . . A-23
CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-2
CONSTITUENT CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . .A-1
CONTROL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
DESIGNATED CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . A-14
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
DIVIDEND LAG PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . A-30
EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-2
EMPLOYEE BENEFIT PLAN. . . . . . . . . . . . . . . . . . . . . . . . . A-20
EMPLOYMENT AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . A-35
EMPLOYMENT-RELATED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . A-20
A-iv
ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
ENVIRONMENTAL RISK . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
ESOP LOAN AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . A-35
EXCHANGE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
EXCHANGE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-6
EXCHANGE RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-3
FDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-9
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
FEDERAL BANK HOLDING COMPANY ACT . . . . . . . . . . . . . . . . . . . .A-9
FEDERAL RESERVE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . .A-9
FELDMAN FINANCIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
FIB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12
FIDUCIARY EVENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-29
FINAL INDEX PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
FINAL OLD KENT PRICE . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
FLOOR OLD KENT PRICE . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
HAZARDOUS SUBSTANCE. . . . . . . . . . . . . . . . . . . . . . . . . . A-22
HOLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-9
INDEMNIFIED PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
INDEX COMPANIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
INITIAL INDEX PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
INITIAL OLD KENT PRICE . . . . . . . . . . . . . . . . . . . . . . . . .A-4
INSURANCE AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
INTERNAL REVENUE CODE. . . . . . . . . . . . . . . . . . . . . . . . . .A-1
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
MATERIAL ADVERSE EFFECT. . . . . . . . . . . . . . . . . . . . . . . . A-41
MERGER.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
MERGERSUB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
MICHIGAN ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
NOTIFYING PARTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
OLD CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-6
OLD KENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
OLD KENT COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . .A-3
OLD KENT DISCLOSURE STATEMENT. . . . . . . . . . . . . . . . . . . . . .A-8
OLD KENT RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-9
OLD KENT RIGHTS AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . .A-9
OLD KENT'S FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . A-10
OPTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
OPTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-7
OTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
PHASE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
A-v
PHASE II AND III WORK. . . . . . . . . . . . . . . . . . . . . . . . . A-34
PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
PRICING PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
PROPOSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-32
PROSPECTUS AND PROXY STATEMENT . . . . . . . . . . . . . . . . . . . . A-12
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . A-11
SAVINGS BANK ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-9
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-8
SPECIAL PRO-RATA DIVIDEND. . . . . . . . . . . . . . . . . . . . . . . A-30
STOCKHOLDERS' MEETING. . . . . . . . . . . . . . . . . . . . . . . . . A-29
SUPERIOR PROPOSAL. . . . . . . . . . . . . . . . . . . . . . . . . . . A-30
SURVIVING CORPORATION. . . . . . . . . . . . . . . . . . . . . . . . . .A-1
TRANSACTION DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . A-11
UNEXERCISED OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .A-7
UPSET CONDITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
WEIGHTED AVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4
YEAR 2000 ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
YEAR 2000 PROBLEM. . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
YEAR 2000 READY. . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
EXHIBITS
- --------
A - CFSB Stock Option Agreement (included as Appendix B)
B - Index Companies
C - Schedule of Additional Information (omitted)
D - Form of CFSB's Affiliate Agreement (omitted)
E - Form of CFSB's Counsel's Legal Opinion (omitted)
F - Form of Old Kent's Counsel's Legal Opinion (omitted)
A-vi
AGREEMENT AND PLAN OF MERGER
This Amended and Restated Agreement and Plan of Merger is made as of
February 24, 1999, between CFSB BANCORP, INC., a Delaware corporation head-
quartered at 112 E. Allegan Street, Lansing, Michigan 48933 ("CFSB"),
OLD KENT FINANCIAL CORPORATION, a Michigan corporation headquartered at One
Vandenberg Center, 111 Lyon Street, N.W., Grand Rapids, Michigan 49503
("OLD KENT"), and OKFC ACQUISITION CORPORATION, a Michigan corporation and
wholly owned subsidiary of Old Kent headquartered at One Vandenberg Center,
111 Lyon Street, N.W., Grand Rapids, Michigan 49503 ("MERGERSUB").
Old Kent and CFSB desire that CFSB and its subsidiaries become affili-
ated with Old Kent. The affiliation would be effected through the merger
of MergerSub with and into CFSB in accordance with this Agreement and 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."
Old Kent has formed MergerSub solely for the purpose of effectuating
the Merger. As soon as reasonably practicable following the consummation of
the Merger, Old Kent will cause CFSB to be liquidated and dissolved. As
soon as reasonably practicable thereafter, CFSB's wholly owned subsidiary,
Community First Bank ("CFSB 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 in-
tended that, for accounting and financial reporting purposes, the Merger
shall be accounted for as a pooling-of-interests.
On February 24, 1999, Old Kent and CFSB entered to an Agreement and Plan
of Merger (the "ORIGINAL AGREEMENT"). Subsequently, Old Kent and CFSB
determined that it was in their respective best interests and in the
interests of their respective shareholders to amend such Agreement and
restate in one document the text of the Original Agreement as so amended.
Therefore, as of April 20, 1999, the parties have executed this Amended and
Restated Agreement and Plan of Merger (as so amended, the "PLAN OF MERGER")
to replace and supercede the Original Agreement.
As a condition to, and concurrently with the execution of, the Original
Agreement, CFSB and Old Kent have entered 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 MERGER OF MERGERSUB WITH AND INTO CFSB. At the Effective Time,
MergerSub shall be merged with and into CFSB. CFSB and MergerSub 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 CFSB (the "SURVIVING CORPORATION"). 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 Delaware.
1.2 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, 111 Lyon Street, N.W., Grand Rapids, Michigan, commencing at
11 a.m. on the earliest 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 statu-
tory waiting periods; and (b) adoption of this Plan of Merger by CFSB's
stockholders. Scheduling or commencing the Closing shall not, however,
constitute a waiver of the conditions precedent of either Old Kent and
MergerSub, or CFSB, as set forth in Articles VI and VII, respectively.
Upon completion of the Closing, CFSB and MergerSub 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 on
the next business day, or other mutually agreed upon date, 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 speci-
fied in the Certificates of Merger, but not later than the next business
day, or other mutually agreed upon date, following the Closing.
1.4 BANK CONSOLIDATION. After the Effective Time, Old Kent intends
to consolidate CFSB 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 CONSOLI-
DATION AGREEMENT"), in the form required by the Michigan Banking Code of
1969, as amended (the "BANKING CODE"), and by other applicable laws, con-
taining terms and conditions, not inconsistent with this Plan of Merger, as
A-2
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. To
obtain the necessary regulatory approval for the Bank Consolidation to
occur immediately after the Effective Time, CFSB and CFSB Bank shall each
execute and deliver the Bank Consolidation Agreement and take other reason-
ably required or convenient steps prior to the Effective Time to effect the
Bank Consolidation. The effectiveness of the 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 CFSB Bank, to approve
the Bank Consolidation Agreement immediately after the Effective Time.
1.5 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 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. MergerSub hereby grants to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such deeds, as-
signments, and assurances and to do all acts necessary, proper, or conve-
nient 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 MergerSub to take any and all such action contemplated by this Plan
of Merger.
1.6 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:
1.6.1 NAME. The name of the Surviving Corporation shall be
CFSB Bancorp, Inc."
1.6.2 ARTICLES OF INCORPORATION. The articles of incorporation
of the Surviving Corporation shall be the articles of incorporation of
CFSB as in effect immediately prior to the Effective Time, without
change.
1.6.3 BYLAWS. The bylaws of the Surviving Corporation shall be
the bylaws of CFSB as in effect immediately prior to the Effective
Time, without change.
1.6.4 DIRECTORS. The directors of the Surviving Corporation
shall be the same as the directors of MergerSub immediately prior to
the Effective Time.
A-3
1.6.5 OFFICERS. The officers of the Surviving Corporation shall
be the same as the officers of MergerSub immediately prior to the Ef-
fective Time.
ARTICLE II - CONVERSION AND EXCHANGE OF SHARES
Subject to the terms and conditions of this Plan of Merger, the ex-
change of the common stock, $0.01 par value per share, of CFSB ("CFSB COM-
MON 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 CFSB COMMON STOCK. Except as provided be-
low, each share of CFSB Common Stock outstanding immediately prior to
the Effective Time shall be converted automatically into 0.6222 (the
"EXCHANGE RATIO") shares of validly issued, fully paid, and
nonassessable 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 3.4.1) 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 MERGERSUB COMMON STOCK. Each share of Common
Stock of MergerSub issued and outstanding immediately prior to the
Effective Time shall be converted automatically into and become one fully
paid and nonassessable share of common stock, $0.01 par value per share,
of the Surviving Corporation.
2.1.4 NO 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.
2.1.5 STOCK HELD BY OLD KENT. Each share of CFSB Common Stock,
if any, held by Old Kent or any of its subsidiaries for its own ac-
count, 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.
2.1.6 TREASURY SHARES. Each share of CFSB Common Stock held by
CFSB 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.
A-4
2.1.7 CFSB COMMON STOCK NO LONGER OUTSTANDING. Each share of
CFSB Common Stock outstanding immediately prior to the Effective Time
shall be considered to be no longer outstanding and to represent
shares of Old Kent Common Stock as provided in this Plan of Merger,
together with any dividends and other distributions payable as pro-
vided in Section 2.5.4 (DIVIDENDS PENDING SURRENDER), but subject to
the payment of cash in lieu of fractional shares as provided in Sec-
tion 2.6 (NO FRACTIONAL SHARES).
2.2 UPSET PROVISION. After a Closing is properly called pursuant to
Section 1.2 (THE CLOSING), CFSB shall have the right to terminate this Plan
of Merger if the "Upset Condition" then exists.
2.2.1 The "UPSET CONDITION" shall exist if both of the following
conditions then exist:
(a) The Final Old Kent Price is less than $38.25 (the
"FLOOR OLD KENT PRICE"); and
(b) The number determined by dividing the Final Old Kent
Price by $45.00 (the "INITIAL OLD KENT PRICE") is less than the
number obtained by subtracting (i) 0.15 from (ii) the quotient
obtained by dividing the Final Index Price (as defined below) by
the Initial Index Price (as defined below).
2.2.2 The "FINAL OLD KENT PRICE" means the average of the clos-
ing prices per share of Old Kent Common Stock reported on the New York
Stock Exchange ("NYSE") during the ten consecutive full trading days
ending on the eleventh business day prior to the date of the Closing
(the "PRICING PERIOD"), as reported in the DOW JONES NEWS/RETRIEVAL
system, or other equally reliable means.
2.2.3 The "INITIAL INDEX PRICE" means the Weighted Average (as
defined below) of the closing prices per share of each of the common
stocks of the Index Companies as reported on NYSE, The Nasdaq Stock
Market ("NASDAQ"), or the American Stock Exchange ("AMEX") on February
19, 1999.
2.2.4 The "FINAL INDEX PRICE" means the Weighted Average of the
average closing prices per share of each of the common stocks of the
Index Companies as reported on NYSE, NASDAQ, or AMEX for the Pricing
Period.
2.2.5 "INDEX COMPANIES" means the companies listed on EXHIBIT B
hereto.
2.2.6 "WEIGHTED AVERAGE" means the average determined by giving
the average closing prices for each of the Index Companies the corre-
sponding weight listed on EXHIBIT B hereto.
A-5
2.2.7 If Old Kent or any company listed on EXHIBIT B declares a
stock dividend or effects a reclassification, recapitalization, split-
up, combination, or subdivision of its common stock between February
19, 1999 and the Effective Time, the closing prices for such common
stock shall be appropriately adjusted for the purposes of the defini-
tions above so as to be comparable to the price on February 19, 1999.
There shall be excluded from the list of companies on EXHIBIT B any
company as to which there is pending at any time during the Pricing
Period any publicly announced proposal for such company to be acquired
by another company in exchange for its stock or any other consider-
ation. In the event that any such company (or companies) is excluded
from the list of companies in EXHIBIT B, then the "Initial Index
Price" and the "Final Index Price" shall be calculated as if the ex-
cluded company had not originally been included in the list of compa-
nies.
2.3 ADJUSTMENTS. The Exchange Ratio, Floor Old Kent Price, Initial
Old Kent Price, and Final Old Kent 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 occur-
rence 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 prior to the date of
the Effective Time, then: (a) the Floor Old Kent Price and the Ini-
tial Old Kent Price, and if the ex-dividend or ex-distribution date
for such stock dividend, stock split, or distribution occurs after the
end of the Pricing Period, the Final Old Kent Price, shall each be
adjusted by multiplying them by that ratio (i) the numerator of which
shall be the total number of shares of Old Kent Common Stock outstand-
ing 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) the Exchange
Ratio shall be adjusted by multiplying it by that ratio (i) the numer-
ator 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
total number of shares of Old Kent Common Stock outstanding immedi-
ately prior to such dividend, split, or distribution. For the pur-
poses of this Section, the number of outstanding shares shall be com-
puted as of the record date of the 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 distribu-
A-6
tion 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 CFSB in exchange for their shares of CFSB 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 reclas-
sification of Old Kent Common Stock, holders of CFSB Common Stock
would receive, in lieu of each share of Old Kent Common Stock to be
issued in exchange for CFSB 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, consoli-
dation, 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 CFSB 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 trans-
action 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
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 au-
thorized 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 pre-
clude Old Kent from amending its Restated Articles of Incorporation to
change its capital structure or from issuing additional shares of Old
A-7
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 CFSB COMMON STOCK. In
the event that the number of shares of CFSB Common Stock outstanding
is greater than 8,230,937 for any reason whatsoever (whether or not
such increase constitutes a breach of this Plan of Merger), other than
the issuance of not more than 407,922 shares upon the exercise of CFSB
stock options identified in Section 4.4 (CAPITAL STOCK), then the
Exchange Ratio shall be adjusted by multiplying it by a fraction
(i) the numerator of which shall be 8,230,937 (the total number of
shares of CFSB Common Stock outstanding as of the date of the Original
Agreement); and (ii) the denominator of which shall be the total number
of shares of CFSB Common Stock outstanding as of the Effective Time of
the Merger, excluding not more than 407,922 shares, if any, issued
after the date of the Original Agreement upon the exercise of CFSB stock
options identified in Section 4.4 (CAPITAL STOCK).
2.4 CESSATION OF STOCKHOLDER STATUS. As of the Effective Time, each
record holder of shares of CFSB Common Stock outstanding immediately prior
to the Effective Time shall cease to be a stockholder of CFSB and shall
have no rights as a CFSB stockholder. Each stock certificate representing
shares of CFSB Common Stock outstanding immediately prior to the Effective
Time ("OLD CERTIFICATES") shall then be considered to represent 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 CFSB Common Stock as of the Effective Time transmittal mate-
rials for use in exchanging that holder's Old Certificates for Old
Kent Common Stock certificates. The transmittal materials will con-
tain instructions with respect to the surrender of Old Certificates.
