Exhibit 2.1
CONFIDENTIAL
- ------------
May 1, 2001
Board of Directors
Bank West Financial Corporation
2185 Three Mile Road NW
Grand Rapids, MI 49544
Re: PROPOSED AFFILIATION OF BANK WEST FINANCIAL CORPORATION
WITH CHEMICAL FINANCIAL CORPORATION
Gentlemen:
We are pleased to provide this expression of our interest in pursuing an
affiliation of Bank West Financial Corporation ("Bank West") and its
subsidiaries with Chemical Financial Corporation ("Chemical"). This letter
serves as an expression of our present intentions concerning a proposed
transaction and as a basis for further discussions. If executed by you and
returned to us as provided below, it shall serve as our letter of intent.
PROPOSED PURCHASE PRICE. We have reviewed certain public information
available for Bank West, the information package furnished to us by Raymond
James & Associates, and certain supplemental information furnished to us by
you. Based upon that information, we are interested in pursuing a merger of
Bank West with and into Chemical in which Bank West shareholders would receive
$11.50 cash for each share of Bank West's common stock. Our proposed price is
based on our understanding that there are currently 2,485,491 shares of Bank
West common stock issued and outstanding and assumes that all shares of Bank
West common stock will be exchanged in the merger.
Our interest in an affiliation at this price is premised upon a transaction
structured as described in this letter, the accuracy and completeness of the
information reviewed by us, and certain assumptions we have made based upon
that information, including, among other things, the quality of your assets
and projected earnings.
TRANSACTION STRUCTURE. The affiliation would be effected through the merger
of Bank West with and into Chemical. Upon consummation of the merger, Bank
West's subsidiaries would become subsidiaries of Chemical. The transaction
would be taxable to Bank West's shareholders.
OUTLINE OF PROPOSAL'S TERMS AND CONDITIONS. Our interest in an affiliation is
premised on these additional terms and conditions.
Bank West Financial Corporation
May 1, 2001
Page 2
_______________________________
1. DEFINITIVE AGREEMENT. The affiliation would be accomplished in
accordance with a definitive agreement prepared by our counsel and
negotiated between the parties. The definitive agreement would contain
mutually acceptable representations, warranties, covenants, and other
appropriate terms and conditions consistent with the substance of this
letter and customary for transactions of this type.
2. OPTION AND MRP SHARES. Holders of the currently outstanding options to
purchase 293,712 shares of Bank West common stock would receive, in
exchange for each such option, an amount of cash equal to the difference
between $11.50 and the exercise price per share for each share subject to
the applicable option multiplied by the total number of shares subject to
each applicable option. Such payment would be made to each holder of
an option that is outstanding and has not been cancelled as of the
closing of the proposed transaction, regardless of whether such options
are vested at the time of the closing. It is our understanding that no
additional stock options will be granted. All MRP shares issued and
outstanding as of the date of this letter agreement will be fully vested
upon the closing of the transaction and will be cashed out at the
purchase price of $11.50 per share. The total amount of cash to be
exchanged for all options and MRP shares shall not exceed $1.2 million
(assuming no options are exercised from the date of this letter until
the closing of the transaction).
3. BANK WEST EMPLOYEE STOCK OWNERSHIP PLAN. Subject to our due diligence
investigation, it is our present intention to address the BankWest
Employee Stock Ownership Plan as follows. Until the closing, Bank West
could continue to make normal quarterly contributions to the ESOP. The
ESOP would be terminated in connection with the merger, and cash received
by the ESOP with respect to unallocated shares held in the suspense
account would first be used to repay the ESOP loan. Any remaining cash
would then be allocated to ESOP participants, with final distribution to
be made as soon as possible after receipt of a favorable determination
letter from the Internal Revenue Service, subject to any applicable
limitations on allocations to employee accounts. It is expected that the
termination of the ESOP will not have a negative impact on Bank West's
shareholders' equity.
4. CONDITIONS PRECEDENT. The obligations of Chemical and Bank West to
consummate the merger would be subject to satisfaction of customary
conditions. Conditions to the consummation of Chemical's obligations
would include, among others, the following:
a. SATISFACTORY INFORMATION. The representations and warranties made
by Bank West in the definitive agreement, together with any
information provided to Chemical in the disclosure schedule that
will be part of that agreement, must be accurate and complete.
Bank West Financial Corporation
May 1, 2001
Page 3
_______________________________
b. NO MATERIAL ADVERSE CHANGE. There must not have occurred any
material adverse change in the financial condition, business,
properties, or results of operations of Bank West or its
subsidiaries prior to or at the closing. For purposes of this
letter, "material" or "materially" shall be viewed from the
perspective of Bank West and its subsidiaries taken as a whole and
shall be limited to facts, events, and circumstances unique to Bank
West and its subsidiaries and not the banking industry as a whole.