2.5.2 EXCHANGE AGENT. On or prior to the Effective Time, Old
Kent will deliver to Old Kent Bank, a Michigan banking corporation, or
such other bank or trust company as Old Kent may designate (the "EX-
CHANGE AGENT"), certificates representing the number of shares of Old
Kent Common Stock issuable and the amount of cash payable for frac-
tional 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
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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 CFSB'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
CFSB 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, trans-
mittal 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 de-
clared by Old Kent on Old Kent Common Stock that is payable to share-
holders 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
CFSB 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 repre-
sented thereby.
2.5.5 STOCK TRANSFERS. On or after the Effective Time, there
shall be no transfers on CFSB's stock transfer books of the shares of
CFSB 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 Com-
mon Stock as provided in this Plan of Merger. After the Effective
Time, ownership of such shares as are represented by any Old Certifi-
cates may be transferred only on the stock transfer records of Old
Kent.
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 CFSB Common Stock are converted in the Merger and governing
the payment for fractional shares of CFSB Common Stock.
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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 CFSB 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.
2.7 ASSUMPTION OF STOCK OPTIONS. Before the Effective Time of the
Merger, CFSB shall amend, if necessary, the terms of all outstanding stock
options granted by CFSB ("UNEXERCISED OPTIONS") pursuant to CFSB's 1990
Stock Option Plan and 1994 Stock Option and Incentive Plan (collectively,
the "OPTION PLANS") so that they shall, if and when the Merger becomes
effective, cease to represent the right to acquire shares of CFSB Common
Stock and each such option shall become by assumption at the Effective Time
an option to acquire that number of shares of Old Kent Common Stock equal
to (a) the number of shares of CFSB Common Stock subject to the Unexercised
Option, multiplied by (b) the Exchange Ratio, rounded to the nearest whole
share. The exercise price per share of Old Kent Common Stock under the
assumed option shall be equal to the exercise price per share of the CFSB
Common Stock that was purchasable under each Unexercised Option divided by
the Exchange Ratio (rounded to the nearest whole cent). In addition, each
option that is an "incentive stock option" as defined in Section 422 of the
Internal Revenue Code shall be adjusted as required by Section 424 of the
Internal Revenue Code and the regulations issued thereunder so as not to
constitute a modification, extension or renewal of the option within the
meaning of section 424 of the Internal Revenue Code. The duration and
other terms and conditions of the assumed options shall be the same as the
original CFSB options, except that any reference to CFSB shall be consid-
ered to be references to Old Kent. At all times after the Effective Time
until all such options have been exercised or terminated, Old Kent shall
reserve for issuance such number of shares of Old Kent Common Stock as
necessary so as to permit the exercise of such options. Old Kent shall use
its best efforts to file as soon as possible after the Effective Time, and
in no event later than 15 days after the Effective Time, and use its best
efforts to maintain the effectiveness of, a registration statement with the
Securities and Exchange Commission (the "SEC"), covering such options and
the sale of the Old Kent Common Stock issuable upon exercise of such op-
tions so long as unexercised options remain outstanding. At the Effective
Time, the Option Plans shall be terminated with respect to the granting of
any additional options or option rights. Old Kent acknowledges and agrees
that the Merger would constitute a "change in control" pursuant to the
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Option Plans resulting in acceleration of the vesting of any options that
have not yet vested. In no event and at no time shall CFSB (including its
board of directors or any committee thereof) permit or allow the holder of
any Unexercised Option to receive cash in exchange for the cancellation of
such Unexercised Option.
ARTICLE III - OLD KENT'S REPRESENTATIONS AND WARRANTIES
Old Kent represents and warrants to CFSB that, except as otherwise set
forth in a disclosure statement delivered to CFSB by Old Kent prior to the
execution of the Original Agreement (the "OLD KENT DISCLOSURE STATEMENT"):
3.1 AUTHORIZATION, NO CONFLICTS, ETC.
3.1.1 AUTHORIZATION OF AGREEMENT. Each of Old Kent and
MergerSub 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
approved and adopted and the consummation of the transactions
contemplated by this Plan of Merger have been duly authorized by the
boards of directors of Old Kent and MergerSub and the sole shareholder
of MergerSub, and no other corporate proceedings on the part of Old
Kent or MergerSub 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 MergerSub and is enforceable against Old
Kent and MergerSub 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
MergerSub, and the consummation of the Merger by Old Kent and MergerSub,
do not and will not violate, conflict with, or result in a breach of:
(a) any provision of Old Kent's Restated Articles of Incorporation or
Bylaws or MergerSub's 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 MergerSub, and the consummation of the Merger by Old Kent and
MergerSub, do not and will not:
(a) AGREEMENTS, ETC. Violate, conflict with, result in a
breach of, constitute a default under, require any consent, ap-
proval, waiver, extension, amendment, authorization, notice or
filing under, or extinguish any material contract right of Old
A-11
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, re-
sult 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 simi-
lar 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 CFSB to material lia-
bility for tortious interference with contractual rights.
3.1.4 REQUIRED APPROVALS. No notice to, filing with, authoriza-
tion of, exemption by, or consent or approval of, any public body or
authority is necessary for the consummation of the Merger by Old Kent
and MergerSub 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 New York Stock Exchange, and the approv-
als required under the Bank Holding Company Act of 1956, as amended
(the "FEDERAL BANK HOLDING COMPANY ACT"), the Home Owners Loan Act of
1933, as amended (the "HOLA"), the Federal Deposit Insurance Act, as
amended the "FDIA"), the Banking Code, and the Michigan Savings Bank
Act, as amended (the "SAVINGS BANK ACT").
3.2 ORGANIZATION AND GOOD STANDING. Each of Old Kent and MergerSub 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 Gover-
nors of the Federal Reserve System (the "FEDERAL RESERVE BOARD") under 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 fail-
ure to be so qualified or omitted would have a Material Adverse Effect on
Old Kent.
3.3 SUBSIDIARIES. Old Kent owns all of the issued and outstanding
shares of capital stock of Old Kent Bank and MergerSub, 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 bank under the
laws of the state of Michigan.
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3.4 CAPITAL STOCK.
3.4.1 CLASSES AND SHARES -- OLD KENT. The authorized capital
stock of Old Kent consists of 325,000,000 shares divided into two classes
as follows: (a) 300,000,000 shares of Old Kent Common Stock, of which,
as of February 19, 1999, a total of 103,990,035 shares were validly is-
sued 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, 500,000 shares are designated Series B Preferred
Stock, and 1,000,000 shares are designated Series C Preferred Stock,
none of which preferred stock was issued and outstanding as of the
Original Agreement. The 1,000,000 shares of Series C Pre-
ferred 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 and as amended December 30,
1998, between Old Kent and Old Kent Bank (the "OLD KENT RIGHTS AGREE-
MENT").
3.4.2 NO OTHER CAPITAL STOCK. As of the date of the Original
Agreement: (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 out-
standing 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 the Original Agreement are repre-
sented 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 compensa-
tion, 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 directors or a commit-
tee of such board; and (v) shares of Old Kent Common Stock issuable
under Old Kent's dividend reinvestment plan and employee stock pur-
chase plan.
3.4.3 ISSUANCE OF SHARES. Between February 19, 1999, and
the date of the Original Agreement, 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
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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.
3.4.4 VOTING RIGHTS. Neither Old Kent nor any of its subsidiar-
ies other than MergerSub 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.
3.4.5 CLASSES AND SHARES -- MERGERSUB. The authorized capital
stock of MergerSub consists of 60,000 shares of common stock, of which,
as of the execution of this Plan of Merger, a total of 1,000 shares were
validly issued and outstanding.
3.5 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.
3.6 FINANCIAL STATEMENTS.
3.6.1 FINANCIAL STATEMENTS. The consolidated financial state-
ments 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, draft consolidated financial
statements of Old Kent and its subsidiaries as of and for the year ended
December 31, 1998, including all schedules and notes relating to such
statements (collectively, "OLD KENT'S FINANCIAL STATEMENTS"), fairly pres-
ent the financial condition and the results of operations, changes in
shareholders' equity, and cash flows of Old Kent as of the respective dates
of and for the periods referred to in such financial statements, all in
accordance with generally accepted United States accounting principles
("GAAP") consistently applied except as stated therein. The unaudited
consolidated financial statements of Old Kent and its subsidiaries as of
and for each of the three quarters ended September 30, 1998, and each quar-
ter thereafter until the Effective Time, including all schedules and notes
relating to such statements, are correct and complete, and as to future
quarters will be correct and complete, in all material respects.
3.6.2 CALL REPORTS. The following reports (including all re-
lated schedules, notes, and exhibits) were prepared and filed in con-
formity with applicable regulatory requirements and were correct and
complete in all material respects when filed:
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(a) 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
(b) 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 through
out their respective periods (except as otherwise noted in such re-
ports) and will be correct and complete in all material respects when
filed.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or reserved against in Old Kent's Financial Statements as of
December 31, 1998, as of such date, neither Old Kent nor any of its subsid-
iaries had liabilities or obligations, secured or unsecured (whether ac-
crued, absolute, or contingent) as to which there is a reasonable probabil-
ity that they could have a Material Adverse Effect on Old Kent.
3.8 ABSENCE OF MATERIAL ADVERSE CHANGE. Since December 31, 1998,
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 is reasonably likely in the future to have, a Mate-
rial Adverse Effect on Old Kent. No facts or circumstances, that are not
applicable to the banking industry as a whole, have been discovered from
which it reasonably appears that there is a reasonable probability that
there will occur a change in Old Kent's financial condition, income, ex-
penses, assets, liabilities, or business that would have a Material Adverse
Effect on Old Kent.
3.9 ABSENCE OF LITIGATION. Except as disclosed in Old Kent's filings
with the SEC, there is no action, suit, proceeding, claim, arbitration, or
investigation pending or, to Old Kent's knowledge, threatened by any per-
son, 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
would 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.
3.10 REGULATORY FILINGS. In the last two years:
3.10.1 SEC FILINGS. Old Kent has filed, and will in the future
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;
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3.10.2 REGULATORY FILINGS. Old Kent has filed in a timely man-
ner all other material filings with other regulatory bodies for which
filings are required; and
3.10.3 COMPLETE AND ACCURATE. All such filings, as of their
respective filing dates, did not contain any untrue statement of mate-
rial 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.
3.11 REGISTRATION STATEMENT, ETC.
3.11.1 "TRANSACTION DOCUMENTS." The term "TRANSACTION DOCU-
MENTS" shall collectively mean: (i) the registration statement to be
filed by Old Kent with the SEC (the "REGISTRATION STATEMENT") in con-
nection 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 CFSB stockholders in connection with the
Stockholders' Meeting (as defined below); and (iii) any other docu-
ments to be filed with the SEC, the Federal Reserve Board, the Office
of Thrift Supervision ("OTS"), the Financial Institutions Bureau
("FIB"), the states of Michigan or Delaware, or any other regulatory
agency in connection with the transactions contemplated by this Plan
of Merger.
3.11.2 ACCURATE INFORMATION. The information to be supplied by
Old Kent for inclusion or incorporation by reference in any Transac-
tion 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 circum-
stances under which they were made, not misleading (a) at the respec-
tive 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.
3.11.3 COMPLIANCE OF FILINGS. All documents that Old Kent is
responsible for filing with the SEC or any regulatory agency in con-
nection with the Merger will comply as to form in all material re-
spects with the provisions of applicable law and regulation.
3.12 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.
3.13 ACCOUNTING AND TAX TREATMENT. Neither Old Kent nor, to its
knowledge, any of its affiliates, has taken or agreed to take any action or
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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 Sec-
tion 368(a) of the Internal Revenue Code.
3.14 AGREEMENTS WITH BANK REGULATORS. Neither Old Kent nor any of
Old Kent's subsidiaries is a party to any agreement or memorandum of under
standing 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 ap-
propriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment
letter or similar submission. Neither Old Kent nor any of Old Kent's sub-
sidiaries is required by applicable law 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 offi-
cer. As of the date of the Original Agreement, Old Kent knows of no reason
why the regulatory approvals referred to in Sections 3.1.4 and 4.1.4 (RE-
QUIRED APPROVALS) should not be obtained.
3.15 EVENTS SINCE DECEMBER 31, 1998. Neither Old Kent nor any of Old
Kent's subsidiaries has, since December 31, 1998, conducted its business
other than in the ordinary course or as contemplated by this Plan of
Merger.
3.16 RESERVE FOR LOAN LOSSES. The reserve for credit losses as re-
flected in Old Kent's Financial Statements were (a) adequate to meet all
reasonably anticipated credit losses, net of recoveries related to assets
previously charged off as of those dates, and (b) consistent with GAAP and
safe and sound banking practices.
3.17 PUBLIC COMMUNICATIONS; SECURITIES OFFERING. Each annual report,
quarterly report, proxy material, press release, or other communication
previously sent or released by Old Kent to Old Kent's shareholders 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.
3.18 YEAR 2000 COMPLIANCE. Old Kent has: (i) initiated a review and
assessment of all areas within the business and operations (including those
affected by material suppliers and vendors) of Old Kent and each of its
subsidiaries that could be adversely affected by the "YEAR 2000 PROBLEM,"
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meaning the risk that computer applications used by Old Kent or any of its
subsidiaries (or material suppliers and vendors) may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior
to and any date after December 31, 1999; (ii) developed a plan and time
line for addressing the Year 2000 Problem on a timely basis; and (iii) to
date, implemented that plan in accordance with that timetable. Old Kent
believes that all computer applications (including those of its material
suppliers and vendors) that are material to the business and operations of
Old Kent or any of its subsidiaries will on a timely basis be able to per-
form properly date-sensitive functions for all dates before and after Janu-
ary 1, 2000, except to the extent that a failure to do so would not have a
Material Adverse Effect on Old Kent.
3.19 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.
ARTICLE IV - CFSB'S REPRESENTATIONS AND WARRANTIES
CFSB represents and warrants to Old Kent that, except as otherwise set
forth in a disclosure statement (the "CFSB DISCLOSURE STATEMENT") delivered
to Old Kent by CFSB prior to the execution of the Original Agreement:
4.1 AUTHORIZATION, NO CONFLICTS, ETC.
4.1.1 AUTHORIZATION OF AGREEMENT. CFSB has the requisite cor-
porate power and authority to execute and deliver this Plan of Merger
and, subject to approval and adoption by CFSB's stockholders, to con-
summate the transactions contemplated by this Plan of Merger. This
Plan of Merger has been duly approved and adopted and the consummation
of the transactions contemplated by this Plan of Merger have been duly
authorized by the board of directors of CFSB and no other corporate
proceedings on the part of CFSB are necessary to authorize this Plan
of Merger or to consummate the transactions so contemplated, subject
only to approval and adoption by the stockholders of CFSB. This Plan
of Merger has been duly executed and delivered by, and constitutes
valid and binding obligations of, CFSB and is enforceable against CFSB
in accordance with its terms.
4.1.2 NO CONFLICT, BREACH, VIOLATION, ETC. The execution, de-
livery, and performance of this Plan of Merger by CFSB, and the con-
summation of the Merger, do not and will not violate, conflict with,
or result in a breach of any provision of: (a) CFSB's or any of
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CFSB's subsidiaries' Certificate of Incorporation, By-laws, or similar
organization documents; or (b) any statute, code, ordinance, rule,
regulation, judgment, order, writ, arbitral award, decree, or injunc-
tion applicable to CFSB or any of CFSB's subsidiaries, 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 exe-
cution, delivery, and performance of this Plan of Merger by CFSB, 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, ap-
proval, waiver, extension, amendment, authorization, notice or
filing under, or extinguish any material contract right of CFSB
or any of CFSB's subsidiaries under any agreement, mortgage,
lease, commitment, indenture, other instrument, or obligation to
which CFSB or any of CFSB's subsidiaries is a party or by which
they are bound or affected, the result of which would have a
Material Adverse Effect on CFSB or CFSB's subsidiaries other than
those designated in Schedule 4.1.3(a) of the CFSB Disclosure
Statement (collectively, the "DESIGNATED CONTRACTS");
(b) REGULATORY RESTRICTIONS. Violate, conflict with, re-
sult 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 simi-
lar regulatory consent agreement to which CFSB or any of its
subsidiaries is a party or subject, or by which it is bound or
affected; or
(c) TORTIOUS INTERFERENCE. Subject Old Kent or its subsid-
iaries to liability for tortious interference with contractual
rights.
4.1.4 REQUIRED APPROVALS. No notice to, filing with, authoriza-
tion of, exemption by, or consent or approval of, any public body or
authority is necessary for the consummation of the Merger by CFSB
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 re-
quired under the Federal Bank Holding Company Act, the HOLA, the FDIA,
the Banking Code, and the Savings Bank Act.
4.2 ORGANIZATION AND GOOD STANDING. CFSB is a corporation duly orga-
nized, validly existing, and in good standing under the laws of the State
of Delaware. CFSB possesses all requisite corporate power and authority to
own, operate, and lease its properties and to carry on its business as it
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is now being conducted in all material respects. CFSB is a unitary thrift
holding company duly registered as such with the OTS under the HOLA. CFSB
is duly qualified and admitted to do business as a foreign corporation in
the state of Michigan 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 CFSB.
4.3 SUBSIDIARIES.
4.3.1 OWNERSHIP. CFSB owns all of the issued and outstanding
shares of capital stock of each of its subsidiaries, free and clear of
all claims, security interests, pledges, or liens of any kind. CFSB
Bank is duly organized, validly existing, and in good standing as a
savings bank under the laws of the state of Michigan. Each of CFSB's
subsidiaries (as listed in the CFSB Disclosure Statement) is duly
incorporated, validly existing, and in good standing in its state of
incorporation. CFSB 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 or disclosed under this
Section.
4.3.2 RIGHTS TO CAPITAL STOCK. There are no outstanding sub-
scriptions, options, warrants, rights to acquire, or any other similar
agreements pertaining to the capital stock of any of CFSB's subsidiar-
ies.
4.3.3 QUALIFICATION AND POWER. Each of CFSB's subsidiaries 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 CFSB. Each of CFSB's subsidiaries has
full corporate power and authority to carry on its business as and
where now being conducted.
4.3.4 DEPOSIT INSURANCE; OTHER ASSESSMENTS. CFSB Bank maintains
in full force and effect deposit insurance through the Savings Associ-
ation Insurance Fund of the Federal Deposit Insurance Corporation
("FDIC"). CFSB 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. CFSB Bank has paid
as and when due all material fees, charges, assessments, and the like
to each and every governmental or regulatory agency having jurisdic-
tion 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 CFSB
consists of 17,000,000 shares divided into two classes as follows:
(a) 15,000,000 shares of common stock, $0.01 par value per share, of
which 8,230,937 shares are issued and outstanding as of February 19,
1999, and 407,922 additional shares were subject to outstanding stock
options issued under the Option Plans as of the date of the Original
Agreement; and (b) 2,000,000 shares of preferred stock, $0.01 par
value per share, none of which is issued or 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 CFSB
and, except for Unexercised Options to acquire up to 407,922 shares of
CFSB Common Stock under the Option Plans, there are no outstanding
subscriptions, options, warrants, or rights to acquire any capital
stock of CFSB, or agreements to which CFSB is a party or by which it
is bound to issue capital stock. No stock option agreement issued
under an Option Plan requires the payout of cash in exchange for the
cancellation of such Unexercised Option.
4.4.3 ISSUANCE OF SHARES. After the date of the Original
Agreement, the number of issued and outstanding shares of CFSB Common
Stock is not subject to change before the Effective Time except for
issuance of up to 407,922 additional shares of CFSB Common Stock
pursuant to the exercise of Unexercised Options issued under the Stock
Plans.
4.4.4 VOTING RIGHTS. Other than the shares of CFSB Common Stock
described in this Section, neither CFSB nor any of CFSB's 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 con-
sent to, or withhold consent on, the Merger or this Plan of Merger.
4.5 FINANCIAL STATEMENTS.
4.5.1 FINANCIAL STATEMENTS. The consolidated financial state
ments of CFSB as of and for the each of three years ended December 31,
1995, 1996, and 1997, as reported on by CFSB's independent accoun-
tants, and the unaudited, draft consolidated financial statements of
CFSB as of and for the year ended December 31, 1998, including all
schedules and notes relating to such statements, as previously deliv-
ered to Old Kent (collectively, "CFSB'S FINANCIAL STATEMENTS"), fairly
present the financial condition and the results of operations, changes
in stockholders' equity, and cash flows of CFSB as of the respective
dates of and for the periods referred to in such financial statements,
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all in accordance with GAAP, consistently applied except as stated
therein. The unaudited consolidated financial statements of CFSB and
its subsidiaries as of and for each of the three quarters ended Sep-
tember 30, 1998, and each quarter thereafter until the Effective Time,
including all schedules and notes relating to such statements, are
correct and complete, and as to future quarters will be correct and
complete, in all material respects. No financial statements of any
entity other than CFSB Bank and the subsidiaries listed in the CFSB
Disclosure Statement with respect to Section 4.3 (SUBSIDIARIES), are
required by GAAP to be included in the consolidated financial state-
ments of CFSB.
4.5.2 CALL REPORTS. The following reports (including all re-
lated schedules, notes, and exhibits) were prepared and filed in con-
formity with applicable regulatory requirements and were correct and
complete in all material respects when filed:
(a) The consolidated reports of condition and income of
CFSB Bank as of and for each of the years ended December 31,
1995, 1996, and 1997, as filed with the FDIC and the OTS, as
applicable; and
(b) The Form H - (b)11 report for CFSB as of and for each
of the years ended December 31, 1995, 1996, and 1997, as filed
with the OTS.
All of such reports required to be filed prior to the Closing by CFSB
and/or CFSB Bank will be prepared and filed in conformity with appli-
cable 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 CFSB's Financial Statements as of
December 31, 1998, neither CFSB nor any of CFSB's subsidiaries had, as of
such date, liabilities or obligations, secured or unsecured (whether ac-
crued, absolute, or contingent) as to which there is a reasonable probabil-
ity that they could have a Material Adverse Effect on CFSB.
4.7 ABSENCE OF MATERIAL ADVERSE CHANGE. Since December 31, 1998,
there has been no change in the financial condition, income, expenses,
assets, liabilities or business of CFSB (and not the banking industry as a
whole) that had, or is reasonably likely in the future to have, a Material
Adverse Effect. No facts or circumstances, that are not applicable to the
banking industry as a whole, have been discovered from which it reasonably
appears that there is a reasonable probability that there will occur a
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change in CFSB's financial condition, income, expenses, assets, liabilities
or business that would have a Material Adverse Effect on CFSB.
4.8 ABSENCE OF LITIGATION. There is no action, suit, proceeding,
claim, arbitration, or investigation pending or, to the knowledge of CFSB,
threatened by any person, including without limitation any governmental or
regulatory agency, against CFSB or any of CFSB's subsidiaries, or the as
sets or business of CFSB or any of CFSB's subsidiaries, any of which has
had or in the future could have a Material Adverse Effect on CFSB. There
is no factual basis known to CFSB that presents a reasonable potential for
any such action, suit, proceeding, claim, arbitration, or investigation.
4.9 CONDUCT OF BUSINESS. CFSB and each of CFSB's subsidiaries have
conducted their respective businesses and used their respective properties
in substantial 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 4.22.2 (ENVIRONMENTAL LAWS)); except for violations (individually
or in the aggregate) that would not have a Material Adverse Effect on CFSB.
4.10 CONTRACTS. There is no existing default by CFSB or any of
CFSB's subsidiaries, or any other party, under any contract or agreement to
which CFSB or any of CFSB's subsidiaries is a party, or by which they are
bound, the result of which would have a Material Adverse Effect on CFSB.
Excepting any ordinary and customary banking relationships, there are no
material agreements, contracts, mortgages, deeds of trust, leases, commit-
ments, indentures, notes, or other instruments under which another party is
in material default under its obligations to CFSB or its subsidiaries.
CFSB is not party to any contract, agreement, arrangement, or understanding
(other than ordinary and customary banking relationships) that would re-
quire CFSB or any of its subsidiaries to make payments or make expenditures
in excess of $100,000 per year or that would require any payment to another
party upon termination in excess of $25,000.
4.11 REGULATORY FILINGS. In the last five years:
4.11.1 SEC FILINGS. CFSB has filed, and in the future 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. CFSB has filed in a timely manner
all other filings with other regulatory bodies for which filings are
required; and
A-23
4.11.3 COMPLETE AND ACCURATE. All such filings, as of their
respective filing dates, did not contain any untrue statement of mate-
rial 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. All such
filings complied in all material respects with all laws, regulations,
forms, and guidelines applicable to such filings.
4.12 REGISTRATION STATEMENT, ETC.
4.12.1 ACCURATE INFORMATION. The information to be supplied by
CFSB 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 neces-
sary 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 Regis-
tration 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 CFSB is re-
sponsible for filing with the SEC or any regulatory agency in connec-
tion with the Merger will comply as to form in all material respects
with the provisions of applicable law and regulation.
4.13 AGREEMENTS WITH BANK REGULATORS. Neither CFSB nor any of CFSB's
subsidiaries is a party to any 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 recipi-
ent of any extraordinary supervisory letter from, any governmental author-
ity 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 CFSB been advised by any governmental authority that it
is contemplating issuing or requesting (or is considering the appropriate-
ness of issuing or requesting) any such order, decree, agreement, memoran-
dum of understanding, extraordinary supervisory letter, commitment letter
or similar submission. Neither CFSB nor any of CFSB's subsidiaries is
required by applicable law 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 the Original Agreement, CFSB 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. CFSB and each of CFSB's subsidiaries have
duly and timely filed all tax returns that they have by law been re-
A-24
quired to file, including without limitation those with respect to
income, withholding, social security, unemployment, 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 regula-
tions.
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 CFSB and CFSB's subsidiaries
have been paid in full as and when due, including applicable extension
periods. The provisions made for taxes on CFSB's Financial Statements
as of December 31, 1998, are sufficient for the payment of all fed-
eral, state, county, and local taxes of CFSB accrued but unpaid as of
the date indicated, whether or not disputed, with respect to all peri-
ods through December 31, 1998.
4.14.3 TAX AUDITS. None of the federal, state, or local consol-
idated franchise or income tax returns of CFSB and its subsidiaries
filed for any tax year after 1989 have been audited by the Internal
Revenue Service (the "IRS"). There is no tax audit or legal or admin-
istrative proceeding for assessment or collection of taxes pending or,
to CFSB's knowledge, threatened with respect to CFSB or any of CFSB's
subsidiaries. No claim for assessment or collection of taxes has been
asserted with respect to CFSB or any of CFSB's subsidiaries that has
not been finally resolved and paid or accrued for. No waiver of any
limitations statute or extension of any assessment or collection pe-
riod has been executed by or on behalf of CFSB or any of CFSB's sub-
sidiaries.
4.15 TITLE TO PROPERTIES. CFSB and each of its subsidiaries have
good 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 CFSB's Financial
Statements as of December 31, 1998, 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 CFSB's Fi-
nancial Statements as of December 31, 1998;
4.15.2 NORMAL TO BUSINESS. Liens for current taxes not yet
delinquent, and liens or encumbrances that are normal to the business
of CFSB and that would not have a Material Adverse Effect on CFSB; 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
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the value, or materially interfere with the present use, of the prop-
erties subject thereto or affected thereby.
4.16 CONDITION OF REAL PROPERTY. With respect to each parcel of real
property owned, legally and beneficially, by CFSB or CFSB's subsidiaries,
including other real estate owned ("CFSB'S REAL PROPERTY"), to its knowl-
edge:
4.16.1 NO ENCROACHMENTS. No building or improvement to CFSB's
Real Property encroaches on any easement or property owned by another
person. No building or property owned by another person encroaches on
CFSB's Real Property or on any easement benefitting CFSB's Real Prop-
erty. None of the boundaries of CFSB's Real Property deviates sub-
stantially from those shown on the survey of such property, if any,
included with the CFSB Disclosure Statement or from what the bound-
aries appear to be through visual inspection. No claim of encroach
ment has been asserted by any person with respect to CFSB's Real Prop-
erty.
4.16.2 ZONING. Neither CFSB, any of CFSB's subsidiaries, nor
CFSB's Real Property is in material violation of any zoning regula-
tion, building restriction, restrictive covenant, ordinance, or other
law, order, regulation, or requirement relating to CFSB's Real Prop-
erty.
4.16.3 BUILDINGS. All buildings and improvements to CFSB'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 utili-
ties necessary for the effective operation of business as presently
conducted at that location.
4.16.4 NO CONDEMNATION. None of CFSB'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 CFSB's Real Property for any governmental purpose.
4.17 REAL AND PERSONAL PROPERTY LEASES. With respect to each lease
and license pursuant to which CFSB or any of CFSB's subsidiaries, as lessee
or licensee, has possession of real or personal property, excluding any
personal property lease with payments of less than $25,000 per year
("CFSB'S LEASES"):
4.17.1 VALID. Each of CFSB'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
CFSB's Leases or any event that with notice or lapse of time, or both,
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would constitute a default with respect to CFSB, any of CFSB's subsid-
iaries, or any other party to the contract, the result of such default
would have a Material Adverse Effect on CFSB.