A material adverse change shall not be deemed to include the impact
of (i) actions or omissions of Bank West or its subsidiaries taken
with the prior written consent of Chemical, (ii) changes
attributable to or resulting from changes in general economic
conditions generally affecting financial institutions, including
changes in the prevailing level of interest rates, or (iii)
expenses, other than expenses for services, to be agreed to by the
parties in the definitive agreement.
c. REQUISITE APPROVALS. Chemical and Bank West must each have received
all requisite approvals, including regulatory approvals, necessary
to consummate the transaction and all applicable waiting periods
must have expired. All approvals must be without conditions or
restrictions that, in the reasonable and good faith opinion of the
Board of Directors of Chemical, are unduly burdensome or would
materially reduce the value of the merger to Chemical.
d. MINIMUM NET WORTH. The total shareholders' equity of Bank West at a
date near in time to the closing date must equal or exceed $24
million, excluding any addition to equity resulting from the exercise
of stock options after the date of this letter; provided, that such
total shareholders' equity shall be adjusted so that no deduction
shall be made for (i) up to and not exceeding $750,000 in
transaction-related expenses that Bank West has incurred or may incur
as a result of the transaction (including, without limitation,
legal, accounting, printing, mailing and investment banker fees),
(ii) any reserves, accruals or other charges that Chemical may
request Bank West to establish or incur, or (iii) purchase-related
accounting adjustments to be agreed to by the parties in the
definitive agreement. Bank West will be required to continue to
make provisions for loan losses to add to the allowance for loan
losses at its historical rate and consistent with past practice.
e. INCOME FROM OPERATIONS. Between the date of this letter and the
date of the closing, Bank West must maintain positive income from
operations, excluding (i) up to and not exceeding $750,000 in
transaction-related expenses that Bank West has incurred or may
incur as a result of the transaction, and (ii) any reserves,
accruals or other charges that Chemical may request Bank West to
establish or incur.
Bank West Financial Corporation
May 1, 2001
Page 4
_______________________________
5. TIMING AND PROCESS. The steps necessary to consummate the transaction
are outlined below:
a. PUBLIC ANNOUNCEMENT. Upon execution of this letter by all
signatories, the parties will as soon as is practicable publicly
announce the transaction by press release and furnishing a copy
of the press release to the Securities and Exchange Commission
on Form 8-K. The timing and content of any press release must
be mutually acceptable, subject to any disclosure requirements
imposed by federal and state securities laws.
b. DUE DILIGENCE INVESTIGATION. Following a public announcement,
Chemical will commence its prepurchase investigation of Bank West
and its subsidiaries.
i. During this time, Bank West will cooperate in furnishing such
information as is reasonably requested concerning Bank West.
Bank West will also prepare and deliver disclosure schedules
containing the proposed exceptions to its representations and
warranties that will appear in the definitive agreement,
together with any other specified information, within 10 days
following the receipt of a draft of the definitive agreement.
ii. Chemical expects that its investigation would be completed by
May 24, 2001.
iii. The definitive agreement would be signed after Chemical is
satisfied with the results of its investigation and the
contents of the final disclosure schedules, and after both
Chemical and Bank West are satisfied with the terms of the
definitive agreement.
iv. Chemical will file the requisite regulatory applications, and
Bank West will file a proxy statement with the Securities and
Exchange Commission that will be used to seek shareholder
approval, provided that it is understood that Chemical will
take an active role in preparation of the proxy statement and
the proxy statement will not be filed without approval of the
timing and content of the filing by Chemical, which approval
shall not be unreasonably withheld.
c. UPSET DATE. Either party could terminate the definitive agreement
at any time on or after October 31, 2001, if the merger has not then
been consummated unless this date is extended by mutual agreement of
the parties.
6. ORDINARY COURSE OF BUSINESS. Our evaluation of Bank West and its
subsidiaries, the price we are prepared to pay, and to some extent our
willingness to proceed with the transaction are based on our assumption
that Bank West and its subsidiaries will be in essentially the same
Bank West Financial Corporation
May 1, 2001
Page 5
_______________________________
condition at closing as they were as of the date of the financial
statements on which we based our proposal. Accordingly:
a. CONDUCT OF OPERATIONS. We would expect that from June 30, 2000,
through the date of the definitive agreement (which will also
address this subject) Bank West and its subsidiaries have conducted
and will continue to conduct business only in the ordinary course,
consistent with past practices and policies, and in accordance with
applicable laws and regulations and sound management standards.
b. COMPENSATION. We would expect that Bank West would only pay, award,
or change directors' fees, salaries, wages, bonuses, and benefits in
the ordinary course of business and consistent with past practices
and policies.
c. DIVIDENDS. We expect that Bank West would not increase the amount
per share of dividends declared or paid to shareholders between the
date of this letter and the closing of the transaction.