4.18 ASSIGNMENT. None of CFSB's Leases contain a prohibition against
assignment by CFSB or any of CFSB's subsidiaries, by operation of law or
otherwise, or any provision that would materially interfere with the pos-
session 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 CFSB or CFSB's subsidiaries prior to the
Effective Time.
4.19 REQUIRED LICENSES, PERMITS, ETC.
4.19.1 LICENSES, PERMITS, ETC. CFSB and each of CFSB's subsid-
iaries hold all licenses, certificates, permits, franchises, and
rights from all appropriate federal, state, and other public authori-
ties necessary for the conduct of its business as presently conducted,
the lack of which would not have a Material Adverse Effect on CFSB.
4.19.2 REGULATORY ACTION. Neither CFSB nor any of CFSB's sub-
sidiaries has within the last five years been charged by a regulatory
authority with, or to CFSB's knowledge is under governmental investi-
gation with respect to, any actual or alleged violation of any stat-
ute, ordinance, rule, regulation, guideline, or standard. Neither
CFSB nor any of CFSB's subsidiaries is the subject of any pending or,
to CFSB's knowledge, threatened proceeding by any regulatory authority
having jurisdiction over its business, properties, or operations.
4.20 CERTAIN EMPLOYMENT MATTERS.
4.20.1 EMPLOYMENT POLICIES, PROGRAMS, AND PROCEDURES. The poli-
cies, programs and practices of CFSB 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 employ-
ment and employer practices and facilities.
4.20.2 RECORD OF PAYMENTS. There are no existing or outstanding
obligations of CFSB or any of CFSB's subsidiaries, whether arising by
operation of law, civil or common, by contract, or by past custom, for
Employment-Related Payments (as defined in Section 4.20.3 (EMPLOYMENT-
RELATED PAYMENTS)) to any trust, fund, company, governmental agency,
or any person that have not been duly recorded on the books and re-
cords of CFSB and paid when due or duly accrued in the ordinary course
of business in accordance with GAAP.
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4.20.3 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 compen-
sation benefits; profit sharing, pension or retirement benefits; so-
cial 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.
4.20.4 EMPLOYMENT CLAIMS. There are no disputes, claims, or
charges, pending or, to CFSB'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
knowledge of CFSB, there is no factual basis for any valid claim or
charge with regard to such employment-related matters.
4.20.5 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 CFSB or
any of CFSB's subsidiaries that is not terminable by CFSB or
CFSB's subsidiaries upon 60 days' or less notice without penalty
or obligation;
(b) Plan, contract, arrangement, understanding, or practice
providing for bonuses, pensions, options, stock purchases, de-
ferred compensation, retirement payments, retirement benefits 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 insur-
ance 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.
4.21 EMPLOYEE BENEFIT PLANS. With respect to any "employee welfare
benefit plan," any "employee pension benefit plan," or any "employee bene-
fit 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 CFSB or CFSB's subsidiaries or to which CFSB or any
of CFSB's subsidiaries has made payments or contributions on behalf of its
employees:
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4.21.1 ERISA COMPLIANCE. CFSB, each of CFSB's subsidiaries,
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.
4.21.2 INTERNAL REVENUE CODE COMPLIANCE. CFSB, each of CFSB's
subsidiaries, 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.
4.21.3 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.
4.21.4 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 Corpora-
tion (the "PBGC"), where applicable, as required by the Internal Reve-
nue Code and ERISA. With respect to each such termination, all termi-
nation 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, partial termina-
tion, curtailment, discontinuance, or consolidation has been accompa-
nied by the issuance of a current favorable determination letter by
the IRS and, where applicable, has been accompanied by plan termina-
tion proceedings with and through the PBGC.
4.21.5 MULTIEMPLOYER PLAN. No Employee Benefit Plan is a
"multiemployer plan" within the meaning of Section 3(37)(A) of ERISA.
4.21.6 DEFINED BENEFIT PLAN. No Employee Benefit Plan in effect
as of the date of the Original Agreement, is a "defined benefit plan"
within the meaning of Section 3(35) of ERISA.
4.21.7 PAYMENT OF CONTRIBUTIONS. CFSB has made when due all
contributions required under each Employee Benefit Plan and under
applicable laws and regulations.
4.21.8 PAYMENT OF BENEFITS. There are no payments that have
become due from any Employee Benefit Plan, the trusts created thereun-
der, or from CFSB or any of CFSB's subsidiaries that have not been
paid through normal administrative procedures to the plan participants
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or beneficiaries entitled thereto, except for claims for benefits for
which administrative claims procedures under such plan have not been
exhausted.
4.21.9 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).
4.21.10 FILING OF REPORTS. CFSB each of CFSB's subsidiaries 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, ERISA, and the
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.
4.22 ENVIRONMENTAL MATTERS.
4.22.1 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. <Section> 9601 ET SEQ.
("CERCLA"), and also includes any substance now or in the future regu-
lated by or subject to any Environmental Law (as defined below) and
any other pollutant, contaminant, or waste, including, without limita-
tion, petroleum, asbestos, radon, and polychlorinated biphenyls.
4.22.2 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 the
generation, manufacture, release, treatment, containment, storage,
handling, transportation, disposal, or management of Hazardous Sub-
stances; (b) regulate or prescribe standards or requirements for the
protection of 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 Haz-
ardous Substance.
4.22.3 OWNED OR OPERATED PROPERTY. With respect to: (i) the
real estate owned or leased by CFSB or any of CFSB's subsidiaries or
used in the conduct of their businesses; (ii) other real estate owned
by CFSB Bank; (iii) real estate held and administered in trust by CFSB
Bank; and (iv) to CFSB's knowledge, any real estate formerly owned or
leased by CFSB or CFSB Bank (for purposes of this Section, properties
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described in any of (i) through (iv) are collectively referred to as
"PREMISES"):
(a) CONSTRUCTION AND CONTENT. To its knowledge, 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 rea-
sonably be expected to change through aging or normal use) re-
leases or may release any Hazardous Substance in violation of
applicable law. Without limiting the generality of this Section,
to the knowledge of CFSB, the Premises are free of asbestos ex-
cept to the extent properly sealed or encapsulated in compliance
with all applicable Environmental Laws and all workplace safety
and health laws and regulations.
(b) USES OF PREMISES. To its knowledge, no part of the
Premises has been used for the generation, manufacture, handling,
containment, treatment, transportation, storage, disposal, or
management of Hazardous Substances.
(c) UNDERGROUND STORAGE TANKS. To its knowledge, the Pre-
mises do not contain, and have never contained, any underground
storage tanks. With respect to any underground storage tank that
is listed in the CFSB Disclosure Statement as an exception to the
foregoing, each such underground storage tank presently or previ-
ously 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.
(d) ABSENCE OF CONTAMINATION. To its knowledge, the Pre-
mises do not contain and are not contaminated by any reportable
quantity, or any quantity or concentration in excess of applica-
ble cleanup standards, of a Hazardous Substance from any source.
(e) ENVIRONMENTAL SUITS AND PROCEEDINGS. To its knowledge
after reasonable inquiry, there is no action, suit, investiga-
tion, liability, inquiry, or other proceeding, ruling, order,
notice of potential liability, or citation involving CFSB or any
of CFSB's subsidiaries that is 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. To its
knowledge, there is no basis for any of the foregoing.
4.22.4 LOAN PORTFOLIO. With respect to any 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, CFSB and each of CFSB's subsidiaries has 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 CFSB Disclosure
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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.
4.23 DUTIES AS FIDUCIARY. CFSB 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. CFSB
Bank has not received notice of any claim, allegation, or complaint from
any person that CFSB Bank failed to perform these fiduciary duties in the
required manner.
4.24 INVESTMENT BANKERS AND BROKERS. CFSB has employed Feldman Fi-
nancial Advisors, Inc. ("FELDMAN FINANCIAL"), in connection with the
Merger. CFSB's only obligation with respect to investment banking firms or
brokers is the payment of fees and expenses as described in the CFSB Dis-
closure Statement. Other than Feldman Financial Advisors, Inc., CFSB has
not employed any broker, finder, or investment banker in connection with
this Plan of Merger or the transactions contemplated by it. CFSB 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.
4.25 CFSB-RELATED PERSONS. For purposes of this Plan of Merger, the
term "CFSB-RELATED PERSON" shall mean any director or executive officer of
CFSB or any of CFSB's subsidiaries, 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 per-
sons, alone or together, have Control.
4.25.1 CONTROL OF MATERIAL ASSETS. Other than in a capacity as
a stockholder, director, or executive officer of CFSB or CFSB's sub-
sidiaries, no CFSB-Related Person owns or controls any material assets
or properties that are used in the business of CFSB or any of CFSB's
subsidiaries.
4.25.2 CONTRACTUAL RELATIONSHIPS. Other than ordinary and cus-
tomary banking relationships, no CFSB-Related Person has any contrac-
tual relationship with CFSB or any of CFSB's subsidiaries.
4.25.3 LOAN RELATIONSHIPS. No CFSB-Related Person has any out-
standing loan or loan commitment from, or on whose behalf an irrevoca-
ble letter of credit has been issued by, CFSB or any of CFSB's subsid-
iaries in a principal amount of $60,000 or more.
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4.26 CHANGE IN BUSINESS RELATIONSHIPS. Neither CFSB nor any of
CFSB's subsidiaries has notice, whether on account of the Merger or other-
wise, that: (a) any customer, agent, representative, or supplier of CFSB or
any of CFSB's subsidiaries intends to discontinue, diminish, or change its
relationship with CFSB or any of CFSB's subsidiaries, the effect of which
would have a Material Adverse Effect on CFSB; or (b) any executive officer
of CFSB or any of CFSB's subsidiaries intends to terminate his or her em-
ployment.
4.27 INSURANCE. CFSB and each of CFSB's subsidiaries maintains in
full force and effect insurance on its assets, properties, premises, opera-
tions, 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 $50,000 or more
under such insurance as to which the insurance carrier has denied liabil-
ity. During the last five years, no insurance company has canceled or
refused to renew a policy of insurance covering CFSB's or any of CFSB's
subsidiaries's assets, properties, premises, operations, or personnel.
CFSB 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 CFSB or any
of CFSB's subsidiaries.
4.28 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of CFSB are complete and correct in all
material respects and have been maintained in accordance with sound busi-
ness practices, including the maintenance of an adequate internal control
system. The corporate minute books of CFSB and each of CFSB's subsidiaries
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.
4.29 LOAN GUARANTEES. All guarantees of indebtedness owed to CFSB or
any of CFSB's subsidiaries, including without limitation those of the Fed-
eral Housing Administration, the Small Business Administration, and other
state and federal agencies, are valid and enforceable.
4.30 EVENTS SINCE DECEMBER 31, 1998. Neither CFSB nor any of CFSB's
subsidiaries has, since December 31, 1998:
4.30.1 BUSINESS IN ORDINARY COURSE. Other than as contemplated
by this Plan of Merger, conducted its business other than in the ordi-
nary course, or incurred or become subject to any liability or obliga-
tion, except liabilities (including deposits) incurred in the ordinary
course of business, and except for any single liability or for the
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aggregate of any group of related liabilities that do not exceed
$100,000.
4.30.2 STRIKES OR LABOR TROUBLE. Experienced or, to its knowl-
edge, 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 CFSB.
4.30.3 DISCHARGE OF OBLIGATIONS. Discharged or satisfied any
lien or encumbrance, or paid any obligation or liability other than
those shown on CFSB's Financial Statements as of December 31, 1998, or
incurred after that date, other than in the ordinary course of busi-
ness, and except for such liens, encumbrances, liabilities, and obli-
gations that do not in the aggregate exceed $100,000.
4.30.4 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 busi-
ness, and except for such mortgages, pledges, liens, charges, and
encumbrances for indebtedness that do not in the aggregate exceed
$100,000.
4.30.5 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 CFSB, except as may
be expressly provided in this Plan of Merger.
4.31 RESERVE FOR LOAN LOSSES. The allowance for losses on loans and
real estate as reflected in CFSB's Financial Statements and Call Reports
were and will be, as of their respective dates, (a) adequate to meet all
reasonably anticipated loan and real estate losses, net of recoveries re-
lated to assets previously charged off as of those dates, and (b) consis-
tent with GAAP and safe and sound banking practices.
4.32 LOAN ORIGINATION AND SERVICING. In originating, underwriting,
servicing, purchasing, selling, transferring, and discharging loans, mort-
gages, land contracts, and other contractual obligations, either for its
own account or for the account of others, each of CFSB's subsidiaries 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, individu-
ally or in the aggregate, have a Material Adverse Effect on CFSB.
4.33 PUBLIC COMMUNICATIONS; SECURITIES OFFERING. Each annual report,
quarterly report, proxy material, press release, or other communication
previously sent or released by CFSB to CFSB's stockholders or the public
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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 state-
ments therein, in light of the circumstances under that they were made, not
misleading.
4.34 NO INSIDER TRADING. CFSB has reviewed its stock transfer re-
cords since December 31, 1995, and has questioned its directors and execu-
tive officers concerning known stock transfers since that date. Based upon
that investigation, CFSB has not, and to CFSB's knowledge (a) no director
or officer of CFSB, (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 of
these persons; has purchased or sold, or caused to be purchased or sold,
any shares of CFSB Common Stock during any period when CFSB was in posses-
sion of material nonpublic information or in violation of any applicable
provision of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT").
4.35 DATA PROCESSING CONTRACTS. All material data processing con-
tracts of CFSB or CFSB's subsidiaries are cancelable on or before September
30, 1999, without cost or penalty.
4.36 YEAR 2000 COMPLIANCE. CFSB and CFSB Bank have adopted plans and
procedures consistent with good business practices and the requirements of
their primary thrift regulator for their Year 2000 Assets (as defined be-
low) to be timely modified, upgraded or replaced to become Year 2000 Ready
(as defined below). Set forth in the CFSB Disclosure Statement are copies
of all letters and responses between CFSB or CFSB's subsidiaries and their
vendors relating to such compliance matters. The cost of achieving Year
2000 Readiness for any Year 2000 Assets that are not Year 2000 Ready would
not have a Material Adverse Effect on CFSB or CFSB's subsidiaries. No
representation is made relating to the compatibility of the technology used
by CFSB or CFSB's subsidiaries with that used by Old Kent or with respect
to the cost of integrating the technology of CFSB or CFSB's subsidiaries
with that used by Old Kent. "YEAR 2000 ASSETS" means all buildings,
plants, structures, machinery, equipment, software, hardware, computer
systems and other property owned, leased, licensed or used by CFSB or
CFSB's subsidiaries in their business. "YEAR 2000 READY" means that the
Year 2000 Asset accurately processes and handles date and time data, in-
cluding but not limited to performing all leap year calculations and calcu-
lating, comparing and sequencing during and between the years 1999 and 2000
and all other years, and will not malfunction, cease to function or provide
invalid or incorrect results or data as a result of date or time data,
including when a Year 2000 Asset is used in combination with or is inter-
facing with any other Year 2000 Asset or with any other asset or informa-
tion technology.
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4.37 ACCOUNTING AND TAX TREATMENT. Neither CFSB nor, to its knowl-
edge, any of its affiliates, has taken or agreed to take any action or
knows of any reason that, with respect to CFSB and its affiliates, would
prevent Old Kent from accounting for the business combination to be ef-
fected by the Merger as a pooling-of-interests. CFSB is aware of no reason
why the Merger will fail to qualify as a reorganization under Section
368(a) of the Internal Revenue Code.
4.38 TRUE AND COMPLETE INFORMATION. No schedule, statement, list,
certificate, or other information furnished or to be furnished by CFSB in
connection with this Plan of Merger, including the CFSB Disclosure State-
ment, 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 state-
ments contained therein, in light of the circumstances in which they are
made, not misleading.
ARTICLE V - COVENANTS PENDING CLOSING
Subject to the terms and conditions of this Plan of Merger, CFSB,
Old Kent, and MergerSub further agree that:
5.1 DISCLOSURE STATEMENTS; ADDITIONAL INFORMATION.
5.1.1 FORM AND CONTENT. Each of Old Kent's and CFSB's
Disclosure Statement 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.
5.1.2 UPDATE. Not less than six business days prior to the
Closing, Old Kent and CFSB shall deliver to the other an update to its Dis-
closure Statement describing any material changes and containing any
new or amended documents, as specified below, that are not contained
in its Disclosure Statement as initially delivered. This update shall
not cure any breach of a representation or warranty occurring at the
time of execution of the Original Agreement.
5.1.3 CERTIFICATION. Old Kent's and CFSB's Disclosure
Statement and its update shall each be certified on its behalf by its
chief executive officer and its chief financial officer (or, in the case
of Old Kent, such other executive officer(s) as may be appropriate) that
such Disclosure Statement contains no untrue statement of a material
fact, or fails to 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.
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5.1.4 CFSB'S SCHEDULE OF ADDITIONAL INFORMATION. CFSB shall
prepare and, within 45 days after the execution of the Original Agreement,
deliver to Old Kent two copies of the Schedule of Additional Informa-
tion attached as EXHIBIT C. The Schedule of Additional Information
shall contain the information described in EXHIBIT C with appropriate
references and cross-references with respect to disclosures and appro-
priate identifying marking with respect to documents. In addition,
the Schedule of Additional Information shall contain true and correct
copies of each and every document specified in EXHIBIT C.
5.2 CHANGES AFFECTING REPRESENTATIONS. While this Plan of Merger is
in effect, if either Old Kent or CFSB 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 CFSB Disclo-
sure Statement or the Old Kent Disclosure Statement, respectively, to be-
come 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 the Original
Agreement, then such party (the "NOTIFYING PARTY") shall immediately give
detailed written notice of such discovery or change, including a detailed
description of the underlying facts or events, to the other party; and
unless waived by the other party in writing, the Notifying Party shall use
all reasonable efforts to take remedial or preventative action, if possi-
ble, in order that such representations and warranties will be true and
complete at the Closing. No remedial action taken by a Notifying Party
shall be deemed to cure a breach of any representation or warranty given by
the Notifying Party in this Plan of Merger, unless such cure is to the
reasonable satisfaction of the other party.
5.3 CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME--CFSB. CFSB
agrees that, until the Effective Time, except as consented to in writing by
Old Kent or as otherwise provided in this Plan of Merger, CFSB shall, and
it shall cause each of its subsidiaries to:
5.3.1 ORDINARY COURSE. Conduct its business and manage its
property only in the usual, regular, and ordinary course and not oth-
erwise, in substantially the same manner as prior to the date of the
Original Agreement, and not make any substantial change to its expen-
ditures or methods of management or operation in respect of such busi-
ness or property.
5.3.2 NO INCONSISTENT ACTIONS. Take no action that would be
inconsistent with or contrary to the representations, warranties, and
covenants made by CFSB in this Plan of Merger, and take no action that
would cause CFSB's representations and warranties to become untrue
A-37
except as and to the extent required by applicable laws and regula-
tions or regulatory agencies having jurisdiction, or this Plan of
Merger.
5.3.3 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.
5.3.4 NO AMENDMENTS. Make no change in its Certificate of In-
corporation or its By-laws, other than to amend its By-laws to reduce
the number of seats on the CFSB board of directors to eliminate any
vacant positions.
5.3.5 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.
5.3.6 NO CHANGE IN STOCK. Except as contemplated by this Plan
of Merger or the Option Agreement: (a) make no change in the number
of shares of its capital stock issued and outstanding other than pur-
suant to the exercise of outstanding options awarded prior to the date
of the Original Agreement under the Option Plans; (b) grant no warrant,
option, or commitment relating to its capital stock; (c) enter into no
agreement relating to its capital stock; and (d) issue no securities
convertible into its capital stock.
5.3.7 MAINTENANCE. Use all reasonable efforts to maintain its
property and assets in their present state of repair, order and condi-
tion, reasonable wear and tear and damage by fire or other casualty
excepted.
5.3.8 PRESERVATION OF GOODWILL. Use all reasonable efforts to
preserve its business organization intact, to keep available the ser-
vices of its present officers and employees, and to preserve the good-
will of its customers and others having business relations with it.
5.3.9 INSURANCE POLICIES. Use all reasonable efforts to main-
tain 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.
5.3.10 CHARGE-OFFS. Charge off loans and maintain its reserve
for loan and lease losses, in each case in a manner in conformity with
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the prior practices of CFSB and CFSB Bank and applicable industry,
regulatory, and accounting standards.
5.3.11 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.
5.3.12 NEW DIRECTORS OR OFFICERS. Except to reelect persons who
are then incumbent officers and directors at annual meetings, 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.
5.3.13 COMPENSATION AND FRINGE BENEFITS. Except for previously
planned salary increases, bonuses as set forth in the CFSB Disclosure
Statement, and payments pursuant to the CFSB Bank Management Incentive
Compensation Plan for calendar year 1998 and on a pro rata basis for
calendar year 1999 (based upon the most recently available peer group
information) to be paid no later than at the Effective Time, take no
action to increase, or agree to increase, the salary, or other compen-
sation 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 increases, agreements or
payments that are reasonable in amount and consistent with past prac-
tice.
5.3.14 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.
5.3.15 NEW EMPLOYMENT AGREEMENTS. Take no action to enter into
any employment agreement that is not terminable by CFSB or any of
CFSB's subsidiaries, as the case may be, without cost or penalty upon
60 days' or less notice, except as contemplated by this Plan of
Merger.
5.3.16 BORROWING. Take no action to borrow money except in the
ordinary course of business.
5.3.17 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, and except for
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property or assets, or any group of related properties or assets, that
have a fair market value of less than $100,000.
5.3.18 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) CFSB or any of CFSB's sub-
sidiaries; (b) their respective directors, officers, or employees in
their capacities as such; (c) CFSB's or CFSB's subsidiaries' assets,
liabilities, businesses, or operations; or (d) the Merger or this Plan
of Merger.
5.3.19 COOPERATION. Take such reasonable actions as may be
necessary to cooperate in effecting the Merger.
5.3.20 CHARITABLE CONTRIBUTIONS. Make no new, and not renew any
existing, 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 $90,000 and shall not, with
out Old Kent's prior consent, commit CFSB or CFSB's subsidiaries to
expenditures after 1999.
5.3.21 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 date of Original Agreement, 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 CFSB, except pur-
suant to prior commitments or plans made by CFSB that are disclosed in
the CFSB Disclosure Statement.
5.3.22 NEW SERVICE ARRANGEMENTS. Take no action to enter into,
or commit to enter into, any agreement for trust, consulting, profes-
sional, or other services to CFSB or any of CFSB's subsidiaries that
is not terminable by CFSB without penalty upon 60 days' or less no-
tice, except for contracts for services under which the aggregate
required payments do not exceed $250,000, except for legal, account-
ing, and other ordinary expenses related to this Plan of Merger.
5.3.23 CAPITAL IMPROVEMENTS. Take no action to open, enlarge,
or materially remodel any bank or other facility, and not lease, pur-
chase, or otherwise acquire any real property for use as a branch
bank, or apply for regulatory approval of any new branch bank, except-
ing pursuant to prior commitments or plans made by CFSB or CFSB Bank
that are disclosed in the CFSB Disclosure Statement.
5.4 APPROVAL OF PLAN OF MERGER. As soon as practicable after this
Plan of Merger has been executed and delivered and the Registration State-
ment has become effective, CFSB shall submit this Plan of Merger to its
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stockholders for approval and adoption at a meeting properly called, no-
ticed, and held for that purpose (the "STOCKHOLDERS' MEETING").
5.4.1 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 CFSB shall recommend that its stockholders vote for ap-
proval and adoption of this Plan of Merger. All actions taken in
connection with the solicitation of proxies for and the voting of
shares of CFSB Common Stock held by or through the CFSB Employee Stock
Ownership Plan (the "ESOP") shall be done in a manner that complies
with all standards and guidelines issued by the United States Depart-
ment of Labor.
5.4.2 FIDUCIARY EVENT. A "FIDUCIARY EVENT" shall have occurred
when the board of directors of CFSB has (a) received in writing a
"Superior Proposal" (as defined below), which is then pending, (b)
determined in good faith (after consultation with independent legal
counsel) that the failure to so withdraw, modify, or change its recom-
mendation would cause the board of directors of CFSB to breach its
fiduciary duties to CFSB's stockholders under applicable law, and (c)
determined to accept and recommend the Superior Proposal to the stock
holders of CFSB.
5.4.3 SUPERIOR PROPOSAL. A "SUPERIOR PROPOSAL" means any bona
fide unsolicited Proposal (as defined in Section 5.9.2 (COMMUNICATION
OF OTHER PROPOSALS)) made by a third party on terms that the board of
directors of CFSB determines in its good faith judgment, based upon
the written advice of Feldman Financial or such other a financial
advisor of nationally recognized reputation, to be more financially
favorable to CFSB's stockholders than the Plan of Merger.
5.4.4 NOTICE. CFSB agrees that it shall notify Old Kent at
least three business days prior to taking any action with respect to
such Superior Proposal or taking any action with respect to the with-
drawal, 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 withdrawal, modifica-
tion, or change of recommendation upon a Fiduciary Event in accordance
with the provisions of this Section shall not constitute a breach of
this Plan of Merger by CFSB.
5.5 REGULAR DIVIDENDS. CFSB 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 other than the regular 10 percent stock dividend on dates
corresponding to the historical declaration and payment dates and regular
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quarterly cash dividends per share on CFSB Common Stock payable on the
regular historical payment dates, all in a manner consistent with CFSB's
past dividend practice. Old Kent and CFSB agree that they will cooperate
to assure that, during any calendar quarter, there shall not be a duplica-
tion of payment of dividends to stockholders of CFSB. 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 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. If the customary payment date for the next regular
cash dividend payable after the Effective Time of Old Kent Common Stock as
the Surviving Corporation which is eligible to be received by the former
holders of CFSB Common Stock is more than 90 days after the payment date of
the last regular cash dividend paid or to be paid on CFSB Common Stock
prior to the Effective Time (such number of days over 90 days being the
"DIVIDEND LAG PERIOD"), then CFSB may declare and set aside immediately
prior to the Effective Time, and may pay at a date it may select in its
discretion, a "SPECIAL PRO-RATA DIVIDEND" pursuant to this Section. Any
such Special Pro-rata Dividend shall be payable in cash, and shall not
exceed an amount per share that is the product of (i) the amount of the
dividend permitted to be paid by CFSB pursuant to this Section 5.5, multi-
plied by (ii) a fraction, the numerator of which is the Dividend Lag Period
and the denominator of which is 90 days.
5.6 DATA PROCESSING AND RELATED CONTRACTS. Until the Effective Time,
CFSB 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 CFSB 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. CFSB agrees to cooperate with Old Kent in nego-
tiating with those vendors the length of any extension or renewal term of
those agreements, which, unless otherwise agreeable with Old Kent, shall
not exceed one year from the date of renewal. CFSB 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 CFSB and Old
Kent.
5.7 AFFILIATES -- COMPLIANCE WITH ACCOUNTING AND SECURITIES RULES.
5.7.1 CFSB AFFILIATES. CFSB shall use its best efforts to cause
each director, executive officer, and other person who is an "affili-
ate" (for purposes of (a) Rule 145 under the Exchange Act, and (b)
qualifying the Merger for pooling-of-interests accounting treatment)
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of CFSB to deliver to Old Kent, as soon as practicable after the date
of the Original Agreement, and prior to the date of the Stockholders'
Meeting, a written agreement, in the form of EXHIBIT D (the "CFSB
AFFILIATE AGREEMENTS"). CFSB shall provide a list of such affiliates
within five days of the date of the Original Agreement and shall up
date such list as necessary upon the reasonable request of Old Kent.
Old Kent shall use its best efforts to publish as promptly as reason-
ably practical but in no event later than 30 days after the end of the
first full 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.
5.7.2 OLD KENT AFFILIATES. Old Kent shall 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 the Original Agreement, and prior to the
date of the Stockholders' Meeting, 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, dis-
qualify the Merger for pooling-of-interests accounting treatment.
5.8 INDEMNIFICATION AND INSURANCE.
5.8.1 INDEMNIFICATION. Following the Effective Time, Old Kent
shall indemnify, defend and hold harmless the directors and officers
of CFSB and its subsidiaries (each an "INDEMNIFIED PARTY") against all
costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities or amounts paid in set-
tlement incurred in connection with any claim, action, suit or pro-
ceeding, whether civil, criminal, administrative or investigative
(collectively, "CLAIMS"), arising out of actions or omissions occur-
ring at or prior to the Effective Time, including, but not limited to,
the Merger, regardless of whether such Claim is asserted before, at or
after the Effective Time, to the fullest extent that CFSB or its sub-
sidiaries is permitted to indemnify (and advance expenses to) its
directors and officers under applicable state or federal law in effect
as of the date hereof or as amended applicable to a time before the
Effective Time or the Certificate of Incorporation or By-laws of CFSB
or its subsidiaries as in effect as of the date hereof. Old Kent may
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by
applicable state or federal law in effect as of the date hereof or as
amended applicable to a time before the Effective Time upon receipt of
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any undertaking required by applicable law. Old Kent shall ensure, to
the extent permitted under applicable law, that all limitations of
liability existing in favor of the Indemnified Parties as provided in
CFSB's Certificate of Incorporation, as in effect as of the date
hereof, or allowed under applicable state or federal law as in effect
as of the date hereof or as amended applicable to a time before the
Effective Time, with respect to claims or liabilities arising from
facts or events existing or occurring before the Effective Time (in-
cluding, without limitation, the transactions contemplated hereby),
shall survive the Merger.