7. EXPRESSION OF INTEREST. This letter is not a legally binding offer or
agreement to consummate a transaction of any kind. Except as set forth
below in "LIMITED BINDING AGREEMENTS" below, there are no agreements,
arrangements, commitments, or undertakings between us, and any that may
be inferred from our dealings are expressly disclaimed.
8. LIMITED BINDING AGREEMENTS. By execution of this letter, Chemical and
Bank West agree, as their only binding agreements, that from the date of
execution of this letter until this letter is terminated or is superseded
by the definitive agreement:
a. NON-PUBLIC INFORMATION. Bank West, its subsidiaries, and their
respective directors, officers, employees, accountants, investment
bankers, counsel, and other representatives, shall not provide any
nonpublic information concerning Bank West, its subsidiaries, or
their respective properties, assets, liabilities, employees,
customers, business, operations, affairs or prospects to any person
other than Chemical and its representatives, except that such
information may be provided if the Board of Directors of Bank West,
after consultation with counsel, is advised and determines in good
faith that the failure to do so would result in a breach of the
fiduciary duties of such Board of Directors under applicable law.
b. NO SOLICITATION. Bank West, its subsidiaries, and their respective
directors, officers, employees, accountants, investment bankers,
counsel, and other representatives, shall not solicit, encourage,
negotiate, accept, or approve any proposals, offers, or expressions
of interest concerning any tender offer, exchange offer, merger,
consolidation, divestiture, reorganization, sale of shares, sale of
assets, or assumption
Bank West Financial Corporation
May 1, 2001
Page 6
_______________________________
of liabilities not in the ordinary course, or other business
combination involving Bank West or any of its subsidiaries other
than the proposed transaction (a "Business Combination"), except
that a Business Combination may be negotiated, accepted or approved
if the Board of Directors of Bank West, after consultation with
counsel, is advised and determines in good faith that the failure
to do so would result in a breach of the fiduciary duties of such
Board of Directors.
c. NOTICE OF COMPETING PROPOSALS OR REQUESTS FOR INFORMATION. Bank
West shall cause written notice to be delivered to Chemical promptly
upon receipt of any solicitation, offer, proposal, or expression of
interest concerning a Business Combination or a request for
non-public information in connection with a possible Business
Combination (a "Proposal"). Such notice shall contain the material
terms and conditions of the Proposal to which such notice relates or
shall contain a copy of Bank West's unequivocal rejection of the
Proposal as delivered to the author of the Proposal. Thereafter,
Bank West shall promptly notify Chemical of any material changes in
the terms, conditions and status of any Proposal.
d. INVESTIGATION. For purposes of conducting a complete and detailed
prepurchase investigation of Bank West and its subsidiaries by
Chemical:
i. Bank West shall permit Chemical full access to the accounts and
records of Bank West and its subsidiaries at all reasonable
times, subject to the terms of the Confidentiality Agreement
dated December 15, 1999.
ii. The parties and their subsidiaries' officers, employees,
attorneys, accountants, advisers, and representatives shall
cooperate fully with the other party's officers, employees,
attorneys, accountants, advisers, and representatives in
performing its investigation.
iii. Bank West shall furnish to Chemical information requested
respecting the assets, liabilities, employees, customers,
business, operations, affairs, and prospects of Bank West and
its subsidiaries, subject to the terms of the Confidentiality
Agreement dated December 15, 1999.
e. EXPENSES. Bank West and Chemical shall each pay their own expenses
incident to preparing, entering into, and performing their
respective obligations under this letter and the definitive
agreement.
f. AFFILIATE AGREEMENTS. Upon execution of the definitive agreement,
we would also expect to enter into separate agreements with a
substantial majority of Bank West's directors indicating their
support of the transaction.
Bank West Financial Corporation
May 1, 2001
Page 7
_______________________________
g. TERMINATION FEE. In recognition of the efforts, expenses, other
opportunities foregone by Chemical while pursuing the proposed
transaction, and unascertainable losses that may be incurred by
Chemical in the event that the proposed transaction is not
consummated, and in recognition of Chemical's potential role in
attracting the interest of an "Unaffiliated Person," the parties
agree that Chemical shall, subject to the terms and conditions set
forth in this paragraph, be entitled to receive a "Termination Fee"
in the event of a "Business Combination" by an Unaffiliated Person,
as each of these terms is defined herein. Bank West and Chemical
agree that the Termination Fee is reasonable and just compensation
under such circumstances.
i. An "UNAFFILIATED PERSON" means any individual, corporation,
partnership, entity, group, or "person" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934 and the
regulations issued thereunder, other than Chemical, Chemical's
subsidiaries and affiliates, and their respective directors,
officers, employees, representatives, and agents.