5.8.2 INSURANCE. Old Kent shall use all reasonable efforts to
cause the persons serving as officers and directors of CFSB immedi-
ately prior to the Effective Time to be covered for a period of at
least six years from the Effective Time by the directors' and offi-
cers' liability insurance policy maintained by CFSB (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, that in no
event shall Old Kent be required to spend more than $140,000 (the
"INSURANCE AMOUNT") to maintain or procure insurance coverage pursuant
hereto. If Old Kent does not advise CFSB in writing at least 30 days
prior to the Closing that it has procured such coverage for at least
six years or agrees to do so without regard to the Insurance Amount,
CFSB shall be permitted (after giving Old Kent three business days
prior written notice and an additional two business day period to
purchase such coverage), 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.
5.8.3 ENFORCEMENT. The obligation of Old Kent provided under
Sections 5.8.1 and 5.8.2 are intended to be enforceable against Old
Kent directly by the Indemnified Parties and shall be binding on all
respective successors and permitted assigns of Old Kent.
5.9 EXCLUSIVE COMMITMENT. Neither Old Kent nor any of Old Kent's
subsidiaries, 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. Except as provided below, neither CFSB nor any of
CFSB's subsidiaries, nor any of their directors, officers, employees, in-
vestment bankers, representatives, or agents, shall take any action incon-
sistent with the intent to consummate the Merger upon the terms and condi-
tions of this Plan of Merger. Without limiting the foregoing:
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5.9.1 NO SOLICITATION. Neither CFSB nor any of CFSB's subsid-
iaries, nor any of their respective directors, officers, employees,
investment bankers, representatives, or agents, shall directly or
indirectly invite, initiate, solicit or encourage, or, unless a Fidu-
ciary 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 CFSB, at that
time, has yet to determine to accept and recommend the Superior Pro-
posal to the stockholders of CFSB), negotiate (which terms shall not
include a request for additional information in response to a Proposal
that is necessary to determine whether the Proposal is a Superior
Proposal, which shall be permitted hereby) with any other party, any
proposals, offers, or expressions of interest concerning any tender
offer, exchange offer, merger, consolidation, sale of shares, sale of
assets, or assumption of liabilities not in the ordinary course, or
other business combination involving CFSB or any of CFSB's subsidiar-
ies other than the Merger (a "BUSINESS COMBINATION").
5.9.2 COMMUNICATION OF OTHER PROPOSALS. CFSB shall cause writ-
ten notice to be delivered to Old Kent promptly upon receipt of any
solicitation, offer, proposal, or expression of interest (a "PRO-
POSAL") concerning a Business Combination. Such notice shall contain
the material terms and conditions of the Proposal to which such notice
relates and shall contain, unless a Fiduciary Event has occurred and
continues or a request for additional information which the CFSB board
of directors has determined is necessary to fulfill its fiduciary
duties is pending, a copy of CFSB's unequivocal rejection of the Pro-
posal in the form actually delivered to the person from whom the Pro-
posal was received. Thereafter, CFSB shall promptly notify Old Kent
of any material changes in the terms, conditions, and status of any
Proposal.
5.9.3 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 CFSB, at that time, has yet to
determine to accept and recommend the Superior Proposal to the stock-
holders of CFSB), neither CFSB nor any of CFSB's subsidiaries, nor any
of their respective directors, officers, employees, investment bank
ers, representatives, or agents, shall furnish any nonpublic informa-
tion concerning CFSB to any person who is not affiliated or under
contract with CFSB or Old Kent, except as required by applicable law
or regulations.
For the purposes of this Section, any breach of this Section by an execu-
tive officer or director of CFSB in his or her individual capacity shall be
deemed to be a breach by CFSB.
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5.10 REGISTRATION STATEMENT. The parties agree to cooperate in the
preparation and filing with the SEC under the Securities Act and the Ex-
change 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 Regis-
tration Statement to become effective. Old Kent agrees to provide CFSB
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 pro-
vide CFSB, 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
CFSB of any stop orders or threatened stop orders with respect to the Reg-
istration Statement. The parties agree to provide all necessary informa-
tion pertaining to each other promptly upon request, and to use all reason-
able efforts to obtain the cooperation of their respective independent
accountants and attorneys in connection with the preparation of the Regis-
tration Statement and the Prospectus and Proxy Statement.
5.11 OTHER FILINGS. Old Kent agrees to use its best efforts to pre-
pare and file within 45 days after the date of Original Agreement with the
Federal Reserve Board, OTS, and each other regulatory agency having juris-
diction all documents reasonably required to obtain approval of or consent
to consummate the Merger. Old Kent agrees to provide CFSB with reasonable
opportunities to review and comment upon such documents before filing and
to make such amendments and file such supplements thereto as CFSB may rea-
sonably request. Old Kent shall provide CFSB with copies of all correspon-
dence received from these agencies and all responsive correspondence sent
to these agencies.
5.12 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 ap-
plicable laws and regulations to consummate and make effective the transac-
tions contemplated by this Plan of Merger. Old Kent and CFSB will use all
reasonable efforts to obtain consents of all third parties and governmental
bodies necessary or desirable for the consummation of the Merger.
5.13 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 and without undue inter-
ference with normal business operations; (b) use reasonable efforts to
cause its and each of respective subsidiaries' officers, directors, employ-
ees, accountants, and attorneys to cooperate fully, for the purpose of
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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 CFSB 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 written materials. Old Kent and CFSB each agree to pre-
serve 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.
5.14 CONFIDENTIALITY. Except as provided below, Old Kent, MergerSub,
and CFSB each agree:
5.14.1 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, accoun-
tants, regulators, and financial advisers who are reasonably believed
to have a need for such information in connection with the Merger or
except as required by law.
5.14.2 NO OTHER USE. No 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.
5.14.3 EXCEPTED INFORMATION. The provisions of this
Section shall not preclude Old Kent or CFSB, or their respective sub-
sidiaries, from using or disclosing information that is readily ascer-
tainable 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 regula-
tory agency.
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5.14.4 PROHIBIT INSIDER TRADING. Old Kent and CFSB 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.
5.15 ENVIRONMENTAL INVESTIGATION. Old Kent shall be permitted to
conduct an environmental assessment of each parcel of CFSB's Real Property
and, at Old Kent's option, any other real estate acquired by any of CFSB's
subsidiaries in satisfaction of a debt previously contracted. As to each
such property:
5.15.1 PRELIMINARY ENVIRONMENTAL ASSESSMENTS. Old Kent may, at
its expense, engage an environmental consultant to conduct a prelimi-
nary ("PHASE I") assessment of the property or, at its option, rely
upon any Phase I assessment of the property obtained by CFSB, or any
predecessor or company acquired by CFSB, that is recertified to Old
Kent as of a recent date. CFSB and CFSB's subsidiaries shall provide
reasonable assistance, including site access and a knowledgeable con-
tact person, to the consultant for purposes of conducting the Phase I
assessments.
5.15.2 ENVIRONMENTAL RISKS. If there are any facts or condi-
tions identified in a Phase I assessment that Old Kent believes could
pose a current or future risk of a material liability, interference
with use, or diminution of value of the property, then Old Kent shall
identify that risk to CFSB, identify the facts or conditions underly-
ing that risk, and provide CFSB with a copy of the Phase I assessment
for that property (an "ENVIRONMENTAL RISK").
5.15.3 PHASE II AND III WORK. Old Kent may obtain one or more
estimates of the proposed scope of work and cost of any further envi-
ronmental investigation, remediation, or other follow-up work it rea-
sonably considers necessary or appropriate to assess and, if necessary
under Environmental Laws, remediate an Environmental Risk ("PHASE II
AND III WORK"). Old Kent shall provide copies of those estimates to
CFSB. The fees and expenses of any Phase II and III Work shall be
paid by CFSB. Old Kent and CFSB shall cooperate in the review, ap-
proval, and implementation of all work plans for Phase II and III
Work. All work plans for any Phase II and III Work shall be mutually
satisfactory to Old Kent and CFSB. Mutually agreed upon Phase II and
III Work shall be undertaken and completed as quickly as possible and
shall be completed prior to the Closing.
5.15.4 OLD KENT'S TERMINATION RIGHTS. If (a) Old Kent and CFSB
are unable to agree upon a course of action to complete any Phase II
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and III Work 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 taken pursuant to
Section 5.15.3 (PHASE II AND III WORK); (ii) the estimated cost of all
investigative actions and remedial or other corrective actions or
measures not undertaken but required by Environmental Laws, or neces-
sary to avoid future exposure to material liability under Environmen-
tal Laws; and (iii) all diminutions of the value of such properties;
in the aggregate will not exceed $3,000,000, then Old Kent may termi-
nate this Plan of Merger as provided in Section 8.3.2 (ENVIRONMENTAL
RISKS).
5.16 ESOP. The ESOP shall be terminated effective as of the Effec-
tive Time. Prior to its termination, the ESOP shall be amended to provide
that no employees of Old Kent shall be eligible to participate, that there
shall be no new participants in the plan on or after the Closing, that upon
termination the Trustee shall pay off the outstanding balance owed by the
ESOP under the loan agreement dated as of April 25, 1994, between the ESOP
and CFSB (the "ESOP LOAN AGREEMENT"), and that any assets left in the sus-
pense account after repayment of the loan will be allocated among the par-
ticipants of the ESOP in accordance with the terms of the ESOP in a manner
consistent with the Internal Revenue Code. Upon receipt of a favorable IRS
determination letter with respect to the termination (which shall be pre-
pared by Old Kent and its counsel with the participation and cooperation of
CFSB and its counsel), the participants in the ESOP will have the option to
transfer or roll over their ESOP accounts into the Old Kent Thrift Plan.
5.17 TERMINATION OF 401(K) PLAN. Upon request by Old Kent, CFSB
shall, and shall cause CFSB Bank to, take all action that is necessary and
appropriate in the judgment of Old Kent to terminate the CFSB Bank Employ-
ees' Deferred Savings Plan (the "401(K) PLAN") on a mutually agreed date
that is as close as practicable to, but not more than 30 days before, the
Effective Time.
5.18 EMPLOYMENT AMENDMENTS. CFSB shall cause CFSB Bank, within 30
days after the date of the Original Agreement, to obtain amendments (in the
form previously agreed to by Old Kent and CFSB) to two existing employment
agreements with its senior officers, as specified by Old Kent, providing
for, among other things, mutually agreeable no-compete and non-solicitation
covenants from those two employees, which shall only become effective upon
consummation of the Merger at the Effective Time (the "EMPLOYMENT AMEND-
MENTS").
5.19 ACCOUNTING AND TAX TREATMENT. During the Term of this Plan of
Merger, Old Kent, MergerSub, and CFSB 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
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the meaning of Section 368(a) of the Internal Revenue Code; provided, that
nothing in this Plan of Merger shall limit Old Kent's ability to exercise
its rights under the Option Agreement. Old Kent and CFSB each agree to
take such action as may be reasonably required to negate the impact of any
past actions, if any, that might adversely impact the ability of Old Kent
to treat the Merger as a pooling-of-interests.
5.20 PUBLIC ANNOUNCEMENTS. Old Kent, MergerSub, and CFSB shall
cooperate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this Plan
of Merger, except as may be otherwise required by law, and neither Old Kent,
MergerSub, nor CFSB shall issue any news releases with respect to this Plan
of Merger or the Merger unless such news releases have been mutually agreed
upon by the parties, except as required by law.
ARTICLE VI - CONDITIONS PRECEDENT TO OLD KENT'S OBLIGATIONS
All obligations of Old Kent and MergerSub 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 CFSB contained in this Plan of Merger shall be true and
correct when made and as of the Closing as if made at and as of such
time (without giving effect to any update to the Disclosure Schedule),
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 Closing 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. CFSB shall have performed and
complied with all agreements, conditions, and covenants required by
this Plan of Merger to be performed or complied with by CFSB prior to
or at the Closing in all material respects.
6.1.3 CERTIFICATES. Compliance with Sections 6.1.1 (REPRESENTA-
TIONS AND WARRANTIES) and 6.1.2 (COMPLIANCE WITH AGREEMENTS) shall be
evidenced by one or more certificates signed by appropriate officers
of CFSB, 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.
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6.2 OPINION OF LEGAL COUNSEL. CFSB shall have delivered to Old Kent
an opinion of Housley Kantarian & Bronstein, P.C., counsel for CFSB, 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 CFSB, Old Kent, and MergerSub
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 CFSB shall have ap-
proved and adopted this Plan of Merger.
6.5 ORDER, DECREE, ETC. Neither Old Kent, MergerSub, nor CFSB 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 against or re-
lating to CFSB, any of CFSB's subsidiaries, or its or their respective
directors (in the capacity as such), officers (in the capacity as such),
properties, or businesses that may reasonably result in any liability that
could have a Material Adverse Effect on CFSB.
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 CFSB. The tax opinion
shall be substantially to the effect that:
6.7.1 REORGANIZATION. The acquisition of substantially all of
the assets of CFSB by Old Kent solely in exchange for Old Kent Common
Stock and the assumption by Old Kent of liabilities of CFSB will
constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code, and Old Kent and CFSB 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 CFSB assets in the
hands of Old Kent will be the same as the basis of those assets in the
hands of CFSB immediately prior to the Merger.
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6.7.3 NO GAIN OR LOSS. No gain or loss will be recognized by
Old Kent on the constructive acquisition by Old Kent of substantially all
of the assets of CFSB in exchange for Old Kent Common Stock and the
assumption by Old Kent of the liabilities of CFSB.
6.7.4 HOLDING PERIOD. The holding period of the assets of CFSB
in the hands of Old Kent will include the holding period during which
such assets were held by CFSB.
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 re-
ceived one or more certificates dated as of the Closing date and signed by
the secretary of CFSB on behalf of CFSB, and by the transfer agent for CFSB
Common Stock, certifying (a) the total number of shares of capital stock of
CFSB issued and outstanding as of the close of business on the day immedi-
ately preceding the Closing; and (b) with respect to the secretary's cer-
tification, the number of shares of CFSB 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 evi-
dence 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 CFSB upon consummation of the Merger under the Desig-
nated 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 CFSB; all in form and substance reasonably satisfactory to Old
Kent.
6.11 POOLING ASSURANCES. Old Kent shall have received a letter ad-
dressed to CFSB, from CFSB's independent accountants, as of a date reason-
ably approximate to the date of the Closing, to the effect that, as of such
date, CFSB is eligible to participate in a pooling-of-interests combination
and a letter from its independent accountants, satisfactory in form and
substance, to the effect that (based in part on the letter from CFSB's
independent accountants) the Merger should be treated as a pooling-of-in-
terests for accounting and financial reporting purposes, subject to satis-
faction of post-Merger conditions.