ii. Chemical shall be paid the Termination Fee in the manner
provided in (iii) below if, while this letter is in effect:
(A) any Unaffiliated Person directly or indirectly or acting
through one or more intermediaries, acquires "Control"
(defined below) of Bank West, or its successor by merger
or consolidation, or acquires 25 percent or more of the
consolidated assets of Bank West and its subsidiaries; or
(B) Bank West solicits, negotiates, or enters into an
agreement with an Unaffiliated Person to acquire such
Control or such assets, or either Bank West or an
Unaffiliated Person publicly announces an intention to do
so, and within one year of the date of such solicitation,
encouragement, negotiation, agreement, or announcement
(whether or not this letter is then in effect) the
Unaffiliated Person acquires such Control or such assets.
(C) For purposes of this paragraph, any transfer of Bank West
common stock for purposes of estate planning or probating
of an estate of an existing shareholder of Bank West shall
not be deemed to effect a transfer of "Control;" provided
that the transferee is not another bank holding company,
an affiliate of another bank holding company, or acting in
concert with another bank holding company.
(D) For purposes of this letter, "Control" is defined in
Section 2(a)(2) of the Federal Bank Holding Company Act.
Bank West Financial Corporation
May 1, 2001
Page 8
_______________________________
iii. The Termination Fee shall be $750,000 paid in cash to Chemical
by wire transfer or by cashier's check of immediately available
funds. In the event of a merger, consolidation, or share
exchange, the payment shall be made at or after the
consummation of the transaction upon Chemical's written demand.
In any other case, the payment shall be made upon Chemical's
written demand, after Chemical becomes entitled to the
Termination Fee.
h. TERMINATION. Bank West and Chemical will during the Prepurchase
Period (defined below) or such shorter period as may be necessary to
reach agreement, negotiate with the objective of reaching, if
possible, a definitive agreement consistent with this letter.
i. The "PREPURCHASE PERIOD" shall begin upon the effective date of
this letter, shown below, and shall end at 5 p.m., E.D.T., on
May 24, 2001.
ii. If the parties have not reached and executed a definitive
agreement within the Prepurchase Period, then either party may
terminate this letter.
iii. Chemical may terminate this letter at any time if, based on its
prepurchase investigation, any facts or circumstances are
discovered which it believes to be materially inconsistent with
the assumptions on which this expression of interest is based or
pose an unacceptable risk of a material loss or liability.
iv. Termination of this letter for any reason, including expiration
of the Prepurchase Period, shall be effective only upon
delivery of written notice to the other party specifying the
grounds for termination.
v. The obligations of Chemical and Bank West under sections 8(e)
and 8(g) shall continue in full force and effect
notwithstanding termination of this letter.
vi. Neither Chemical nor Bank West shall incur any liability
whatsoever under, or pursuant to, this letter except for
damages for breach of this section, "LIMITED BINDING
AGREEMENTS," and except for payments required pursuant to
sections 8(e) and 8(g).
EXECUTION AND DELIVERY. This letter of intent may be executed in
counterparts, each of which shall be deemed to be an original, but which
together shall constitute one and the same document. Delivery of executed
copies may be effected by fax and shall be effective upon receipt with verbal
confirmation. If delivered by fax, manually executed copies shall be
delivered promptly by overnight delivery service.
Bank West Financial Corporation
May 1, 2001
Page 9
_______________________________
We believe that the transaction proposed in this letter offers substantial
economic benefits to Bank West's shareholders. As you may appreciate, with a
proposal of this kind, time is of the essence. We wish to emphasize our
desire to move ahead with this transaction as quickly as possible.
Sincerely,
Chemical Financial Corporation
By: /s/ Aloysius J. Oliver
---------------------------------------------------------
Aloysius J. Oliver, President and Chief Executive Officer
BANK WEST'S ACKNOWLEDGMENT AND AGREEMENT. The proposal set forth in this
letter is acceptable to Bank West Financial Corporation. This letter shall
serve as our mutual letter of intent. Bank West agrees to be bound by the
agreements set forth in the section captioned "LIMITED BINDING AGREEMENTS"
above, but acknowledges that this letter of intent is not otherwise a binding
agreement.
Bank West represents that it is not breaching any verbal or written agreement,
commitment, or understanding with any other person by executing and delivering
the letter to Chemical, and that the execution, delivery, and performance of
the letter of intent by Bank West is duly authorized by all requisite
corporate action. This letter of intent shall become effective as of May 1,
2001.
Bank West Financial Corporation
By: /s/ Robert J. Stephan
----------------------------------------
Robert J. Stephan, Chairman of the Board
By: /s/ Ronald A. Van Houten
-----------------------------------
Ronald A. Van Houten, President and
Chief Executive Officer