6.12 NO DEFAULT UNDER ESOP LOAN AGREEMENT. CFSB shall have obtained
and delivered to Old Kent such consents, amendments, or supplemental agree-
ments, all in form and substance reasonably satisfactory to Old Kent, nec-
essary or advisable to confirm that neither the execution of this Plan of
Merger nor consummation of the Merger will result in any default or penalty
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under the ESOP loan agreement, or any related pledge agreement, security
agreement, note, or other agreement.
6.13 EMPLOYMENT AMENDMENTS. CFSB Bank shall have obtained and deliv-
ered to Old Kent copies of the executed Employment Amendments.
ARTICLE VII - CONDITIONS PRECEDENT TO CFSB'S OBLIGATIONS
All obligations of CFSB under this Plan of Merger are subject to the
fulfillment (or waiver in writing by a duly authorized officer of CFSB),
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 as of the date of the Original Agreement and as of the
Closing as if made at and as of such time (without giving effect to any
update to the Disclosure Schedule), 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 and MergerSub
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 and MergerSub prior to or at the Closing in all
material respects.
7.1.3 CERTIFICATES. Compliance with Sections 7.1.1 (REPRESENTA-
TIONS 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 fore-
going 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 CFSB
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
CFSB.
7.3 REQUIRED REGULATORY APPROVALS. CFSB, Old Kent, or MergerSub shall
have received all such approvals, consents, authorizations, and licenses of
all regulatory and other governmental authorities having jurisdiction as may
A-53
be required to permit the performance by CFSB, Old Kent, and MergerSub of
their respective obligations under this Plan of Merger and the consummation
of the Merger.
7.4 STOCKHOLDER APPROVAL. CFSB shall have received the requisite
approval of the stockholders of CFSB of this Plan of Merger.
7.5 ORDER, DECREE, ETC. Neither Old Kent, MergerSub, nor CFSB 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. CFSB shall have received a tax opinion from counsel
for Old Kent, reasonably satisfactory in form and substance to CFSB's coun-
sel. 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 REORGANIZATION. The acquisition of substantially all
of the assets of CFSB by Old Kent solely in exchange for Old Kent
Common Stock and the assumption by Old Kent of liabilities of CFSB
will constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code, and Old Kent and CFSB will each be a
"party to a reorganization" within the meaning of Section 368(b) of
the Internal Revenue Code.
7.6.2 NO GAIN OR LOSS. No gain or loss will be recognized
by the stockholders of CFSB upon the receipt of Old Kent Common Stock
in exchange for all of their shares of CFSB Common Stock, except to
the extent of any cash received in lieu of a fractional share of Old
Kent Common Stock.
7.6.3 STOCK TAX BASIS. The basis of the Old Kent Common Stock
to be received by stockholders of CFSB will, in each instance, be the
same as the basis of the respective shares of CFSB Common Stock sur-
rendered in exchange therefor.
7.6.4 HOLDING PERIOD. The holding period of the Old Kent Common
Stock received by stockholders of CFSB will, in each instance, include
the period during which the CFSB Common Stock surrendered in exchange
therefor was held, provided that the CFSB Common Stock was, in each
instance, held as a capital asset in the hands of the stockholder of
CFSB 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.
A-54
7.8 FAIRNESS OPINION. CFSB shall have received an opinion from
Feldman Financial or such other nationally recognized financial advisor
reasonably acceptable to Old Kent, dated as of the date of the Original
Agreement and renewed as of a date approximately the date of the Prospectus
and Proxy Statement, to the effect that the Exchange Ratio is fair to
CFSB's stockholders from a financial point of view as of that date and such
opinion shall not have been subsequently withdrawn.
7.9 LISTING OF SHARES. The shares of Old Kent Common Stock that
shall be issued to the stockholders of CFSB upon consummation of the Merger
shall have been authorized for listing on the New York Stock Exchange upon
official notice of issuance.
7.10 EXCHANGE AGENT CERTIFICATE. CFSB shall have received a certifi-
cate from the Exchange Agent certifying to receipt of certificates for
shares of Old Kent Common Stock to be issued and sufficient cash to make
payments in lieu of fractional shares as contemplated by this Plan of
Merger.
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 CFSB may have previously been ob-
tained) as follows:
8.1 MUTUAL ABANDONMENT. By mutual consent of the boards of direc-
tors, or duly authorized committees thereof, of Old Kent and CFSB.
8.2 UPSET DATE. By either Old Kent or CFSB if the Merger shall not
have been consummated on or before October 1, 1999, except that this right
to terminate shall not be available to a party if the failure to consummate
the Merge by such date is due to such party's breach of any of its obliga-
tions under this Plan of Merger.
8.3 OLD KENT'S RIGHTS TO TERMINATE. By Old Kent under any of the
following circumstances:
8.3.1 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 not-
withstanding Old Kent's best efforts to comply with the covenants in
this Plan of Merger.
8.3.2 ENVIRONMENTAL RISKS. If Old Kent has given CFSB notice of
an unacceptable Environmental Risk as provided in Section 5.15.4 (OLD
KENT'S RIGHT TO TERMINATE).
A-55
8.3.3 POOLING QUALIFICATION. At any time after Old Kent's inde-
pendent accountants shall have advised Old Kent that the Merger is
unlikely to qualify for treatment as a pooling-of-interests for ac-
counting and financial reporting purposes.
8.3.4 APPROVAL OF CFSB'S STOCKHOLDERS. This Plan of Merger is
not approved by CFSB's stockholders at the Stockholders' Meeting.
8.3.5 MATERIAL ADVERSE EVENT. If there shall have occurred one
or more events that shall have caused or are reasonably likely to
cause a Material Adverse Effect on CFSB.
8.4 CFSB'S RIGHTS TO TERMINATE. By the board of directors, or a duly
authorized committee thereof, of CFSB under any of the following circum-
stances:
8.4.1 UPSET CONDITION. If the Upset Condition exists in accor-
dance with Section 2.2 (UPSET PROVISION).
8.4.2 FAILURE TO SATISFY CLOSING CONDITIONS. If any of the
conditions specified in Article VII have not been met or waived by
CFSB at such time as such condition can no longer be satisfied not-
withstanding Old Kent's best efforts to comply with the covenants in
this Plan of Merger.
8.4.3 POOLING QUALIFICATION. At any time after Old Kent's inde-
pendent accountants shall have advised Old Kent and CFSB that the
Merger is unlikely to qualify for treatment as a pooling-of-interests
for accounting and financial reporting purposes.
8.4.4 APPROVAL OF CFSB'S STOCKHOLDERS. This Plan of Merger is
not approved by CFSB's stockholders at the Stockholders' Meeting.
8.4.5 MATERIAL ADVERSE EVENT. If there shall have occurred one
or more events that shall have caused or are reasonably likely to
cause a Material Adverse Effect on Old Kent.
8.5 EFFECT OF TERMINATION. In the event of termination of this Plan
of Merger by either CFSB or Old Kent as provided in this Article, this Plan
of Merger shall forthwith become void and have no effect, and none of
CFSB'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) the Option Agree-
ment and Sections 5.15 (CONFIDENTIALITY), 8.5 (EFFECT OF TERMINATION), 9.2
(NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS), and 9.4 (EX-
PENSES), shall survive any termination of this Plan of Merger, and (b)
notwithstanding anything to the contrary contained in this Plan of Merger,
A-56
neither CFSB, Old Kent, nor MergerSub shall be relieved or released from any
liabilities or damages arising out of its 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,
MergerSub, and CFSB further agree as follows:
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, CFSB and CFSB Bank, taken as a whole; or (b) the
ability of Old Kent or CFSB, 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, the impact of the
following shall not be included in any determination of a Material Adverse
Effect: (a) changes in GAAP, generally applicable to financial institu-
tions and their holding companies; (b) actions and omissions of a party (or
any of its subsidiaries) taken with the prior written consent of the other
party; (c) changes in economic conditions (including changes in the level
of interest rates) generally affecting financial institutions; and (d) 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 pro-
visions).
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 Amendments, 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, MergerSub, and CFSB, or by the respective officers thereunto duly
authorized, at any time prior to the Effective Time.
A-57
9.4 EXPENSES. Except as otherwise provided in this Plan of Merger,
CFSB 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 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 CFSB.
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 may be inadequate
and not susceptible of computation because of the unique nature of CFSB,
CFSB Bank, and the Merger. Therefore, the parties each agree that a fed-
eral or state court of competent jurisdiction shall have authority, subject
to the rules of law and equity, to specifically 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, MergerSub, and CFSB each
agree to the jurisdiction and venue of any state or federal court located in
Ingham County or Kent County, Michigan. Old Kent, MergerSub, and CFSB 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 direc-
tors 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 provi-
sion. 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 communica-
tions 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 transmis-
sion (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:
A-58
IF TO OLD KENT OR MERGERSUB: WITH A COPY TO:
Old Kent Financial Corporation Warner Norcross & Judd LLP
Attention: Mary E. Tuuk Attention: Shane B. Hansen
111 Lyon St., N.W. 900 Old Kent Building
Grand Rapids, Michigan 49503 111 Lyon Street, N.W.
Fax: (616) 771-4698 Grand Rapids, Michigan 49503-2489
Telephone: (616) 771-5272 Fax: (616) 752-2500
Telephone: (616) 752-2000
IF TO CFSB: WITH A COPY TO:
CFSB Bancorp, Inc. Housley Kantarian & Bronstein, P.C.
Attention: Robert H. Becker Attention: Harry K. Kantarian
112 Allegan Street Suite 700
Lansing, Michigan 48933-1814 1220 19th Street, N.W.
Fax: (517) 374-3557 Washington, D.C. 20036
Telephone: (517) 483-4871 Fax: (202) 822-0140
Telephone: (202) 822-9611
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 principles of conflicts of laws.
9.10 ENTIRE AGREEMENT. This Plan of Merger supersedes all prior
agreements between the parties with respect to its subject matter and con-
stitutes (along with the agreements and documents referred to in this Plan
of Merger) 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 exe-
cuted by the parties. No party may assign any of its rights or obli-
gations 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,
MergerSub, and CFSB and their respective successors. Nothing in this Plan
of Merger 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 except as specifically set forth in 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.
A-59
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 con-
tained 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 speci-
fied, any period of time to be determined under this Plan of Merger shall
be deemed to commence at 12:01 a.m. on the first full day after the speci-
fied starting date, event, or occurrence. Any deadline, due date, expira-
tion 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.
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/ MARK F. FURLONG
Mark F. Furlong, Executive Vice President
OKFC ACQUISITION CORPORATION
By /S/ MARK F. FURLONG
Mark F. Furlong, President
CFSB BANCORP, INC.
By /S/ ROBERT H. BECKER
Robert H. Becker, President and
Chief Executive Officer
A-60
EXHIBIT B
TO THE AGREEMENT AND PLAN OF MERGER
BETWEEN
CFSB BANCORP, INC.
AND
OLD KENT FINANCIAL CORPORATION
2/19/99
TOTAL CLOSING MARKET INITIAL
ASSETS PRICE VALUE WEIGHTING INDEX
COMPANY NAME STATE ($000) ($) ($M) (%) PRICE
AmSouth Bancorporation AL 19,901,679 48.438 5,734.56 4.54 2.19867
Associated Banc-Corp WI 11,250,667 31.375 1,973.08 1.56 0.49001
BB&T Corporation NC 34,427,227 35.938 10,429.45 8.26 2.96680
Colonial BancGroup, Inc. AL 10,456,281 12.063 1,338.16 1.06 0.12777
Comerica Incorporated MI 36,600,831 64.563 10,064.07 7.97 5.14316
Commerce Bancshares, Inc. MO 11,402,023 40.000 2,446.38 1.94 0.77456
Compass Bancshares, Inc. AL 17,288,908 36.250 2.736.88 2.17 0.78530
First American Corporation TN 20,731,770 41.000 4.769.08 3.77 1.54772
First Citizens BancShares, Inc. NC 9,605,787 78.000 838.58 0.66 0.51774
First Security Corporation UT 21,689,088 18.688 3,489.18 2.76 0.51613
First Tennessee National Corporation TN 18,733,961 38.688 5,001.61 3.96 1.53165
First Virginia Banks, Inc. VA 9,564,696 47.250 2,366.94 1.87 0.88524
Hibernia Corporation LA 14,011,500 16.438 2,570.83 2.03 0.33450
Huntington Bancshares Incorporated OH 28,296,336 31.875 6,717.54 5.32 1.69486
M&T Bank Corporation NY 20,583,891 480.000 3,698.88 2.93 14.05350
Marshall & Ilsley Corporation WI 21,566,293 56.313 5,974.95 4.73 2.66327
Mercantile Bankshares Corporation MD 7,609,563 35.750 2,539.22 2.01 0.71854
North Fork Bancorporation, Inc. NY 10,679,556 22.250 3,138.85 2.48 0.55281
Northern Trust Corporation IL 27,870,000 88.469 9,839.06 7.79 6.88998
Pacific Century Financial Corporation HI 15,016,563 21.938 1,762.15 1.39 0.30599
SouthTrust Corporation AL 38,133,774 36.438 6,092.76 4.82 1.75728
Summit Bancorp NJ 33,101,314 38.750 6,733.16 5.33 2.06521
Synovus Financial Corp. GA 10,498,009 24.313 6,569.68 5.20 1.26432
TCF Financial Corporation MN 10,164,594 23.438 2,005.53 1.59 0.37207
Union Planters Corporation TN 31,691,953 45.313 6,430.97 5.09 2.30660
UnionBanCal Corporation CA 32,276,316 35.875 6,287.45 4.98 1.78542
Zions Bancorporation UT 16,662,562 60.875 4,786.97 3.79 2.30660
126,335.97 100.00 56.556
======
/TABLE
APPENDIX B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "AGREEMENT") is made as of
February 24, 1999, by and between OLD KENT FINANCIAL CORPORATION, a
Michigan corporation ("GRANTEE"), and CFSB BANCORP, INC., 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 February 24, 1999 (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 1,645,364 fully paid and nonassessable shares of Issuer
Common Stock, par value $0.01 ("COMMON STOCK"), at a price per share equal
to $21.00; PROVIDED that in the event Issuer issues or agrees to issue any
shares of Common Stock at a price per share less than $21.00 (as adjusted
pursuant to Section 5(b)) (other than as permitted under the Plan of
Merger), 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
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; 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. 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.
(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
B-2
"EXCHANGE ACT"), and the rules and regulations thereunder) other than
Grantee or any of its subsidiaries (a "GRANTEE SUBSIDIARY");
(ii) the board of directors of Issuer shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction other than the Merger;
(iii) any person other than Grantee or any Grantee
Subsidiary shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 20% 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);
(iv) the stockholders of Issuer shall have voted and failed
to approve the Plan of Merger and the Merger at a meeting that was
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;
(v) 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 stockholders of Issuer approve the
transactions contemplated by the Plan of Merger in anticipation of
engaging in an Acquisition Transaction (other than Grantee or any
Grantee Subsidiary) or following a proposal to Issuer to engage in an
Acquisition Transaction, or Issuer or 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;
(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 stockholders to
approve the issuance of shares to be offered in such an exchange
offer);
B-3
(vii) Issuer shall have willfully breached any covenant
or obligation contained in the Plan of Merger in anticipation of
engaging in an Acquisition Transaction (other than Grantee or any
Grantee Subsidiary), 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);
(xiii) any person other than Grantee or any Grantee
Subsidiary shall have filed an application or notice with the Federal
Office of Thrift Supervision ("OTS"), the Financial Institutions
Bureau of the Michigan Department of Commerce (the "FIB") 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
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 stockholders 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 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 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.
(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
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(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) If 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
OTS, the FIB 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
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:
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"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement, dated as of
February 24, 1999, 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.
(k) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Grantee (together with any other Holders of the
Option) purchase under the terms of this Agreement that number of shares of
Common Stock that have a "Spread Value" (as defined below) in excess of
$11,400,000. For purposes of this Agreement, "SPREAD VALUE" means the
difference between (i) the product of (A) the sum of the total number of
shares of Common Stock Grantee (1) intends to purchase upon exercise of the
Option on the date of exercise and (2) previously purchased pursuant to the
prior exercise of the Option, and (B) the closing price of Issuer Common
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Stock as quoted on The Nasdaq Stock Market National Market Issues on the
last trading day immediately preceding the date of exercise, and (ii) the
product of (A) the total number of shares of Common Stock Grantee (1)
intends to purchase upon exercise of the Option on the date of exercise and
(2) previously purchased pursuant to the prior exercise of the Option, and
(B) the applicable Option Price of such shares of Common Stock. If the
Spread Value exceeds $11,400,000, the number of shares of Common Stock that
the Grantee (together with any other Holders of the Option) is entitled to
purchase on the date of exercise shall be reduced to the greatest number of
shares permissible such that the Spread Value equals or is less than
$11,400,000.
3. COVENANTS OF ISSUER. Issuer agrees: (i) that it shall at all
times maintain, free from preemptive rights, sufficient authorized but
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) if, under the applicable
federal or state regulatory requirements or any state or federal banking
law, prior approval of or notice to the OTS, the Board of Governors of the
Federal Reserve System (the "FEDERAL RESERVE BOARD"), the FIB 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 OTS, the Federal Reserve Board, the FIB
and/or each such Governmental Entity as they may require) 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
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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.
(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, if 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 shares 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 owner of 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
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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 the first 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) and Grantee shall bear the costs of the second
such registration. 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
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 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.
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7. REPURCHASE OF OPTION.
(a) At any time after the occurrence of a Repurchase Event
(defined below) which occurs prior to an Exercise Termination Event: (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: (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.
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(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
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%.
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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
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 Issuer Subsidiary).
(ii) "SUBSTITUTE COMMON STOCK" means the voting 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
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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
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.
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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
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
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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
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
Section 9(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. EXTENSION 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.
B-15
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) 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 if 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 and the OTS
have 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 and/or OTS.
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 and OTS for approval to acquire the shares
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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 which
occurs 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 Section 7. The "Surrender Price" shall be equal to
$11,400,000, (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 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
B-17
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.
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 in writing and shall be
considered 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), by hand delivery, or by a nationwide overnight delivery service
(all fees prepaid) to 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 considered to be an original, but all
of which shall constitute one and the same agreement.
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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 and permitted assignees, any rights, remedies,
obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
IN WITNESS WHEREOF, the parties have 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/ MARK F. FURLONG
Mark F. Furlong
Its Executive Vice President
CFSB BANCORP, INC.
By: /S/ ROBERT H. BECKER
Robert H. Becker
Its President and Chief Executive
Officer
B-19
APPENDIX C
OPINION OF FELDMAN FINANCIAL ADVISORS, INC.
[LETTERHEAD OF FELDMAN FINANCIAL ADVISORS, INC.]
May 4, 1999
Board of Directors
CFSB Bancorp, Inc.
112 East Allegan Street
Lansing, Michigan 48933
Members of the Board:
CFSB Bancorp, Inc. ("CFSB") and Old Kent Financial Corporation ("Old
Kent") have entered into an Agreement and Plan of Merger ("Plan of
Merger"), as amended, dated as of February 24, 1999, pursuant to which CFSB
will be merged with a wholly owned subsidiary of Old Kent (the "Merger"). As
set forth in the Plan of Merger, at the effective time of the Merger each of
the outstanding shares of CFSB common stock ("CFSB Common Stock") will be
converted into 0.6222 shares (the "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 Exchange
Ratio to the stockholders of CFSB.
Feldman Financial Advisors, Inc. ("Feldman Financial") specializes in
providing financial advisory and consulting services to commercial banks
and thrift institutions. As part of our business, we are regularly
engaged in the independent valuation of businesses and securities in
connection with merger and acquisition transactions, initial public
offerings, private placements, and recapitalizations. Feldman Financial
is familiar with CFSB, having acted as financial advisor to CFSB in
connection with, and having participated in the negotiations leading to,
the Plan of Merger and will receive a fee from CFSB for our services.
During the course of our engagement, we reviewed and analyzed
material bearing upon the financial and operating conditions of CFSB and
Old Kent and material prepared in connection with the proposed
transaction, including the following: the Plan of Merger; the Stock
Option Agreement; certain historical financial information concerning
CFSB and Old Kent; the terms of recent merger and acquisition
Board of Directors
CFSB Bancorp, Inc.
May 4, 1999
Page Two
transactions involving thrifts and banks that we considered relevant;
historical market prices and trading activity for CFSB Common Stock and
Old Kent Common Stock; and financial and other information provided to
us by the management of CFSB and Old Kent.
In addition, we have conducted meetings with members of the senior
management of CFSB and Old Kent for the purposes of reviewing the future
prospects of CFSB and Old Kent. We also conducted such other studies,
analyses, and examinations as we deemed appropriate. We also took into
account our assessment of general market and financial conditions and
our experience in other transactions, as well as our knowledge of the
thrift and banking industries and our general experience in securities
valuations.
In rendering this opinion, we have, with your consent, assumed and
relied, without independent verification, upon the accuracy and
completeness of the financial and other information and the
representations contained in the materials provided to us by CFSB and
Old Kent and in the discussions with CFSB 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 CFSB and Old Kent at December 31, 1998 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 and did not conduct a physical inspection of any of
the properties or facilities of CFSB or Old Kent, nor did we make any
independent evaluation or appraisal of the assets, liabilities, or
prospects of CFSB 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.
We have also assumed that there has been no material change in
CFSB's or Old Kent's assets, financial condition, results of operations,
business, or prospects since the date of the last financial statements
made available to us by CFSB and Old Kent, respectively. Counsel to
CFSB has undertaken responsibility for all legal matters with respect to
CFSB, CFSB's Board of Directors, the Merger, and the Plan of Merger.
Our opinion is necessarily based upon economic, market, monetary, and
other conditions as they exist and can be evaluated as of the date
hereof and the information made available to us through the date hereof.
Board of Directors
CFSB Bancorp, Inc.
May 4, 1999
Page Three
We are not expressing any opinion herein as to the price 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 CFSB Common Stock as to how
such holder should vote with respect to the Plan of Merger at any
meeting of holders of CFSB Common Stock.
This letter is solely for the information of the Board of Directors
of CFSB and is not to be used, circulated, quoted, or otherwise referred
to for any other purpose without our prior written consent, except as
set forth in our engagement letter with CFSB. We hereby consent to the
inclusion and reference to this letter in any registration statement or
proxy statement to be delivered to holders of CFSB 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.
Based upon and subject to the foregoing, and based upon such other
matters as we considered relevant, we are of the opinion that, as of the
date hereof, the Exchange Ratio to be paid by Old Kent pursuant to the
terms of the Plan of Merger is fair, from a financial point of view, to
the stockholders of CFSB.
Sincerely,
FELDMAN FINANCIAL ADVISORS, INC.
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: (1) 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 (2)
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 (1) and (2) 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
II-1
shareholders. If the articles of incorporation include a provision
eliminating or limiting the liability of a director, however, a
corporation may indemnify a 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.
II-2
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 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. Included as Appendix A to
the prospectus and proxy statement.<F*>
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 3.2 to Old Kent's Form
8-K Current Report dated March 15, 1999. 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 STOCK INCENTIVE PLAN OF 1999. Previously filed as part of
Old Kent's Definitive Proxy Statement dated March 1, 1999.
Here incorporated by reference.
10.20 EMPLOYEE STOCK PURCHASE PLAN OF 1999. Previously filed as
part of Old Kent's Definitive Proxy Statement dated March
1, 1999. Here incorporated by reference.
10.21 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.
10.22 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 10.22 to Old Kent's Form 8-
K filed March 15, 1999. Here incorporated by reference.
10.23 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 10.23 to Old Kent's Form 8-
K filed March 15, 1999. Here incorporated by reference.
10.24 EXECUTIVE SEVERANCE AGREEMENTS. The form of Executive
Severance Agreement, with a schedule of participants, was
previously filed as Exhibit 10.24 to Old Kent's Form 8-K
filed March 15, 1999. Here incorporated by reference.
10.25 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 10.25 to Old
Kent's Form 8-K filed March 15, 1999. Here incorporated by
reference.
10.26 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.
II-7
10.27 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, 1998. 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 15, 1999. Here
incorporated by reference.
23.1
CONSENT OF OLD KENT'S INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.2
CONSENT OF CFSB'S INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.3
CONSENT OF CFSB'S FINANCIAL ADVISOR. Included in
Appendix C to the prospectus and proxy statement.<F*>
23.4
CONSENT OF OLD KENT'S COUNSEL. Included in Exhibit 5.1.<F**>
23.5
COUNSEL OF OLD KENT'S COUNSEL. Included in Exhibit 8.1.<F*>
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 CFSB STOCKHOLDERS.<F*>
99.3
NOTICE OF SPECIAL MEETING OF CFSB STOCKHOLDERS.<F*>
99.4
FORM OF PROXY FOR CFSB BANCORP, INC.<F*>
_____________________
<F*> Filed with this Pre-effective Amendment No. 1.
<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.
II-8
C. OPINION OF FINANCIAL ADVISOR.
The opinion of Feldman Financial Advisors, Inc is included as
Appendix C to the prospectus and proxy statement.
II-9
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
II-10
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.
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-11
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 April 27, 1999.
OLD KENT FINANCIAL CORPORATION
By: /S/ MARY E. TUUK
Mary E. Tuuk
Its Senior Vice President and Secretary
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:
April 27, 1999 */S/ RICHARD L. ANTONINI
Richard L. Antonini
Director
April 27, 1999 */S/ JOHN D. BOYLES
John D. Boyles
Director
April 27, 1999 */S/ WILLIAM P. CRAWFORD
William P. Crawford
Director
April 27, 1999 */S/ RICHARD M. DEVOS, JR.
Richard M. DeVos, Jr.
Director
April 27, 1999 */S/ WILLIAM G. GONZALEZ
William G. Gonzalez
Director
April 27, 1999 */S/ JAMES P. HACKETT
James P. Hackett
Director
April 27, 1999 */S/ ERINA HANKA
Erina Hanka
Director
II-12
April 27, 1999 */S/ MICHAEL J. JANDERNOA
Michael J. Jandernoa
Director
April 27, 1999 */S/ KEVIN T. KABAT
Kevin T. Kabat
Vice Chairman of the Board and
Director
April 27, 1999 */S/ FRED P. KELLER
Fred P. Keller
Director
April 27, 1999 */S/ JOHN P. KELLER
John P. Keller
Director
April 27, 1999 */S/ HENDRIK G. MEIJER
Hendrik G. Meijer
Director
April 27, 1999 */S/ PERCY A. PIERRE
Percy A. Pierre
Director
April 27, 1999 */S/ MARILYN J. SCHLACK
Marilyn J. Schlack
Director
April 27, 1999 */S/ PETER F. SECCHIA
Peter F. Secchia
Director
April 27, 1999 */S/ DAVID J. WAGNER
David J. Wagner
Chairman of the Board, President,
Chief Executive Officer, and Director
(Principal Executive Officer)
April 27, 1999 */S/ MARGARET SELLERS WALKER
Margaret Sellers Walker
Director
II-13
April 27, 1999 */S/ ROBERT H. WARRINGTON
Robert H. Warrington
Vice Chairman of the Board, Chief
Financial Officer, and Director
(Principal Financial and Accounting
Officer)
April 27, 1999 *By /S/ MARY E. TUUK
Mary E. Tuuk
Attorney-in-fact
II-14
EXHIBIT INDEX
NUMBER EXHIBIT
2.1 AGREEMENT AND PLAN OF MERGER. Included as Appendix A to
the prospectus and proxy statement.<F*>
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 3.2 to Old Kent's Form
8-K Current Report dated March 15, 1999. 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.
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.
10.19 STOCK INCENTIVE PLAN OF 1999. Previously filed as part of
Old Kent's Definitive Proxy Statement dated March 1, 1999.
Here incorporated by reference.
10.20 EMPLOYEE STOCK PURCHASE PLAN OF 1999. Previously filed as
part of Old Kent's Definitive Proxy Statement dated March
1, 1999. Here incorporated by reference.
10.21 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.
10.22 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 10.22 to Old Kent's Form 8-
K filed March 15, 1999. Here incorporated by reference.
10.23 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 10.23 to Old Kent's Form 8-
K filed March 15, 1999. Here incorporated by reference.
10.24 EXECUTIVE SEVERANCE AGREEMENTS. The form of Executive
Severance Agreement, with a schedule of participants, was
previously filed as Exhibit 10.24 to Old Kent's Form 8-K
filed March 15, 1999. Here incorporated by reference.
10.25 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 10.25 to Old
Kent's Form 8-K filed March 15, 1999. Here incorporated by
reference.
10.26 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.
10.27 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, 1998. 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 15, 1999. Here
incorporated by reference.
23.1
CONSENT OF OLD KENT'S INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.2
CONSENT OF CFSB'S INDEPENDENT PUBLIC ACCOUNTANTS.<F*>
23.3
CONSENT OF CFSB'S FINANCIAL ADVISOR. Included in
Appendix C to the prospectus and proxy statement.<F*>
23.4
CONSENT OF OLD KENT'S COUNSEL. Included in Exhibit 5.1.<F**>
23.5
COUNSEL OF OLD KENT'S COUNSEL. Included in Exhibit 8.1.<F*>
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 CFSB STOCKHOLDERS.<F*>
99.3
NOTICE OF SPECIAL MEETING OF CFSB STOCKHOLDERS.<F*>
99.4
FORM OF PROXY FOR CFSB BANCORP, INC.<F*>
- ----------------
<F*> Filed with this Pre-effective Amendment No. 1.
<F**> Previously filed.